All 16 Parliamentary debates in the Lords on 15th Jan 2025

Grand Committee

Wednesday 15th January 2025

(3 days, 8 hours ago)

Grand Committee
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Wednesday 15 January 2025

Arrangement of Business

Wednesday 15th January 2025

(3 days, 8 hours ago)

Grand Committee
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Announcement
16:15
Lord Russell of Liverpool Portrait The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)
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My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Committee (4th Day)
Relevant document: 4th Report from the Constitution Committee. Scottish, Welsh and Northern Ireland Legislative Consent sought.
16:15
Clause 7: Annual accounts and reports
Debate on Amendment 88 resumed.
Lord Russell of Liverpool Portrait The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)
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My Lords, any noble Lords who were not able to speak on Monday and who wish to speak before the opposition spokesman may now do so.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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At the point when the Committee decided to adjourn its deliberations on Monday, I was about to make a brief intervention in support of my noble friend Lady Noakes and the noble Lord, Lord Vaux. As my noble friend Lady Noakes explained, GBE will be a private company, which would normally allow it nine months in which to file its accounts. As my noble friend explained on Monday, Amendment 88 changes that to six months, in line with the requirement for public companies. GBE may not be a public company technically, but it certainly is a company of huge interest to the public. It is therefore obviously right that the company should be required to prepare its accounts in accord with the rules applicable to public companies, rather than taking advantage of the more lenient requirement applicable to private companies.

In his remarks in the House yesterday, the Minister said that he recognised that it was the role of the Opposition to scrutinise legislation. But I ask the noble Lord: is it not actually the role of the whole House to scrutinise legislation, including the Government’s own Back-Benchers? He probably did not mean it when he said that it was the role of the Opposition.

Lord Hunt of Kings Heath Portrait The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
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The point was that I was responding to a comment made by the Opposition Chief Whip about scrutiny. But of course I very much take the point that this is a matter for the whole House. The very fact that my noble friend Lady Young spoke to this group shows how effective that scrutiny can be.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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I thank the Minister for his kind explanation, which certainly clarifies that. As far as my interventions on Monday are concerned— I spoke at length and several times—I take issue with and very much resent being accused of having filibustered. If the noble Lord looks at my contributions, he will find that they were all different.

I suggest that one reason why there have been so many amendments to the Bill is that so little was included in it. It is very thin Bill, but it has £8 billion of public money. Many of us are puzzled that GBE is being established effectively with £8 billion of public money, whereas Great British Nuclear, which has no public money to speak of, continues to operate in a kind of silo. I recognise that the noble Lord attempted to reassure the Committee about how GBN and GBE will work together, but I do not think that they can be described as comparable organisations.

I had intended to support my noble friend Lady Noakes and the noble Lord, Lord Vaux, on Amendment 88, and I added my name to it. I think that it is necessary because although GBE is intended to be structured as a public company, it will have only one shareholder, the Secretary of State. As my noble friend explained on Monday—she is well known as an expert in these matters—we must be sure that GBE will be managed according to the standards that would be expected by shareholders in public companies. That is why changing the nine-month provision for filing accounts to six months is so necessary.

I have also added my name to Amendment 89, in the names of the noble Lords, Lord Vaux and Lord Cameron, and my noble friend Lady Noakes. It is particularly important that the accounts must comply with the stipulation in proposed subsection (d), to provide

“an assessment of the extent to which”

any investments made or partnerships entered into

“have encouraged additional investment by the private sector”.

It is clear that the very long incubation period for nuclear projects places them outside the criteria for many private sector investors, but some public investment can be effective in unlocking private investment through match funding, as the Rolls-Royce SMR programme has already shown.

I also support Amendment 92, in the name of my noble friend Lady Noakes and that of the noble Lord, Lord Vaux, which would ensure that the Comptroller and Auditor-General must audit GBE’s accounts.

Lord Roborough Portrait Lord Roborough (Con)
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My Lords, Amendment 88, in the name of my noble friend Lady Noakes, would require more timely publication of GB Energy’s accounts, in line with public rather than private company reporting. I also support Amendment 89, in the name of the noble Lord, Lord Vaux of Harrowden. On earlier groups I have addressed the limitations of private and public company reporting versus that of listed companies. I made that argument, given that taxpayers’ money, raised at great cost through tax increases impacting pensioners, farmers and all businesses in this country, is being invested. All this appears to have fallen on somewhat deaf ears with the Minister, who seems determined to avoid anything but the lowest level of scrutiny, transparency or accountability as to how GB Energy invests this, at least, £8.3 billion.

I also alluded to my comments in the debate on the King’s Gracious Speech and I remind the Committee of exactly what I said:

“it is private capital that has driven the rollout of renewables and infrastructure in our country, and it appears that Great British Energy will be targeting investments that private capital alone will not finance. That does not fill our Benches with confidence that these investments will necessarily be judicious. Please can the Minister assure the House that GB Energy will report on the performance of its investments regularly and in detail and that the Government will be held accountable in this House for the performance of those investments?”.—[Official Report, 18/7/24; col. 36.]

In response to this question, I received the following reply from the Minister, the noble Baroness, Lady Hayman of Ullock:

“The cost to the taxpayer of its set-up and investments will be carefully managed and monitored through Parliament, and investments will be subject to safeguards and risk assessments, similar to established public finance institutions”.—[Official Report, 18/7/24; col. 126.]


That answer may not have been the answer that I was looking for, nor the answer that I may be seeking today, which many amendments tabled to the Bill have also sought, but it does seem to offer at least some scrutiny through Parliament. It does not appear to me that the Minister here today is offering even that level of scrutiny in the Bill. His response in previous groups to amendments seeking this transparency and accountability has been:

“the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts”.—[Official Report, 13/1/25; col. 942.]

It is hard to disagree that the reporting requirements as determined by the Government are set out in the Bill. However, the point that these amendments, and many others already debated, make is that this is simply not adequate. One set of accounts published annually up to nine months after the year end, with the potential for minimal levels of detailed reporting, is effectively writing GB Energy a blank cheque, with next to no external oversight.

As other noble Lords have suggested to the Minister, if the Government were willing to table amendments to allow for greater scrutiny in a timely manner of the financial performance of investments, and the progress in achieving the overall objectives of increasing employment, reducing household electricity bills and reducing carbon emissions, I am sure that the Committee could be satisfied, without taking so much time making similar points. On previous groups the Minister has called this filibustering. That is an unfair characterisation, at least of the groups that I have taken part in. The Government have proven deaf to the Committee’s reasonable requests, but that will not make them go away.

I am particularly taken by Amendment 89 in the name of the noble Lord, Lord Vaux, and not in the least surprised to see that it has so many supporters. It avoids amendments to Clause 6, which the Minister has pointed out is the wrong place in the Bill for such amendments, and to which my noble friend Lady Noakes has given authoritative support, but it addresses key reporting requirements around the receipt of subsidies, reporting on individual investments, achievement of objectives and strategic priorities, and impacts on the wider financial ecosystem. For these reasons, I believe it is an excellent amendment. However, it may still be lacking by relying on the relatively lax Companies House requirements for limited companies, so I also support Amendment 88 in the name of my noble friend Lady Noakes to make reporting in line with that for public companies.

As I have argued in previous groups, in support of my noble friend Lord Petitgas, who is in his place, there is a strong argument that quarterly reporting should also be required, in line with the listing requirements for publicly traded companies. As I have pointed out, if companies worth less than £100 million can comply with this, I do not believe it is a challenge for the £8.3 billion-plus GB Energy. This would also impose more disciplined reporting on GB Energy’s investees.

Why is it that the Government are so resistant to GB Energy showing proper transparency and accountability, even less than the modest commitments that I read in my response to the King’s Speech? What do the Government fear, if they are so convinced that it is worth while taking so much taxpayers’ money and investing it in energy, which in theory will be a good financial deal for the taxpayer? Last year’s business-unfriendly Budget, despite the protestations that it was pro-business and pro-growth, fills us all with concern that this Government do not understand business.

Lord Cromwell Portrait Lord Cromwell (CB)
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My Lords, I am not sure what the opposite of a filibuster is, but I am going to try. I add my support to Amendments 88 and 92. They are both simple, timely, consistent and robust: elements of good housekeeping, quite frankly.

I also add my support to Amendment 89. We need to draw lessons from the experience with the water industry, whose reporting was opaque. It simply was not transparent enough on key areas of its financial structuring. This amendment would tease out the things that people need to know—people who are not forensic accountants going through the balance sheets reported by companies. Therefore, I thoroughly endorse Amendment 89.

Lord Petitgas Portrait Lord Petitgas (Con)
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My Lords, I too would like to voice my support for Amendments 88 and 89. I will be brief. The timing and regularity of this reporting seems to be normal, standard housekeeping. It is not onerous, and it is legitimate. On the substance, as I said on the previous day in Committee, this is not an operating company which would report, like Ørsted or others; this is a portfolio of investments. It would be a number of minority investments; this company will not be operating assets. The Member opposite seems to be sceptical, but it will be a collection of small investments. Therefore, it will be more complex to track, and it will be important that it is clearly stated in the accounts. Amendment 89 states that.

Lord Macpherson of Earl's Court Portrait Lord Macpherson of Earl’s Court (CB)
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My Lords, I add my support for Amendment 92. It is an important principle of public audit that institutions within the public sector are audited by the National Audit Office. Indeed, when I was at the Treasury, I spent many years trying to get the Royal Household and the Bank of England within the ambit of the National Audit Office, and finally I succeeded. Long may that continue.

16:30
Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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My Lords, I speak in support of Amendments 88, 89 and 92, which stand in the names of my noble friends Lady Noakes and Lord Trenchard and other distinguished colleagues, including the noble Lords, Lord Vaux of Harrowden and Lord Cameron of Dillington. These amendments, although technical in nature, are vital to ensure that Great British Energy operates with the highest standards of transparency, accountability and good governance. This is not simply a matter of administrative precision; it is the fundamental issue of public trust.

Amendment 88 ensures that GBE files its reporting accounts within the same timeframe required of public companies under Section 442 of the Companies Act 2006. This alignment with established statutory requirements is essential. It demonstrates that GBE, although a public body, will not be afforded preferential treatment or lesser obligations than private enterprises. The public expect and deserve this parity, especially given GBE’s role as a steward of taxpayers’ funds.

Amendment 89 introduces additional requirements for GBE’s annual reporting accounts. Crucially, it provides the Treasury with the flexibility to define additional reporting requirements over time. This ensures that GBE can adapt to evolving priorities and maintain accountability as it grows. It is worth emphasising that comprehensive and transparent reporting is not an administrative burden; it is a cornerstone of effective governance. This amendment guarantees that GBE will meet not only the letter of the law but the spirit of public accountability. By ensuring this level of scrutiny, we are demonstrating a commitment to good governance that transcends political or ideological divides but sends a clear message that public funds and the public interest will always be protected.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, I am grateful to noble Lords who spoke in this debate, both today and in our deliberations on Monday. It seems quite a long time ago since then, and I am looking forward to a very constructive engagement today and welcome the contributions that all noble Lords are going to make.

Let me say at once that I very much understand the importance of information being provided in order to judge the performance of GBE and of it being held to effective account. There is no disagreement at all between me and other noble Lords on this. Noble Lords will know, as the noble Baroness, Lady Noakes, explained very clearly in her remarks on Monday, that her Amendment 88 requires GBE to file its annual reports and accounts within six months from the end of its accounting reference period. As she said then, and as noble Lords have repeated, this aligns with the Companies Act 2006 for public companies whose shares are publicly traded. Of course I agree that a six-month filing period is appropriate for public companies. Financial markets need up-to-date and timely information on the performance of a company, as do its range of stakeholders and shareholders, to help them make informed decisions when companies are seeking to raise capital.

I also understand why noble Lords wish this discipline to be applied to GBE, but it is a private limited company owned wholly by the Crown. It is not unreasonable for the Government to say that, on that basis, we should be in line with the Companies Acts requirements, which set a nine-month filing period for private limited companies. I should also say that this is an arrangement applied to most government-owned companies: for example, the National Wealth Fund, the National Energy System Operator and the Low Carbon Contracts Company. I know that the noble Baroness, Lady Noakes, was concerned about the filing deadline, but it is also the case that the vast majority of these organisations, government-owned companies, file their accounts well in advance of the statutory requirement.

I understand the point that the noble Viscount, Lord Trenchard, made about public interest in Great British Energy, and I welcome that. Indeed, I want GBE to be well-known and seen as spearheading the drive we wish to see in relation to Clause 3 and the statement of priorities in Clause 5. We wish GBE to be as successful as possible.

My point is that, in a sense, what is in statute in relation to the Companies Act is a minimum requirement because, as GBE is owned by the Secretary of State, it will be subject to the usual mechanisms that apply in the public sector. They are put in place to ensure that the public interest is discharged and proper public accountabilities are in place.

On Monday, the noble Lord, Lord Teverson, made an interesting point: one of the concerns some people have is that, because of GBE’s structure and because it is publicly accountable, it will be subject to a considerable number of the controls put in place for bodies that fall within public accountability. The key question is: can we ensure that GBE has sufficient operational independence to perform effectively in its work? There are a number of issues here around the way it will work in future.

I should also say that the annual report and accounts are not the only means of scrutinising the funding allocated to GBE. All funding to GBE must be voted on by Parliament; because of that, it will be scrutinised through the supply and appropriations debates in the other place.

Amendment 89 in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Noakes, proposes specific topics to be included in the annual reports and accounts of Great British Energy, as well as the granting of an additional power to His Majesty’s Treasury to require further information. I can confirm that much of the proposed content will already be included and publicly available in the annual report and accounts, as required by Clause 7, and will be laid before Parliament. As an example, the financial assistance details under new paragraph (a), proposed by this amendment, will be included in the accounts of GBE. Details are likely to include issued share capital and items on the balance sheet of the company, such as borrowing from government if that method has been utilised.

The noble Lord, Lord Vaux, and my noble friend Lady Young of Old Scone were concerned that Great British Energy would need only to follow the provisions of the Companies Act in preparing its annual report and accounts. However, I can assure them that that is not the case. GBE will adhere to the additional reporting requirements for government-owned companies over and above the reporting requirements under the Companies Act. These include the obligation to follow the Treasury’s directions on accounts through the powers extended in the Government Resources and Accounts Act 2000, laid out in the government financial reporting manual and related “Dear Accounting Officer” letters. The most recent of these account direction letters requires bodies to give a true and fair view of the state of affairs, including net resource outturn, the application of resources, changes in taxpayers’ equity and cash flows for the financial year.

Furthermore, GBE will be required to report on its governance around exposure to and risk of climate-related scenarios in its operations, as set out by the Task Force on Climate-Related Financial Disclosures. Finally, any future funding of GBE will be subject to agreement through a government spending review, or another mechanism, as the Government see fit.

Amendment 92 in the name of the noble Baroness, Lady Noakes, proposes to require the Comptroller and Auditor-General to be the external auditor of Great British Energy; I think she said on Monday that it is a probing amendment. I am very happy to reassure noble Lords in this case. It is already the case that the Comptroller and Auditor-General will be the external auditor of Great British Energy. The company will also need to comply with the provisions set out in the Treasury’s Managing Public Money document, which requires the Comptroller and Auditor-General to be the external auditor for non-departmental public bodies such as Great British Energy. The requirement will also be set out in the framework document for Great British Energy, which we will debate shortly.

Amendment 90A, in the name of my noble friend Lady Young, seeks to require additional reporting from Great British Energy. Again, I assure her that much of the information that she seeks will be provided in GBE’s annual report and accounts, as a matter of course. The annual report and accounts will include key achievements and milestones, general business information relating to its strategic direction, a review of the company’s performance, challenges and future outlook, as well as financial statements and resourcing levels. It will also include reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures.

GBE may also make more information available through reporting, such as when projects or investments are announced. We want to set this company up to be transparent and accountable, with a reporting regime appropriate to its company basis and status. The accountability of Ministers to Parliament for its performance will also be in place.

We very much take the point about the need for this organisation to be transparent and accountable. In the light of this debate, I will set out how this all comes together in detail and send a note to noble Lords. I hope that provides some greater reassurance.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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I realise that Monday is quite a long time ago now and that the noble Lord has probably forgotten this, but I asked a specific question then. The impact assessment for the Bill says that, because the Bill does nothing but create the company, “no quantification of benefits” and costs

“has been provided at this stage”,

and that those benefits and costs

“will be subject to future spending reviews and business cases”.

I asked whether those future spending reviews and business cases would be made public.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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I am not sure that I can answer that point in detail. The impact assessment is built around the legislation, rather than the future activities of GBE. May I take that specific question away? Clearly, the funding that the Government provide Great British Energy will have to be in the public domain and part of the normal process of dealing with a spending review and the financial consequences and flows of money that follow it. I am happy to look into that in more detail, if the noble Lord would like.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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That would be very kind. The issue is that, if the Bill had been done in the normal way and included the detail of what GBE was going to do, the impact assessment would have covered those activities. However, those things are not included in the Bill so are not covered by the impact assessment. When the statement of strategic priorities and the detail of what the company will do are published, there will be no impact assessment on them, other than the spending reviews and business cases. It is important that they are made public, as if they had been part of the impact assessment that would have happened if this had been done in the usual way.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, as I said, I think we have acted properly with the impact assessment, which is based on the Bill. GBE has yet to commence its work. I have said that I will write to noble Lords detailing how we see GBE being held to account, in terms of its reporting and accountability, and I will add some more information about how that relates to the statement of strategic priorities in Clause 5.

Baroness Young of Old Scone Portrait Baroness Young of Old Scone (Lab)
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I hope that in writing this note, which I welcome, the Minister will give us an account of how GBE will report on the strategic priorities set by the Government, and that they will include not just climate but environmental and biodiversity targets. They are the twin crises that GBE is helping to solve.

Lord Roborough Portrait Lord Roborough (Con)
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The noble Lord mentioned that the minimum requirement was the nine-month reporting window under the Companies Act. Could he give us an idea now of what he sees as a desirable reporting timeframe? If he would like to reflect, perhaps he could include those thoughts in his letter.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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I do not think so. Clearly, there is a statutory requirement. All I was saying is that our experience in my department is that the bodies that have a similar discipline have generally reported well within that figure. I am certainly happy to say that one would always hope that an organisation such as this would report in a timely fashion, but I cannot go any further than that.

16:45
Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, the noble Baroness, Lady Noakes, regrets that she is not able to be here today, because this was scheduled after she already had other commitments, so, with the leave of the Committee, I will channel the noble Baroness to wrap up. I thank all noble Lords who have taken part in this constructive debate and the Minister for his constructive response.

Common themes are emerging throughout our discussions on the Bill, and the subject of transparency and accountability is probably the major one. I know that the noble Baroness will be disappointed by the response to shortening the reporting deadline to six months, which does not seem overly onerous. I was encouraged, I think, by what the Minister said about the reporting requirements and I look forward to receiving the letter he has spoken about. However, he did not refer in his answer to a couple of things that were in the amendment and are really important.

First, it is important that GBE reports on the investments it has made, and I do not think he mentioned that. Secondly, as a number of noble Lords mentioned, the key issue is that of additionality—in other words, what impact GBE is having on crowding-in private investment alongside the public investment. As I said on Monday, anyone can spend money. If this is to be in any way positive, it needs to attract private investment that would not otherwise have happened. It is really important that that is measured in the same way as it has to be by the National Wealth Fund. I think it is true to say that the National Wealth Fund, because it has the obligation to report on additionality, is actually performing rather well on additionality.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, I think I said by implication that I consider those matters that I would expect the company to report on.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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I am reassured to hear that and I look forward to receiving the letter. We may need to come back to this, and I hope the noble Lord will be willing to sit down, discuss the overall questions around accountability and transparency and, I hope, put something forward himself that will strengthen what is, if I am honest, a somewhat thin Bill. With that, I beg leave to withdraw the amendment.

Amendment 88 withdrawn.
Amendments 89 to 90A not moved.
Clause 7 agreed.
Amendments 91 and 92 not moved.
Amendment 93
Moved by
93: After Clause 7, insert the following new Clause—
“Framework document(1) The Secretary of State must prepare a framework document which sets out the principles underpinning the relationship between the Secretary of State, Great British Energy and any other relevant public sector bodies.(2) The framework document must cover the operating and financial principles through which Great British Energy will pursue its strategic objectives and may include such other matters as the Secretary of State determines.(3) Relevant public sector bodies are public sector bodies and government departments which the Secretary of State considers will or may have a relationship with Great British Energy.(4) The Secretary of State may amend the framework document at any time.(5) The Secretary of State must consult Great British Energy before preparing or amending the framework document.(6) The Secretary of State must lay a copy of the framework document or any amended framework document before Parliament as soon as practical after it is finalised.”Member’s explanatory statement
This amendment requires the Secretary of State to prepare and publish a document setting out the operating and financial principles which Great British Energy will use.
Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, with the leave of the Committee I shall move Amendment 93 at the request of the noble Baroness, Lady Noakes, who, as I say, is unable to attend today. I will speak also to Amendment 121A, also in her name.

Amendment 93 says:

“The Secretary of State must prepare a framework document”


to cover

“the relationship between the Secretary of State, Great British Energy and any other relevant public sector bodies … The framework document must cover the operating and financial principles”,

at least, to be adopted by Great British Energy. Once finalised, the framework document must be laid before Parliament.

Amendment 121A goes a little further and would defer commencement of the Act until the framework document has been laid before Parliament. The noble Baroness, Lady Noakes, and I have several times contrasted the parliamentary passage of the UK Infrastructure Bank Bill with that of this Bill. In particular, she has raised the absence of a draft framework document for Great British Energy. All we know in relation to GBE is that the founding statement published for it last July said that a framework document would be established in due course. The Minister has not yet given any indication of the timing for that framework document.

I would not normally expect a Bill establishing a public sector body to contain a requirement for a framework document. That is because it is a document routinely put in place between the Government and public bodies, and there should be no question of a body commencing operation until all the details are in place. Hence, when we scrutinised the UK Infrastructure Bank Bill, an advanced draft was made available to those of us taking part in the Bill, which was extremely helpful in our debates. We knew the detail of what the Government were planning, and how they were intending to deliver it, which is missing from this Bill.

Although framework documents have no legal force, they set out in some detail what the Government expect of the new body. Sometimes they cover detail that could have been included in primary legislation, but usually the detail is of a nature likely to change over time and, hence, is inappropriate for statute. The important point, however, is that considerable thought and work are put into the contents of that document.

As we have discussed, it is clear that with GBE, the Government have not yet put in all the hard work on how it is to operate in practice, and what rules and restrictions will be necessary. The Minister has confirmed that this is under way and explained the thinness of the Bill on the basis that the Government had to get on with legislating, and that details would follow. That is not a sound basis for legislating, and failure to provide fuller details on things such as the framework document or strategic priorities treats the process of legislative scrutiny in a somewhat disrespectful manner. We have already discussed the concerns raised in that respect by the Constitution Committee.

I will quickly run through the key contents of the framework document for what is now the National Wealth Fund—what was the UK Infrastructure Bank—which will illustrate the things that we should have expected to see advanced drafts of by now. It sets out the strategic objectives for the National Wealth Fund. These might, or might not, be the same as required by Clause 5 of this Bill. We have seen no draft or even an outline of the strategic priorities that the Secretary of State will set under Clause 5, so we do not know whether to expect strategic objectives in the framework document. Objectives and priorities ought to be different things, but we are completely in the dark at the moment.

There are a number of operating principles, which are extremely important. They include the requirement to make a positive financial return over time, and a double bottom line—a phrase used frequently during passage of the UK Infrastructure Bank Bill, another complicated Bill—of achieving both the strategic objectives and financial return. We ought to know the financial objectives of GBE by now, especially in view of the open-ended financial assistance power in Clause 4, which might mean that GBE will not be required to make a financial return.

Another operating principle is that of additionality, by prioritising investments where there is an undersupply of private sector finance. The noble Baroness, Lady Noakes, asked whether additionality applied to GBE at Second Reading but did not receive a suitable answer, and I have raised this principle a number of times, including in the previous group. It would be helpful if the Minister spoke a little about the expectations for additionality for GBE. It is another fundamental question that Parliament ought to be informed about before allowing this Bill to become law.

Another section of the framework document sets out investment principles. It describes the kinds of investment that are to be undertaken and those which are not allowed. Not only must individual investments support its core objectives, they must also be intended to deliver a positive financial return, and to crowd in significant private capital. We have no idea what the guiding principles for investments made by GBE are. There is also a lot in the framework document on governance and other matters.

The key questions are whether we will see a framework document and when. I would not go as far as the noble Baroness, Lady Noakes, in Amendment 121A, which would delay commencement, but it is essential that we see a framework document as early as possible. Given the lack of detail in the Bill, it is important that the company should have to do that. I beg to move.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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My Lords, I rise to follow the noble Lord, Lord Vaux, in speaking to Amendment 93, which he moved on behalf on my noble friend Lady Noakes. I have also added my name to this amendment.

As has been said several times in our debates, this is in essence a framework or enabling Bill but one that gives a large number of Henry VIII powers to the Secretary of State. A requirement to produce a framework document setting out the operating and financial principles that GBE will use would be a significant improvement to the Bill, as the noble Lord, Lord Vaux, explained so eloquently. It is essential that the principles underpinning the relationship between the Secretary of State and GBE should be publicly understood and supported. The arguments that I have previously used in relation to my Amendment 86A also apply here; other relevant public bodies, as mentioned in that amendment, clearly include GBN, NWF, NESO, Ofgem and Mission Control.

I also support my noble friend Lady Noakes in her Amendment 121A, which I think is justified in the circumstances, but I would certainly like to hear the Minister’s view on it. Amendment 121A would ensure that the framework document is laid before Parliament before the Act comes into force.

Earl Russell Portrait Earl Russell (LD)
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My Lords, I shall speak briefly on this group of amendments.

I generally give my support to Amendment 93. I understand that these things are being done quickly and urgently to get GBE established and that the Government need to get that done, but there is a general lack of detail in the Bill and we do not have the framework agreement. If the Minister could update the Committee on where that framework document is and what stage it is at, that would be useful. In the interests of trying to find a compromise and a way forward on these issues, I do not know whether it might be possible for the Minister to provide the equivalent of heads of terms or to say something from the Dispatch Box about what he would expect the framework document to cover or to send us an outline of what is likely to be in that document. We are keen to support the principles of this Bill, but the Bill is extremely short and lacks detail.

On the other side of the fence, there is a slight feeling that we are being asked to approve things without knowing what it is we are approving. If it were possible to find a way forward on these issues before Report, that would be appreciated, but I am interested to hear from the Minister what stage these documents are at and what impediments there may be beyond the Minister’s control in these matters.

Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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My Lords, I thank my noble friend Lady Noakes, in her absence, for her amendments in this group. In fact, this amendment, Amendment 93, ties closely with Amendment 125 in my name, which would ensure that this Bill does not come into force until a financial framework document has been published. Together, these amendments address an essential issue in the governance of GBE: the need for proper financial oversight and clear frameworks that ensure that this body is held accountable. That is the reason why I support Amendment 93 and why it is so critical to the Bill—because it would require the Secretary of State to prepare a framework document that sets out not just the operating principles but the financial principles through which GBE will pursue its strategic objectives.

Without this clear framework, GBE would operate without the financial clarity and accountability required to protect public funds and to ensure that GBE’s financial practices align with the UK’s broader energy strategy. A financial framework is not just a bureaucratic detail; it is fundamental because the energy sector is complex and fast-moving. GB Energy will be responsible for substantial public investment. Without this financial framework, there is a risk of financial mismanagement and inefficiency or lack of transparency. The framework simply provides clear guidelines on budgeting, expenditure, revenue generation and risk management; it also ensures that GBE’s financial decisions align with the Government’s energy and climate goals, such as achieving net-zero emissions and maintaining energy security.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, I am grateful to the noble Baroness, Lady Noakes, and the noble Lord, Lord Vaux, who spoke in her absence. As the noble Baroness raised earlier on in our debates, her amendment inserts an additional clause requiring the Secretary of State to prepare and publish a framework document setting out the principles underpinning the relationship between the Secretary of State, my department and other relevant public bodies and also requires financial and operating principles to be included in that document.

17:00
First, there is no question about it: we will ensure that there is a framework document for Great British Energy that sets out the shareholder relationship and governance between the company and its shareholder, the Department for Energy Security and Net Zero. I fully accept that this is important; it is a well-established governance document for public bodies, with the required content set out by His Majesty’s Treasury publication Managing Public Money. It will include topics such as the roles and responsibilities of the responsible Minister, the principal accounting officer, the accounting officer of Great British Energy and the board of Great British Energy. It will also cover the governance structure, requirements for reporting and information sharing, and financial responsibilities and controls.
The point here—this is where I cannot meet what noble Lords want—is that we want the framework document to be published following Royal Assent because we want the company to be fully involved in the discussions that need to take place between the company, us and His Majesty’s Treasury. This is why I cannot produce the document for noble Lords at the moment and why it will take some months before it is produced and agreed. Clearly, the content of the framework document will follow the guidance and templates set out in Managing Public Money which, as I have already said, applies to all public bodies and will apply to Great British Energy.
The framework document is not legally binding and does not supersede company law, under which Great British Energy will operate, but it is a very important governance document. Both parties—Great British Energy and the Secretary of State—agree to operate within its terms. The framework document typically contains the following. As I have already said, the purpose of the document sets out the broad governance framework within which Great British Energy and the department will operate. This includes, as I have said, the responsibilities of the responsible Minister, the principal accounting officer, the accounting officer—who is usually the chief executive office of the company—and the board. It will detail the reporting requirements and information-sharing arrangements that will be in place between my department and Great British Energy. This will include requirements to share corporate and business plans and compliance with audits. It will set out expectations for how Great British Energy will manage its audit, risk management, procurement and a host of other corporate responsibilities to ensure alignment with the requirements for public bodies. It will also include detail about the organisation’s purpose and strategic aims. Copies of the documents and any subsequent amendments will be placed in the Libraries of both Houses of Parliament and available to the public.
The framework document is therefore focused on the corporate governance of the public body to ensure it aligns with the best practice set out in Managing Public Money and is clear on its expectations to be fully accountable to the department. This is a commitment from the Dispatch Box by the Minister who is taking the Bill through that there will be a framework document and it will cover the areas that I have mentioned. I cannot give an exact timing; it is simply not possible. We do not yet know. We do not know how long it is going to take. Clearly, we want it to be done as quickly as possible, but it needs to be done thoroughly and it will take a matter of months. I am afraid that that is as far as I can go on that.
Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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In effect, under the Bill GB Energy will take a chunk of the activity of the National Wealth Fund—approximately a third of the total value, in fact—and put it into another entity. As I said, the National Wealth Fund’s framework document includes quite a lot of information around requirements to make financial returns and, in particular, the additionality principle. Therefore, because we are, in effect, moving a chunk of the National Wealth Fund’s activities into a different entity, it would presumably be appropriate that that remains subject to fairly similar levels of governance and control. Could the Minister perhaps say a little about the expectation on financial returns and additionality, which he has not mentioned in his response so far?

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, by implication, we would expect the organisation to be as transparent as possible and to cover the sort of areas that the noble Lord mentioned. It is also fair to say that, given the comparisons being drawn between Great British Energy and the UK Infrastructure Bank, in the case of the UKIB, the framework document was published before Royal Assent. The point is that the organisation was operational before Royal Assent, but this Bill is being brought to Parliament before we have operationalised the company, so there is a distinction. As I said, noble Lords can be reassured that there will be a stringent framework document to ensure proper accountability. I am searching to find something else to say to give comfort, but I have to say that this is as far as we can go. Having said this from the Dispatch Box, it has to happen.

Returning to the part of the amendment that would require the relationship between GB Energy and other relevant public bodies to be included in the framework agreement, noble Lords will know that that is not typically part of a framework document, but GB Energy’s relationship with relevant public sector bodies will of course be part of delivering its objectives. Again, the partnerships will be undertaken in accordance with GB Energy’s operating principles and, where appropriate, we will provide definition to those relationships in the upcoming statement of strategic priorities. As part of its annual reports and accounts, we will of course expect GB Energy to report on activities undertaken as part of its public sector partnerships. We expect it to enter into a number of partnerships or relationships with other public bodies, but that is not appropriate for the framework document.

The other point to make here is that GBE will be accountable to Parliament, with a statement of strategic priorities laid before Parliament, and the accounting officer of Great British Energy, and Ministers, will be accountable to Parliament for the work and performance of the company. Members of your Lordships’ House will be able to ask questions and debate, and I have no doubt that Select Committees will wish to examine the chair and chief executive of the organisation from time to time, which seems wholly appropriate and will provide the public accountability that needs to go alongside the normal accountability that a private company would expect to operate, within the legislation that it will be covered by. We need to remember that it is also publicly accountable alongside the accountability that it needs to discharge as a private company.

The issue I come back to is that we have to ensure that it has enough operational independence. A push-back from noble Lords might be to ask: will it be overly constrained? We have to get the balance right between proper accountability and reporting and—dare I say it —what I hope will be an entrepreneurial approach to the formidable task it is being given. That is why the appointment of the incoming chair has been so important —to give us that expertise and experience.

As noble Lords will see, it is very difficult for us to agree to Amendment 121A, which would defer commencement of most of the provisions in the Bill until a framework document had been laid before Parliament. We do not think it possible to produce a framework document without the active involvement of the company itself. That is probably as far as I can go on this interesting area, but I can assure noble Lords that there will be a fully fledged framework document, which I think will cover all the issues that noble Lords are concerned about.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, I thank all noble Lords who have taken part in this short debate, and the Minister for his response, which is helpful and encouraging—I understand his point. However, I think he put his finger on the fundamental problem with the Bill, which is precisely what he said: the company is being established before we really know what it is going to do and before it starts to operate. Therefore, there is no scrutiny of those things at the moment. When he says that there is accountability through, for example, the statement of strategic priorities, it is not strictly true. It gets laid before Parliament, but there is no debate, approval or anything. The framework document will not even be laid before Parliament.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, of course, that is a fair point but, equally, I would say, as a Minister accountable to Parliament, that the opportunity for noble Lords to ask questions and take part in debates is considerable. I would expect that GBE and any statement of priorities will be fully part of the rough and tumble of life in Parliament. Anyone who has been involved in a company organisation such as that will know that parliamentary accountability really does bite and is effective.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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The Minister is right on that—I cannot disagree—except, again, that accountability is only as good as the information on which one bases it. If there is no information, or if it is really thin, it is hard—

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, I do not want to intervene constantly, but I think noble Lords will be awash with information about GBE, its performance and activities.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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I am very encouraged to hear that but there is nothing in the Bill that says that. If one is honest, what tends to happen is that if something is really successful, we will be awash with information telling us how successful it has been. If it is less than successful, I wonder how much information we will see. Fair enough, but there is a wider discussion to be had between now and Report on transparency and accountability, and I hope the Minister will be open to that. With that, I beg leave to withdraw Amendment 93.

Amendment 93 withdrawn.
Amendment 94
Moved by
94: After Clause 7, insert the following new Clause—
“Review of effective delivery(1) The Secretary of State must appoint an independent person to carry out reviews of the effectiveness of Great British Energy in—(a) delivering its objects under section 3,(b) meeting its strategic priorities under section 5, and(c) complying with any directions given under section 6.(2) After each review, the independent person must—(a) prepare a report of the review, and(b) submit the report to the Secretary of State,as soon as is reasonably practicable after the completion of the review.(3) The independent person must submit to the Secretary of State—(a) the first report under this section within the period of 12 months beginning on the day on which this Act comes into force, and(b) subsequent reports at intervals of no more than 12 months thereafter.(4) On receiving the report, the Secretary of State must, as soon as is reasonably practicable in each case,—(a) publish the report,(b) lay a copy of the report before Parliament, and(c) prepare and lay before Parliament a response to the report’s findings.(5) In this section, references to an “independent person” are to a person who appears to the Secretary of State to be independent of—(a) the Secretary of State, and(b) Great British Energy.”Member’s explanatory statement
This amendment would require that the Secretary of State appoints an independent person to review the effectiveness of Great British Energy in delivering its objects, meeting its strategic priorities, and complying with its directions.
Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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My Lords, I shall move Amendment 94 and speak to the amendments in this group, which, once again, address the review, scrutiny and governance of a publicly owned company.

It is alarming that so many in this House have had to table so many amendments to ensure that GB Energy undergoes proper independent review and governance. We find ourselves in the unfortunate position in which provisions to ensure the thorough review and governance of GB Energy are missing from the drafting of the legislation. This is rather strange. Why should publicly owned companies, funded by billions of pounds, not be subject to reviews by independent bodies or have to report on their successes or failures? The incoming chair himself has stated that “independently run” will mean “excellent governance” and that he will ensure that this is the case, but how? Although the Minister claims that these amendments, which would indeed ensure excellent governance, do not need to be included in the Bill, I strongly disagree. He claims that there will be many opportunities for review by the Secretary of State and, ultimately, for the usual sort of public scrutiny, but how will this be the case when the Bill does not include a single measure that requires GB Energy to be reviewed or allows for public scrutiny?

I am not alone in questioning the lack of governance to which GB Energy is presently subject. Marc Hedin, head of UK and Ireland research at Aurora Energy Research, also asked:

“what are the governance arrangements to ensure that Great British Energy carries out its duties and focuses on its remit? ”.—[Official Report, Commons, Great British Energy Bill Committee, 8/10/24; cols. 20-21.]

Amendment 94 in my name seeks to address this shortcoming. It requires the Secretary of State to appoint an independent person to review the effectiveness of GBE in delivering its objects, meeting its strategic priorities and complying with its directions. The amendment is closely aligned with Amendment 103, in the names of the noble Lords, Lord Vaux of Harrowden and Lord Cameron of Dillington, and my noble friend Lady Noakes. While demanding an independent review of the success or failure of GB Energy in achieving its objects, the amendment neatly requires a review of the company’s impact on private investment.

I draw your Lordships’ attention to Section 9 of the UK Infrastructure Bank Act, entitled, “Reviews of the Bank’s effectiveness and impact”. Under that section,

“The Chancellor of the Exchequer must appoint an independent person to carry out reviews of … the effectiveness of the Bank in delivering its objectives”,


and the results must be laid before Parliament. If the UK Infrastructure Bank—now known as the National Wealth Fund—has to undergo an independent review of its performance, why should GBE not face the same? It does not make sense. The Great British Energy Bill is almost a carbon copy of the UK Infrastructure Bank Act but with one glaring difference: provisions to ensure sufficient governance.

I hope that the Minister has listened carefully to the concerns I have raised and will be receptive to the worries other noble Lords will undoubtedly raise on this issue. I beg to move.

17:15
Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, I rise to speak to Amendment 103, and thank the noble Baroness, Lady Noakes, the noble Lord, Lord Cameron of Dillington and the noble Viscount, Lord Trenchard, for their support. As we have heard, once again we are returning to transparency and accountability.

Amendment 103 is similar to Amendment 94, which has just been introduced by the noble Lord, Lord Offord, but with some important differences. As we have discussed before, and as the noble Lord, Lord Offord, has just mentioned, most of this Bill has been copied across from the UK Infrastructure Bank Act, but with most of the transparency and accountability provisions removed. In particular, Section 9 of that Act, which provides for independent reviews of the effectiveness and impact of the bank—now the National Wealth Fund—has been omitted.

The Minister has previously explained that the reason for this omission was that no such reviews were included in the Energy Act in respect of Great British Nuclear, and he feels that this is the precedent which should apply here. That argument holds no water at all. Great British Nuclear is a completely different entity, with completely different activities. It has a clearly defined and specific role initially to administer the process to select which small modular reactor technology the UK will choose. It has a relatively small budget—I think it was £157 million initially—and it is not intended to invest directly in those technologies. Great British Nuclear has an important role, but it is very different to what is apparently planned for GBE.

GBE will, in effect, take over a substantial and important area of the National Wealth Fund’s activity, investing directly in projects and businesses. It has an initial budget of £8.3 billion, which is nearly a third of the National Wealth Fund’s budget. It is worth reminding noble Lords that there is no limit in the Bill on how much public money GBE can spend. Indeed, the activities of GBE and the National Wealth Fund are so close that, initially, the National Wealth Fund will carry out the activities of GBE on its behalf, so let us drop this pretence that GBE is like Great British Nuclear; it is not. GBE is taking over a part of the National Wealth Fund’s activities and has a substantial budget. A body with the ability to spend billions of pounds of public money should be subject to rigorous transparency and accountability, and not just to the Treasury and the Secretary of State. It must, therefore, be appropriate for GBE to have to follow at least equivalent accountability disciplines to the National Wealth Fund. It is doing very similar things.

Amendment 103 is an almost direct copy of the independent review process that the National Wealth Fund is subject to. That arose from lengthy debate during the passage of the UK Infrastructure Bank Act and was supported by the Minister’s party at the time. It is not clear why, in government, they have decided to omit it from the Bill. Accountability seems to be a good thing, so long as it does not apply to them.

For GBE, I have changed the provision slightly from how it is in the UK Infrastructure Bank Act, in two ways. I have limited the scope to reporting only on how GBE has met its objectives and how well it has encouraged private sector investment alongside its activities. This latter point—additionality—is critical, as I have mentioned before. I do not have time to get into the details of crowding-in and crowding-out theory, but if all that GBE does is invest in projects which could easily have been financed by the private sector, that would be a complete waste of taxpayers’ money. Indeed, it would be actively damaging, as it would undermine the emergence and growth of a thriving industry providing the finance for our move to net zero.

We had lengthy discussions around the additionality principle during the passage of the UK Infrastructure Bank Act. I asked the Minister to comment on it in a previous group. He has still not commented in any detail, but it is critical. I would like to hear from the Minister what the expectations of GBE are in that respect. The Government have stressed the importance of it, and I have referred previously to the £1 of public money capitalising £3 of private investment that has been claimed. Crowding in is fundamental to its success, so it should be part of the measurement and review of GBE’s performance.

The second tweak I have made to the section from the UK Infrastructure Bank Act is on timing. The 2023 Act requires that the first independent report should be after seven years and then every five years. Infrastructure is by nature long-term, so those timeframes made sense in that context. However, GBE is intending to have decarbonised the power sector by 2030, in just five years’ time, so we should logically be reviewing progress before then. I have suggested reporting every three years; that is probably the major difference between my Amendment 103 and Amendment 94 of the noble Lord Offord, which proposes an independent report every year. I think an annual independent review is probably unduly onerous, but we need an independent progress review before the end of the target period of 2030, so I hope that three years is an acceptable compromise. However we do it, as currently drafted, the Bill falls woefully short on transparency and accountability.

I hope that the Government look seriously at having an independent review of effectiveness. It was hard-wired into the UK Infrastructure Bank Act for good reason: routine annual reports and accounts are simply not a good vehicle for a deep dive into the effectiveness of what are often quite complex investments and other financial activities. A separate, independent review was a good idea for what is now the National Wealth Fund, and I cannot see how a valid distinction can be made between the two organisations. The Government should want to ensure that they both operate equally effectively. Again, I would be very happy to discuss this further with the Minister and I hope that he is receptive to strengthening these aspects of the Bill, just as he and his party, when sitting on the other side of the Chamber, were on other Bills including the UK Infrastructure Bank Bill.

I say in passing that I support Amendment 102 of the noble Earl, Lord Russell, which requires a biennial report on GBE’s relationship with other public sector bodies. We have talked about this previously and it is another example of the opacity that currently surrounds GBE. In particular, I have no idea what its relationship with the Crown Estate means in practice, as well as that with Great British Nuclear and the UK Infrastructure Bank. It would be very desirable to have reports on how those relationships would work.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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My Lords, I support my noble friend Lord Offord’s Amendment 94, to which I have added my name. I have also added my name to Amendment 103 in the names of the noble Lords, Lord Vaux and Lord Cameron, and my noble friend Lady Noakes.

The noble Lord, Lord Vaux, made the same point that I tried to make on Monday much more eloquently than I did: GBE and GBN are not comparable institutions. Unfortunately, it seems that the Minister’s department does not recognise that. I refer to the Explanatory Notes at page 6, paragraph 22. The power to give directions in the hands of the Secretary of State

“is consistent with the power that the Government has to direct comparable institutions, for example: the Department for Energy Security and Net Zero has a statutory power to direct Great British Nuclear, although, to date, this has never been used”.

I repeat the point made by the noble Lord, Lord Vaux, that, despite what this says, I cannot think that they are comparable institutions.

Both Amendments 94 and 103 require an independent person to carry out a review of GBE’s effectiveness. Of the two, I prefer Amendment 103, which requires the independent person to review the extent to which investments by GBE have encouraged private sector investment in those projects. Amendment 94 requires an annual independent review, whereas Amendment 103 requires such a review only once every three years. Perhaps we could compromise at two years.

I have also added my name to Amendment 102, in the name of the noble Earl, Lord Russell. This requires GBE to report on its relationships with other connected bodies and is, to some extent, similar to some of the other amendments we have debated. It is obviously a requirement of working together on strategic objectives and directions that GBE should maintain excellent relationships with its stakeholders. One of the ways to achieve that would be by adopting the noble Earl’s amendment, and I look forward to hearing him speak to it and to hearing the Minister’s response.

Earl Russell Portrait Earl Russell (LD)
- Hansard - - - Excerpts

My Lords, I rise to speak to my Amendment 102 in this group, which concerns independent review and governance. It would insert a new clause after Clause 7 on Great British Energy stakeholder relationships. To be honest, it is a bit of a probing amendment and one that is looking for a bit of reassurance from the Minister.

The amendment argues:

“Within one year of the day on which this Act is passed, and every two years thereafter, Great British Energy must publish a report regarding its relationship with … Great British Nuclear … the Office of Gas and Electricity Markets (Ofgem) … National Energy System Operator (NESO) … the UK Infrastructure Bank … the Crown Estate”.


Obviously, it is essential that Great British Energy publishes reports and that these are available. It is important that we have a good understanding of how Great British Energy is working in practice. That involves understanding how it is establishing its working relationships alongside other partners and fulfilling its missions and goals, as we work towards net zero. It extends to objectives and joint projects and asks, “What problems are happening?” These are all key issues in the energy transition, which is itself a complicated business that involves lots of partner organisations and joint and crossover responsibilities. This is already a crowded space—or a tangled web, if you like—in which Great British Energy is being created. Indeed, the delivery of GB Energy’s goals will happen only if the new organisation builds strong and lasting relationships that develop well and help create both joint working and good outcomes.

I want to say a word about the Crown Estate Bill, if I may. It is the cornerstone of GB Energy’s relationship with the Crown Estate; their partnership was announced on the same day that GB Energy was created. Clearly—certainly for the initial part of GB Energy’s life—that partnership will be about developing floating offshore wind with the Crown Estate. As part of the Crown Estate Bill, an amendment was agreed in order that the Crown Estate produces an annual report on its relationship with GB Energy. So that is already happening on the Crown Estate side. I ask the Minister to give an assurance that, from the Government’s point of view, there is no reason why that requirement would not be mirrored on GB Energy’s side. I cannot see one; it seems like common sense to me. As others have said, reporting is a general issue running across this Bill.

I note what the Minister has said today in relation to group 10. I also note what he has said about the possibility for ongoing parliamentary scrutiny. Ministers are responsible, of course, for example at Question time. As the Minister has confirmed today at the Dispatch Box, GB Energy will be subject to scrutiny by all the Select Committees across both Houses of Parliament, but it is important that these relationships are reported on via an annual report. I would like to hear some reassurance from the Minister on that.

I turn briefly to the other amendments in this group. As we have heard, Amendment 94 in the names of the noble Lord, Lord Offord of Garvel, and the noble Viscount, Lord Trenchard, would require the Secretary of State to appoint an independent person to review annually the effectiveness of Great British Energy in delivering its objectives, meeting its strategic priorities and complying with its directions. The independent review would be required to cover Clauses 3, 5 and 6 of the Bill.

I would be interested in the Minister’s response to this amendment. My worry is that this would be overly burdensome for the organisation. I am not certain that I was able to find another comparable organisation where these conditions applied, so my concern is whether we are asking for something that is not on a level playing field with other, similar types of organisations. I note as well that strategic directions can be given and, as I said, there are also other methods of scrutiny, so it would be the Minister’s right, at any point, to give the strategic direction for that to happen.

Amendment 103 in the name of the noble Lord, Lord Vaux of Harrowden, would require an independent review of the effectiveness of Great British Energy in achieving its objectives and the extent to which it had encouraged private investment. But this would be every three years. I was interested to hear what the noble Lord said in relation to the UK Infrastructure Bank. Again, my worry is whether this is a level playing field, but I was interested that the noble Lord said that that is part of that organisation and how it works. That makes me more inclined to lend support to his amendment.

17:30
Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
- Hansard - - - Excerpts

I am sorry to interrupt the noble Earl. This was lifted directly, almost word for word, from the relevant legislation, the UK Infrastructure Bank Act.

Earl Russell Portrait Earl Russell (LD)
- Hansard - - - Excerpts

I thank the noble Lord. I would be keen to hear what the Minister has to say in response to that amendment.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
- Hansard - - - Excerpts

My Lords, this has been a very interesting debate and I am grateful to noble Lords for what they have said. I will start with Amendment 102, tabled by the noble Earl, Lord Russell, and supported by the noble Viscount, Lord Trenchard. As he said, the amendment focuses on Great British Energy’s relationships with its key stakeholders and would require the company to publish a report every two years detailing its relationship with a number of named public bodies.

As I have already said, we of course expect and want Great British Energy to enter into a number of partnerships or relationships with other public bodies. This will include public bodies beyond those highlighted by the noble Earl, including, for example, those operating in the devolved Administrations—although I agree with him very much about the importance of the relationship with the Crown Estate.

I think it was implied in what I said earlier that we are absolutely certain, as part of the rigorous reporting requirements that the organisation will need to take part in through its annual reports and accounts, that it will report on activities undertaken as part of these partnerships. That seems to me a perfectly sensible request, which I can affirm readily. In view of that, I am not sure that you need a separate report, but we can make it very clear to GBE that we expect it to report on this regularly. We have already publicly committed to setting out how Great British Energy and the National Wealth Fund will collaborate and complement each other. I can assure noble Lords that we have made the same commitment on Great British Energy’s relationship with Great British Nuclear.

In terms of Great British Energy’s relationship with Ofgem and the National Energy System Operator, again, we would expect GBE to be subject to the same legal and regulatory frameworks as other entities. Clearly, when it comes to the Crown Estate, I readily say that, of course, GBE will report on its relationship, just as the noble Earl said. The Crown Estate will be doing similar, and we hope that there will be a consistency of approach in their reports. I am sure that there will be.

Turning to Amendments 94 and 103, which would require independent reviews of Great British Energy’s effectiveness, I thank the noble Lords, Lord Offord, Lord Vaux and Lord Cameron, and the noble Baroness, Lady Noakes, for putting their names to them. We all agree that Great British Energy needs to be accountable, transparent and clear about how it is delivering against its objectives and the statement of strategic priorities. The Bill already ensures that GBE will provide regular updates through its annual reports and accounts. These documents will be laid before Parliament, ensuring public accountability. Clause 5 provides that GBE must “act in accordance” with the priorities set out by the Secretary of State. To ensure this, Great British Energy must publish a strategic plan on how it will deliver those priorities, and it will update this plan regularly.

On the question, generally, of a review, I certainly understand the point that noble Lords have made and agree that reviews are important. I am prepared to consider the principle of a review between Committee and Report. I would not want to get into a debate about how regular those reviews should be. It is important that GBE has a good run before it is subject to such a review. Equally, I do not think you want a review happening on a regular annual basis because that would detract from its ability to perform effectively, but I understand the principle of a review. I will take this away without commitment at this stage, but I am happy to talk to noble Lords between now and Report about it.

Coming back to additionality, we obviously agree that it is an important principle, and we would expect Great British Energy to learn from the UKIB/National Wealth Fund approach. Of course, GBE has rather a wider role than the National Wealth Fund, particularly in that it is not just an investor but a developer, and it has an important future role to play in trying to get rid of some of the barriers to investment that we have seen in the energy sector.

Having said that, I think additionality will be covered. Equally, we accept that undertaking reviews from time to time is important. But they should not be done so frequently that they lose impact in what they are there to do. I hope noble Lords will accept that I have tried to be constructive in my response to these amendments.

Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
- Hansard - - - Excerpts

I thank noble Lords for their contributions to the debate on this group, and I thank the Minister for listening to these concerns, which, as always, are to do just with the review and governance of GB Energy for it to be held to rigorous and proper account. I thank the Minister for considering how he deals with this. In the meantime, therefore, I beg leave to withdraw the amendment.

Amendment 94 withdrawn.
Amendment 95
Moved by
95: After Clause 7, insert the following new Clause—
“Budget report(1) Great British Energy must publish an annual budget report and send it to the Energy Security and Net Zero Committee, or any successor Committee, of the House of Commons.(2) This report must include but is not limited to—(a) a breakdown of current and expected funding sources;(b) spending per sector;(c) grid spending;(d) future spending;(e) estimations of future profitability.(3) A representative of Great British Energy must appear before the Energy Security and Net Zero Committee, or any successor Committee, if requested by the Committee.”Member’s explanatory statement
This amendment requires GBE to publish an annual budget report.
Earl Russell Portrait Earl Russell (LD)
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My Lords, in moving Amendment 95, I will speak also to my Amendments 96 and 97, on accountability to Parliament. This group is all about GB Energy reporting to Parliament. As I have said, the Bill is quite short and some bits are missing, so I think noble Lords are just looking for as much reassurance as the Minister can give on these matters.

As the Bill stands, there are no real basic requirements for GB Energy to produce an annual report, or requirements for it to report to Parliament, beyond those in Clause 7 and what the Minister has said at the Dispatch Box today. I note that GB Energy will be subject to the same general reporting as other arm’s-length government organisations.

My Amendment 95 would ask GB Energy to publish an annual budget report, which would be sent to the Energy Security and Net Zero Committee or a successor committee of the House of Commons. That report must include but not be limited to,

“a breakdown of current and expected funding sources … spending per sector … grid spending … future spending … estimations of future profitability”.

It goes on:

“A representative of Great British Energy must appear before the Energy Security and Net Zero Committee, or any successor Committee, if requested”.


Amendment 96 says:

“Great British Energy must publish an annual report and send it to the Energy Security and Net Zero Committee, or any successor Committee, of the House of Commons”,


and that that report

“must consider Great British Energy functions and activity in the contribution to the following … supporting local communities and economies … the achievement of the United Kingdom’s climate and environmental targets … the relationship with The Crown Estate … a just transition to green energy … a jobs and skills transition into the green economy”.

It would also provide that Great British Energy must appear before that committee if requested.

Amendment 97 would require GB Energy to commit to an ongoing sustainable development review of its activities. It states:

“Great British Energy must keep under review the impact of their activities on the achievement of sustainable development in the United Kingdom”.


This would require GB Energy to keep under constant review the impact of its activities on sustainable development goals, as recognised by the United Nations, the Commonwealth and other bodies that refer to human rights developments, which aim to meet the economic, environmental and social needs of the present, while also ensuring the ability of future generations to meet their own needs.

At the outset I acknowledge to the Committee that my amendment is a direct copy of one tabled by the noble Baroness, Lady Hayman, and so skilfully negotiated with the noble Lord, Lord Livermore, the Financial Secretary to the Treasury, as part of the Crown Estate Bill. It was agreed as a government amendment to that Bill as it left your Lordships’ House. I wish to put on the record my thanks to both of them for their work in getting the amendment into the Bill. My reasons for bringing the amendment here again are, as I said, simply to mirror the other Bill, because the two organisations are so closely interlinked. For me, this is a minimum backstop amendment. I have added my name to Amendment 116, in the name of the noble Baroness, Lady Hayman, and I continue to support it, but I wish to make clear that if that amendment falls, this one is a kind of backstop.

My amendments are relatively straightforward, so I will turn to the other amendment in this group, Amendment 117, in the name of the noble Baroness, Lady Bloomfield of Hinton Waldrist. This would hold Great British Energy accountable to the relevant parliamentary committees of both Houses of Parliament.

The Minister has said—I already suspected that this would be the case with an arm’s-length body—that this would be subject to parliamentary scrutiny. It is good that he has confirmed that from the Dispatch Box. I just wanted to indicate my full support for the amendment and the principles that it sets out. It is obviously important that all bodies that the Government set up should be subject to parliamentary scrutiny from the Select Committees.

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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My Lords, I shall speak to the amendments in this group, which contains amendments in my name and those of the noble Earl, Lord Russell, one of which he moved. I thank the noble Earl for introducing this group; I appreciate the sentiment and spirit of his amendments, and his support for mine.

I do not wish to repeat noble Lords’ arguments from previous groups, but these amendments again seek to shape the governance, accountability and sustainability of the proposed Great British Energy entity. They have been drafted in line with the values of responsible governance, fiscal prudence and national interest, so, although I will not repeat his arguments, or those of my noble friend Lady Noakes from earlier, I wholeheartedly agree with the comments made by my noble friend Lord Roborough on the first group.

On Amendment 95, which would require GBE to publish an annual budget report, I appreciate the sentiment of ensuring transparency in how public funds are utilised. On these Benches, we have always championed the prudent use of taxpayers’ money, and this amendment acknowledges that principle. However, we must ensure that such reporting is not merely a box-ticking exercise. The report must provide meaningful insights, ensuring that GBE operates efficiently and delivers value for money. We cannot allow an additional layer of bureaucracy to stifle innovation or create unnecessary costs. Therefore, I agree with the noble Earl, Lord Russell, on the spirit of this amendment, and I look forward to hearing from other noble Lords about how the reporting requirement could best be used to ensure that GBE operates in the best interests of the nation.

17:45
On Amendment 96, which calls for an annual report to be laid before Parliament through the Energy Security and Net Zero Committee, I support greater accountability to Parliament. Let us ensure that such reports focus on measurable outcomes—namely, energy security, affordability and innovation. Again, I appreciate the spirit in which the noble Earl, Lord Russell, has drafted his amendment.
Amendment 97, on sustainable development, is admirable in its aspirations. On these Benches, we understand the importance of stewardship and leaving our country—and, indeed, our planet—in a better condition for future generations. Yet the pursuit of sustainable development must be balanced with our duty to ensure energy affordability and security. My concern is that a requirement to review the impact of activities might lead to excessive regulatory burdens or delays; this could hinder investment and innovation in an already competitive global energy market.
Lastly, Amendment 117 in my name seeks to hold GBE accountable to the relevant parliamentary committees. The Minister has gone some way in his efforts to reassure us as to the issues relating to this body’s reporting and accountability. That is always going to be a major problem in a skeleton Bill of this nature, not least because of the level of taxpayers’ money at its disposal. This amendment would allow for GBE to be regularly scrutinised by Parliament, which would be in the best interests of the nation as a whole. By allowing GBE to be scrutinised, we can ensure that the entity does not become another bloated arm of the state. GBE must embody efficiency, innovation and a relentless focus on delivering secure, affordable and clean energy for the British people.
These amendments, if refined with these principles in mind, could help ensure that GBE operates as a nimble, effective organisation that serves the long-term interests of our nation.
Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom (Con)
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My Lords, I, too, speak in support of these amendments. It is definitely important that accountability is brought to bear here. Of course, one has the constant worry that the private sector is going to pick up all the low-hanging fruit, which is quite profitable, while GB Energy is going to be left with all of the much more speculative stuff, which will probably lose money for the taxpayer.

I want to refer in particular to subsection (2)(d) in the new clause to be inserted by Amendment 96 in the name of the noble Earl, Lord Russell, which refers to

“a just transition to green energy”.

I use that as a bit of a hook on which to return to the question I asked in Committee on Monday; I should have intervened and asked the Minister to answer before he sat down, but I had a problem at that stage, which is why I have given him advance notice today. I hope that the Minister will be able to answer my question for me because there is a dispute on our side. My noble friend Lord Fuller is a great exponent of green liquid hydrogen. Let us face it: if we could manufacture it effectively, it would be a bit of a silver bullet in solving many of these problems. But, at the same time, my noble friend Lord Roborough said that it will always be much too expensive to produce. I was slightly surprised by this because, like my noble friend Lord Fuller, I have always taken the view that the technology will develop as it goes along and the price will start to come down. It used to be the policy of the previous Government to support hydrogen; it is certainly supported by JCB.

Lord Ashcombe Portrait Lord Ashcombe (Con)
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I thank my noble friend for letting me speak. I wish to correct the record: it was actually me who described what my noble friend is describing, not my noble friend Lord Fuller.

Lord Fuller Portrait Lord Fuller (Con)
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Although I do of course wish to be associated with those remarks.

Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom (Con)
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I cringe, with apologies to my noble friend Lord Ashcombe; I did not realise that it was he who said it. Anyway, whoever said it, I very much supported the view that it might well be possible for the price of liquid hydrogen to come down as the technology developed and got better.

My noble friend Lord Roborough said to me that it was always going to be expensive. I said that it was being manufactured by wind turbines in the North Sea at the moment, but as we have already discussed, the problem with wind is that it is intermittent. The wind gets turned off every now and then, the windmills do not turn, and electricity is not generated. Apparently, it is very expensive to replace all the filters, and so forth, and you need to have a constant supply of electricity to produce hydrogen.

What is felt about this on the Opposition Benches does not really matter; what matters is the attitude that the Government are taking towards liquid hydrogen and whether this is something that Great British Energy will be investing in or not. I would be grateful if the Minister would tell us where the Government stand on liquid hydrogen, as it is an important component of having clean energy for this country.

Lord Petitgas Portrait Lord Petitgas (Con)
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My Lords, I also support these amendments aimed, like others, at greater accountability and transparency of the delivery of GBE. In particular, I support Amendment 95 in the name of the noble Earl, Lord Russell, on budgets. It is all very well to check on delivery and ask for more reports, but you only get what you measure. It needs to be set against a budget and objectives. I have found the objectives in the Bill to be a little vague. I am therefore in favour of Amendment 95 to the extent that it will allow us to set reporting and disclosure against a set of objectives, and a certain budget. I would also add additionality in there, as that is the only way to understand whether the delivery has been effective.

Lord Cryer Portrait Lord in Waiting/Government Whip (Lord Cryer) (Lab)
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My Lords, I will begin with Amendments 95 and 96 in the name of the noble Earl, Lord Russell.

Amendment 95 proposes requiring GBE to publish an annual budget report and send it to Parliament through the Commons Energy Security and Net Zero Select Committee—or its successor, as he said, since its name seems to keep changing every five minutes. Amendment 96 proposes requiring GBE to publish an annual report on various topics which must also be sent to the Select Committee. GBE will already have a requirement to produce publicly available annual reports and accounts at Companies House, and the Secretary of State will lay copies before Parliament.

The noble Earl, Lord Russell, also mentioned the requirement that the Secretary of State appear before the Select Committee to speak to those reports. That requirement is already fulfilled. I know that Select Committees cannot subpoena witnesses, so there is no compulsion, but the Secretary of State and other Ministers regularly appear before relevant Select Committees. I emphasise other Ministers with specific interests. Once GBE is up and running, and producing these accounts, that is the time when the Secretary of State will appear before the relevant Select Committees. In theory, the Secretary of State does not have to appear—as I said, there is no compulsion—but it would be pretty odd if they did not do so under those circumstances.

There are also additional requirements on government-owned companies to ensure transparency and accountability. These include the obligation to follow the Treasury’s directions on accounts through the powers extended in the Government Resources and Accounts Act 2000, and laid out in the Government Financial Reporting Manual and related “Dear Accounting Officer” letters. Furthermore, GBE will be required to report on its governance around, exposure to, and risk of, climate-related scenarios in its operations as set out by the Task Force on Climate-Related Financial Disclosures a couple of years ago.

I acknowledge the noble Lord’s expectation that Parliament will hold a strong interest in the performance of GBE, which anybody who knows anything about how Parliament works would expect. I fully anticipate that the relevant Select Committees will call representatives from the company and from the department to provide evidence when required.

The point about hydrogen made by the noble Lord, Lord Hamilton, is a little wide of the scope of the amendment. However, I remind noble Lords that the exact mix of technologies in which GBE, as an operationally independent company, chooses to invest will be determined by its board in due course. His prediction—he is inviting me to look into the future, and I suppose he is doing the same—is that, as technology advances, hydrogen starts to fall in cost. That is fairly sensible, although I do not ask the noble Lord to hold me to it, because we are looking into the future and we do not know what technologies there will be then.

Amendment 97 proposes that GBE reviews the impact of its activities on sustainable development in the UK. This Government—this has been made very clear and repeatedly so—firmly believe in a healthy natural environment and that is critical to a strong economy and to sustainable growth and development. Our commitment to the environment is unwavering and will be in the future, including through meeting the Environment Act 2021 targets and halting biodiversity decline by 2030. That is a pretty demanding target, but that is what we have set out for five years’ time. I assure the noble Earl that the projects in which GBE is involved will be subject to the usual and rigorous planning and environmental regulations, where the impacts on the environment and habitats are considered. The Bill focuses on establishing the company, and adding more detail at this point may restrict its activities or add layers to its reporting and governance.

Amendment 117, proposed by the noble Baroness, Lady Bloomfield, seeks to legislate the scrutiny of GBE by relevant Select Committees. My noble friend and I have touched on that to some extent. This amendment goes beyond the precedent and practice of the involvement of Select Committees in public appointments. The chief executive of Great British Energy, once appointed, will also be its chief accounting officer and will be accountable to Parliament for their stewardship of GBE and its funds. As is common practice for public bodies, the management and leadership of GBE will be available to the relevant Select Committees as needed. There is no real need to legislate on this arrangement at this point.

I remind noble Lords that the chief accounting officer would, in all likelihood, be called before the Public Accounts Committee. Over the past few years, the PAC was chaired by Margaret Hodge, as was, who is now the noble Baroness, Lady Hodge; she was followed by the honourable Member for Hackney South and Shoreditch. Those who have seen those sessions know what an acute and thorough grilling that committee gives to anybody who appears in front of it. That Select Committee is always chaired by a Member of the Opposition; that is set up in the Standing Orders of the House of Commons. It is now chaired by the honourable Member for Cirencester and Tewkesbury. Having served with him in the other place for more than 20 years, I assure noble Lords that he will be just as incisive as his predecessors.

The Cabinet Office guidance on pre-appointment scrutiny by House of Commons Select Committees provides criteria and processes for such roles. It sets out that decisions on the scrutiny of individual posts should be made between the Secretary of State, the chair of the relevant Select Committee and the Cabinet Office. It is not common practice for this to be set in primary legislation. As per this guidance, no public body currently appears to have its full board subject to that kind of pre-appointment scrutiny. We anticipate recruitment for the substantive board to begin over the course of this year and will ensure that it is undertaken in a manner that aligns with best practice. To reassure the noble Baroness—

Earl Russell Portrait Earl Russell (LD)
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I am sorry to intervene, but I think the noble Lord has moved on to the next group of amendments in his response to me, unless I am mistaken, because the next one is on government appointments, is it not?

Lord Cryer Portrait Lord Cryer (Lab)
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No, at present I am talking about Amendment 117.

Earl Russell Portrait Earl Russell (LD)
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Oh, I am sorry.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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But we are coming to that.

Earl Russell Portrait Earl Russell (LD)
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I thought the noble Lord had moved on; I apologise for interrupting.

Lord Cryer Portrait Lord Cryer (Lab)
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I am glad I was able to reassure the noble Earl. I hope that I have provided the assurances and explanations sought by noble Lords in tabling these amendments, and I sincerely hope that they will not press them.

18:00
Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom (Con)
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May I press the Minister a bit harder on green hydrogen? If my noble friend Lord Roborough is right and, whatever happens, it will be much too expensive to produce, then we surely have to look elsewhere. What is the Government’s attitude towards liquid hydrogen as a fuel for the future?

Lord Cryer Portrait Lord Cryer (Lab)
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I am grateful to the noble Lord for that question. I cannot add anything to what I said before. GBE will look at a range of technology and sources. The whole of energy policy is predicated on security of supply and range of supply, because at various times in British history, although those two things have not been absent at the same time—or perhaps they have, briefly—there have been times when one or the other has been absent. If it is possible for hydrogen to play a part in that security of supply and range of supply—it certainly would on the latter—I do not see why that should not be part of the nation’s energy supply in the future.

Earl Russell Portrait Earl Russell (LD)
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I thank all noble Lords who have taken part in the discussion on this group of amendments, and I thank the Minister for responding to me; I apologise for interrupting him. I appreciate everything he said, and I appreciate that there will be reports on GB Energy and that there are lots of opportunities for parliamentary scrutiny. It is appropriate that we ask these questions. The amendments in this group and others look to go a bit further to ensure that certain things will be reported on.

In response to the discussion on the previous group, the noble Lord, Lord Hunt of Kings Heath, asked me whether we were looking for a separate report. In my mind, this is about making sure that GB Energy produces a really good-quality annual report that covers a broad range of areas and is open and transparent about its activities.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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Perhaps I may intervene. In the discussion on the first group of amendments, I promised to write a letter to noble Lords focused on financial information. It might reassure noble Lords if I pick up that challenge and say that we should perhaps also try to encompass the annual report arrangements. If that would be a sensible way forward, the letter will set this out very clearly in writing so that noble Lords can see it after Committee but before Report.

Earl Russell Portrait Earl Russell (LD)
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That would be greatly appreciated and would really reassure us. That was the point that these amendments were trying to get to, so I thank the Minister.

Amendment 95 withdrawn.
Amendments 96 and 97 not moved.
Amendment 98
Moved by
98: After Clause 7, insert the following new Clause—
“The Chair of Great British Energy(1) The Chair of Great British Energy may not be appointed until the appointment has been scrutinised by the Treasury Committee of the House of Commons, or any successor committee.(2) The Chair of Great British Energy must be based full-time at the headquarters of Great British Energy in Aberdeen.(3) The Chair of Great British Energy must undergo an annual review on their performance and—(a) this review must be carried out by external auditors;(b) this review must be submitted to the Secretary of State and laid before Parliament.”Member’s explanatory statement
This would require the Chair of Great British Energy to undergo pre-appointment scrutinisation, to be based at Great British Energy’s headquarters full-time and to undergo an annual review of their performance.
Lord Frost Portrait Lord Frost (Con)
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My Lords, in moving Amendment 98 I will also speak to Amendment 99 in my name. As it is the first time I have spoken in Committee, I take this opportunity to declare an interest as the director of the company Net Zero Watch.

I have a couple of preliminary remarks before turning to the text of the amendments. These two amendments very much echo themes that we have been debating at length over the last day or two. They are amendments to make up for the lack of detail in the Bill and to ensure, as my noble friend Lady Noakes pointed out the other day, that this company is subject to the same degree of scrutiny that large public companies would expect to face. With the Bill, we are creating a company with precious little oversight or scrutiny as normally understood in company law, and with an idiosyncratic version of the normal governance and accountability arrangements that go with a normal company. Of course, this fact is why nationalised public companies are typically so badly run.

The only detail we have had on the ground covered by these two amendments is in the founding statement, which says:

“Led by its own CEO, Great British Energy will be overseen by an independent fiduciary Board, rather than ministers, benefitting from industry-leading expertise and experience across its remit. Trade unions will also have a voice and representation within Great British Energy”.


Although Ministers both here and in the Commons have commented on that, they have not gone beyond what that statement says, and we are still left rather unclear about how these arrangements are to work, other than to say that normal company law will apply. As I say, that is not quite enough, and these amendments are designed to fill the gap here.

I turn to the text of the amendments. Amendment 98 is designed to set out a few minimum requirements for the themes that we have been talking about: transparency and accountability. Amendment 98 would make clear that there must be a chair and, more importantly, that the appointment of the chair would require a degree of parliamentary scrutiny, in this case by the Treasury Committee. As has been noted, we have already trespassed slightly on this ground, and the Minister noted that this degree of scrutiny would be going beyond precedent. He read out the Cabinet Office guidance on this subject, which is interesting but not decisive for this House and the legislators.

Certainly, the degree of parliamentary scrutiny is dictated by the very political nature of this job, and quite a political figure has been appointed to it as the current chair. He has not been shy in giving us his ambitions for the company. He told the Guardian on 17 October that he thought it should become a “national champion” and

“a longer-term operator in … areas, such as floating offshore wind”.

I do not know whether that is the Government’s view of the development of GB Energy—it might or might not be—but they are statements by the chair and, by making them, he is coming into the arena of political debate about the company. Therefore, some sort of political process in his appointment seems logical. I cannot help noting that he has made broader reflections on politics, populism and progressivism, and he has been a quite a critic of Brexit in the past. Of course, he is entitled to have these opinions but, once you get into the political field, you must expect to face a degree of political scrutiny of your appointment. That is why this amendment would require such public scrutiny.

Similar thoughts are behind the other part of this amendment: the requirement for a publicly available review of performance against the purposes of GBE, and that this should be done independently. Once again, we come back to the point that has been touched on at length: that this is an unusual company and that normal accountability mechanisms are not there. There is only one shareholder, the content of the board is uncertain and, as it stands, there is no requirement in the Bill for directors of any kind at all—although I will come on to Amendment 99. This is a public company, fulfilling absolutely classical public goals, so there must be accountability to the public in how it is run.

Proposed new subsection (2) would require the chair to be based full time at the headquarters of the company, which has been said to be Aberdeen. The Government have made a virtue of that fact, at some length, when talking about GBE. They also confirmed, in October, that the new chair would be based in Manchester. It is not unusual for a non-executive chair to be based somewhere else, but the current chair role is not exactly a non-executive one; it is quite hands on. I struggle to see how one can run the company in quite that way.

The Government say that he will

“regularly spend time in Aberdeen”.

That is good and important, obviously—but this is a new company. It needs leadership as it is built up. If the taxpayer is going to get value for money out of the chair, his salary and the process, he should be where the company is when he is working.

I wish to record that Amendment 99 is a copy of an amendment tabled by Andrew Bowie MP and debated in the Commons—although perhaps it was not fully debated. Again, this comes back to the fact that we are dealing with an unusual company. What is being created is, in many ways, more like an executive arm of HMG than a genuinely independent company. The description that the Minister just gave about the role of the CEO rather confirmed that. It sounded much more like the role of the Permanent Secretary of a department, responsible to Parliament as accounting officer, than the role of a genuine CEO of a company.

The Bill is literally silent on appointment processes, content of the board and so on. The amendment is designed to fill that gap, to give clarity on numbers, and to make it clear that there must be non-executives as well as executives, that there must be a CEO as well the chair, that there can be no repeated appointment beyond defined limits and so on. That is a bare minimum. There already are some provisions in the Bill connected with the articles of association, so the line of principle about what is right to include in the Bill and what is not has already been passed. I hope that, with that in mind, the Minister will consider that these are serious amendments designed to deal with potential weaknesses in the corporate governance and accountability of GB Energy. I look forward to hearing his response.

Earl Russell Portrait Earl Russell (LD)
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I shall speak to my Amendment 101, and I thank the noble Viscount, Lord Trenchard, for adding his name in support of it. It would simply prevent the board of GB Energy from being appointed until each prospective appointment had been scrutinised by the Energy Security and Net Zero Committee. I believe in pre-appointment scrutiny, and I put this forward as a way of helping to ensure that that happens.

I shall not speak for long on this amendment, because I suspect that it will not win favour with the Government and that the Minister will argue that there are well-established processes and procedures for making such appointments. It might be useful if he could say a brief word about what those processes will be.

Amendment 99 is very similar to mine on pre-appointment scrutiny, so I lend my support to it. However, I would probably leave out the politics; I am much more interested in the skills and abilities people have to perform the functions that they undertake. Their personal politics should not really come into it.

Amendment 98, in the name of the noble Lord, Lord Frost, and the noble Viscount, Lord Trenchard, has three elements. The first reflects my amendment in this group. The second calls for the headquarters to be placed full time in Aberdeen. The third calls for the chair of GB Energy to undergo an annual review by external auditors, and for that review to be sent to the Secretary of State.

I cannot disagree with the first part, because we are kind of on the same ground, so I welcome it. Labour made commitments on the second part, but I am not certain that the Bill is the place to go into what a full-time headquarters is and how it should be defined, so I will park that. On an annual review by external auditors, my question is again about level playing fields. Would other people in other similar organisations find that that was part of their normal working relationship with their employment contracts? I suspect that they would not. If the answer is no, there is no precedent for putting it in the Bill, so I would not think it acceptable.

18:15
Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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My Lords, I will speak to the two amendments in this group regarding the appointments of the chairman and board of Great British Energy. These amendments, in the names of my noble friends Lord Frost, Lady Noakes and Lord Trenchard, attempt to fix a glaring omission from the Bill as it stands. As drafted, there is no mechanism to govern the appointments process of the chairman and the board, and this is a concern as we have heard on many occasions that GB Energy will be responsible for £8.3 billion of taxpayers’ money. Those at the top of the company will have enormous responsibility and therefore it is paramount that adequate scrutiny is given to these appointments.

My noble friend Lord Frost has attempted to address these concerns with his amendments in this group. Amendment 98 requires the chairman of GBE to undergo pre-appointment scrutiny in front of the Treasury Committee. This amendment has not come out of the blue: it is exactly the same process as the appointment of the chairman of the Office of Gas and Electricity Markets, otherwise known as Ofgem, which is the regulatory authority for the energy sector. Once the Secretary of State appoints the chair, they must appear before the House of Commons Energy Security and Net Zero Committee. This is also the case for the chairs of the Climate Change Committee and the Nuclear Decommissioning Authority. The Commissioner for Public Appointments keeps a list of significant appointments, which details the public bodies of which the chairs must undergo pre-appointment scrutiny by Parliament. There are no fewer than 40 current chairmanships of public bodies for which this appointments procedure applies.

There is clearly precedent for the chairmen of significant public bodies with responsibility for large sums of public money to be subject to pre-appointment parliamentary scrutiny. If this is the case for these three other public bodies with responsibilities in the energy sector, why should the chair of GBE not also be subject to the same pre-appointment parliamentary scrutiny process?

The Bill also fails to detail the procedure for the appointments and tenure of the directors of Great British Energy. As drafted, there are no requirements for the composition of the board, no limits on the number of directors that may be appointed and for how long a director may serve on the board, and no statutory duties to be conveyed on the board. The amendment from my noble friend Lord Frost plugs this gap.

Once again, there is precedent for having this level of detail regarding appointments to the board of a major public body. The Utilities Act 2000, which created Ofgem and which—we must not forget—was passed by the last Labour Government, did exactly that. Schedule 1 to that Act lays out, for example, that:

“An appointment of a person to hold office as chairman or other member must be for a term of not less than 5 years and not more than 7 years”.


So that Act includes details of the tenure and the appointments of the chairman and the board, yet the Bill does not. I ask the Minister why Labour thought it pertinent to specify the executive composition of Ofgem but does not believe it necessary to do the same for Great British Energy.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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My Lords, I congratulate my noble friend Lord Frost on his two amendments in this group, which deal with the governance of GBE. There is, as has been said in previous debates, almost nothing in the Bill about the corporate structure of GBE or how it will be managed. I welcome my noble friend’s proposals to require that the chair should be full time and be required to attend the office in Aberdeen, from which it follows that he must be based there. That would also ensure that the person will be fully committed and be a real check on the powers of the chief executive, who may need oversight in interpreting the priorities and actions needed in response to directions received from the Secretary of State. My noble friend’s proposal that the board must comprise at least five and no more than eight directors makes perfect sense and provides for the assembly of a group of people with the appropriate skills and experience.

I have also considered and support Amendment 101 in the name of the noble Earl, Lord Russell, which requires scrutiny of any proposed appointments by the Energy Security and Net Zero Committee of another place. That committee should ensure that an appropriate balance of skills and experience among the directors is maintained at all times.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, I was not going to speak on this, but I just point out very quickly that the other Act that has a clause that is not quite the same but similar to Amendment 99 is the UK Infrastructure Bank Act. As I have already pointed out, that is the really analogous organisation to Great British Energy, so it must be appropriate, I think.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, I am grateful to the noble Lord, Lord Frost, for initiating the debate on his Amendment 98, where he proposes to place a number of requirements on the role of the chair of the board of Great British Energy. I agree that the chair, the board and the chief executive officer have major responsibilities. I must say to him though that I do not recognise GBE as being an executive arm of my department. It is very interesting that he said that, because the noble Lord, Lord Teverson, made the interesting remark on Monday that there is a risk in having too many controls and reporting arrangements in relation to GBE, detracting from what we need it to do. We do want it to have operational independence, albeit working within the context of Clauses 3 and 5 of the Bill, the requirements under the Companies Act and the accountability arrangements I have already referred to. We need very highly skilled people at the top of GBE to find their way through this in order to ensure that it actually delivers on the things we want it to deliver on.

At the risk of inviting the noble Lord, Lord Hamilton, to intervene, I take his point about winners and Governments: this is the whole point of having an organisation that is not part of government—but, of course, it is owned by government—and being able to really get on with the job that needs to be done.

I will address pre-appointment scrutiny of the chair in relation to Amendment 101 soon. Amendment 98 requires the chair to be a full-time position based at the headquarters of Great British Energy in Aberdeen. I must say that it would be highly unusual to specify that a company’s non-executive chair should be full time or based formally at an organisation’s headquarters. Looking at the Grand Committee, almost all noble Lords here have taken roles as chairs or non-executive directors of organisations that can be based very far from where they are resident. Frankly, if we were to adopt this principle, we might inhibit the appointment of high-calibre people, notwithstanding that Aberdeen is a very fine place to live and work, as I know from the experience of having a family member working in the offshore oil and gas industry from there.

I do not think that a full-time chair is appropriate; I think it is perfectly appropriate to have a part-time, non-executive chair in that role, as the noble Lord, Lord Frost, has already remarked. Having an interim chair does not preclude having a very lively presence—and a jolly good thing too. I do not think we should insist that that should be a full-time role.

My main board experience is in the public sector, in the National Health Service, and I have been around in the NHS for long enough to know the problem of chairs who come in on a daily basis and inhibit the proper role of the chief executive. I would be wary of encouraging that development in GBE; I am sure that it will not happen.

Again, in relation to the annual review of the chair’s performance by external auditors, which is to be laid before Parliament, first, we will of course ensure that there are annual performance reviews for Great British Energy’s chair. This aligns with best practice followed by other public bodies, and my department is well used to doing this in relation to a number of the bodies it oversees. The review will typically be performed by a senior official in the sponsoring department, supported by the senior independent director on the board, who will have deep insight into the chair’s performance over the year.

Of course, there will also be regular meetings between the responsible Minister and GBE, as there is in my department between Ministers and other organisations, as would be expected. In a sense, these are also part of the accountability mechanism. However, I acknowledge the expectation of the noble Lord, Lord Frost, that Parliament will have a strong interest in the chair’s performance. I fully anticipate that the relevant Select Committees will call on them on a regular basis to provide evidence and, of course, I fully expect the chair of GBE to accept those committee’s invitations.

Amendment 99, also in the name of the noble Lord, Lord Frost, would place certain requirements on the composition of Great British Energy’s board. As noble Lords have said, it largely replicates provisions in the UK Infrastructure Bank Act. We made clear in our founding statement that GBE will be an operationally independent company, overseen by an independent board. We do not think that it is necessary to legislate these provisions, since established governance documents, such as the UK Corporate Governance Code and the Governance Code on Public Appointments, already apply.

The UK Corporate Governance Code, published by the Financial Reporting Council, sets out best practice in relation to corporate governance. Although it applies formally to listed companies only, it is standard practice for government companies to comply with it or, where they do not, explain why. The Governance Code on Public Appointments provides clear guidance for ministerial appointments, which are regulated by the Commissioner for Public Appointments and should be followed even where roles are not formally within the scope of the commissioner. I can give an assurance from the Dispatch Box that Great British Energy will comply with these codes, ensuring best practice in corporate governance.

GBE will also be required to follow corporate governance best practice to help guide the composition of its board. This will have an impact on the number of directors required at each stage of GBE’s development and operation. We think that, having given those assurances, there needs to be a degree of flexibility at this stage about how GBE goes forward in relation to the composition of its board. The noble Lord’s amendment would also place standard requirements on when an individual should cease to be a director. I can assure him that such provisions already exist, including in the Companies Act 2006, and that they will, as is common practice, be replicated in GBE’s articles of association.

Amendment 101 in the name of the noble Earl, Lord Russell, proposes to require all appointments by GBE to be scrutinised by the Energy Security and Net Zero Committee in the other place before they come into effect. This is similar to new subsection (1), proposed by Amendment 98. Noble Lords will know that Cabinet Office guidance on pre-appointment scrutiny by House of Commons Select Committees provides clear guidance on the criteria and process to be used in these circumstances. It sets out that decisions on the scrutiny of individual posts should be made between the Secretary of State, the chair of the relevant committee and the Cabinet Office. It is not common practice for this to be set in primary legislation.

The guidance gives the criteria of the types of roles which may be in scope. Importantly, it sets out the principle that the posts which require pre-appointment scrutiny are, most typically, the chair or equivalent of the organisations. None of the roles identified in the guidance as requiring pre-appointment scrutiny are in government-owned companies of the kind that GBE will be. No public body currently appears to have its full board subject to pre-appointment scrutiny. Where individual roles are scrutinised, it is done following agreement between the Secretary of State and the committee chair.

From our point of view, the calibre of Great British Energy’s director appointments will be of great importance. We want GBE to succeed, so we want the highest calibre of people to be appointed as chair, to non-executive positions and to the chief executive officer role. We anticipate that recruitment for the substantive board will begin over the course of this year, and we will ensure that recruitment is undertaken in a manner which aligns with best practice. I can assure the noble Earl, Lord Russell, and the noble Lord, Lord Frost, that in line with Cabinet Office guidance, any relevant public appointments to Great British Energy will be discussed with the appropriate Select Committee chair. I hope that I have been reassuring regarding this.

18:30
Lord Frost Portrait Lord Frost (Con)
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My Lords, I thank the Minister for his comprehensive and understanding response, and I thank other noble Lords who spoke in support of these amendments. I have two very quick points in response.

First, I note what the Minister says about the likely degree of independence of Great British Energy. We will have to see how that turns out, but I make the point, which was not really dealt with in his response, that there will always be an area where the company thinks that something is operational, but the Government believe it is political. That is where it is important to have clarity on relationships and how accountability works, so I am not entirely persuaded that the Bill gets this right at the moment, but I hear what he says.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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I am not sure that you can legislate for this. I understand what he says, because as Ministers, we have relationships with a number of key bodies at the moment. We have formal relationships, there are accountabilities, reports and meetings, but we also build up trust, understanding and working closely together. It is difficult to legislate for that. In saying that we want GBE to work, it has to feel operationally independent, or it is not going to work. We cannot micromanage it, but on the other hand, we are setting the tramlines in the context in which it operates. It is hard to go much further than that, in reality.

Lord Frost Portrait Lord Frost
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Obviously, there is a degree of judgment and practice in how these things are done. There is also a degree of judgment on the extent to which it is desirable to fix the framework within which these judgments and relationships operate, which is probably the area of disagreement.

On the question of where the chair is based, the amendment may not be perfectly drafted. I think there is a difference between “based at” and “resident at”. The point of this amendment is to make sure that the business of the company, when transacted by the chair, is very firmly in Aberdeen, the HQ of the company, and not dragged elsewhere by the fact that the chair may not be resident there. This may not perfectly deal with that point, but it is an important point all the same, so I welcome the Minister’s comments on it. I will reflect on whether any of this is necessary at Report, because it is part of a wider discussion, but for the time being, I beg leave to withdraw the amendment.

Amendment 98 withdrawn.
Amendments 99 to 105 not moved.
Amendment 106
Moved by
106: After Clause 7, insert the following new Clause—
“Annual report: impact on coastal communities(1) Within 12 months of the day on which this Act is passed, and annually thereafter, Great British Energy must annually report on the impact of their activities on coastal communities.(2) The Secretary of State must lay a copy of these reports before Parliament.”Member’s explanatory statement
This would require Great British Energy to annually report on the impact of their activities on coastal communities.
Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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My Lords, I rise to speak to my Amendments 106 and 107 in this group and to support my noble friend Lady Bloomfield’s Amendment 118. These amendments are closely aligned with Amendments 27, 28 and 29 in the name of my noble friend Lord Effingham, which were debated on the first day in Committee. Amendment 106 introduces a new clause that ensures that Great British Energy must annually report on the impact of activities on coastal communities. Amendment 107 similarly requires GB Energy to report on its impact on commercial fishing.

The Government have committed to substantial wind developments, promising to double onshore and quadruple offshore wind by 2030. It goes without saying that there is a difficult balance to strike when undertaking considerable developments while minimising the damage to the communities and industries that are most likely to be affected. That said, we must not lose sight of the communities and sectors to which GB Energy’s activities may be costly. I remind noble Lords that the Government have said that GB Energy will work closely and collaboratively with local communities to achieve their clean energy targets. I therefore see no reason why they should not consult and report on the impact of its functions on the communities they suggest will reap the rewards of GB Energy.

The impact of GB Energy’s activities and the Government’s green energy agenda on communities throughout the UK has been a recurring theme and a point of serious concern throughout the debate on the Bill. Last year, I highlighted the burden facing rural communities in particular, as the Government looked to ramp up transmission and distribution infrastructure. It is essential that the energy transition, and GB Energy’s role within it, do not come at the expense of the communities and associated industries.

Many in this House urged the Minister to ensure that the Secretary of State and GB Energy consult local communities. I point to the noble Baroness, Lady McIntosh of Pickering, who rightly raised concerns that offshore wind development risks forcing fishermen out of the seas in which they operate. It is essential that we carefully consider the use of our country’s marine space. Preliminary results from the Plymouth Marine Laboratory concluded that all the proposed offshore wind farms in the UK are predicted to impact fishing, with fishermen pointing to both financial and safety concerns resulting from the construction and operation of offshore wind farms. Ultimately, this is an issue of spatial competition.

Amendment 115 of the noble Lord, Lord Teverson, is broader, addressing the impact of GB Energy’s activities on both fishing and commercial shipping. He is right to extend the scope to commercial shipping. I turn to the UK Harbour Masters’ Association, which notes the challenges faced by the sector from offshore renewable energy installations. It calls for a report on the impact of such installations on the shipping industry and insightfully draws a link with commercial fishing, noting that fishing vessels may be squeezed out of their usual channels and enter shipping routes to avoid sites of renewable energy generation. We must not ignore the worries and recommendations of these industry bodies. With this in mind, many environmental, biodiversity and wildlife bodies have called for GB Energy to deliver for nature alongside climate. I welcome and support my noble friend Lady Bloomfield’s Amendment 118, which requires GB Energy to make

“a positive contribution to nature recovery”.

Careful consideration is key to the success of GB Energy. We must not isolate but include those communities and sectors that will be most impacted by the Government’s attempts to create this green energy superpower. Additionally, we ought to consider how GB Energy will act in a way that seeks to benefit both the climate and biodiversity, which are inextricably linked.

I look forward to hearing the contributions of all noble Lords in the debate on this group of amendments, and the Minister’s response.

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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My Lords, Amendment 118 in my name would introduce a new clause which requires GB Energy and its partners to make only investments that make a positive contribution to nature recovery. As my noble friend Lord Offord of Garvel rightly explained, the UK is facing both a climate and a nature crisis.

Nature recovery, the restoration of our country’s biodiversity and the climate are matters that are so closely interwoven. They cannot and should not be considered in a separate capacity. Therefore, if GB Energy is to be established in an effort to achieve clean energy by 2030 and net zero by 2050 and to reduce the UK’s carbon emissions in an attempt to tackle climate change, GB Energy ought to operate in a way which looks to make a positive contribution to nature recovery.

The Government themselves recognised the ties between climate and nature recovery. Indeed, they were elected on a manifesto which said:

“The climate and nature crisis is the greatest long-term global challenge that we face”


and

“The climate crisis has accelerated the nature crisis”.


The omission of a nature recovery duty is another shortcoming of the Bill. Climate change and the loss of biodiversity both compound and reinforce one another. The Royal Society has acknowledged that a flourishing ecosystem has the ability to combat the effects of climate change. We know that the UK’s biodiversity is under serious threat, yet we know that natural habitats have a significant role to play in absorbing and storing carbon and regulating the climate.

Wildlife and Countryside Link has called for nature recovery to be put in the Bill and the amendment in my name would do just that. It recognises that restoration of the UK’s nature has the ability to provide up to a third of the climate mitigation effort that is required if we are to achieve net zero by 2050. Rightly, it describes the Government’s failure to include a nature recovery duty as a “missed opportunity”.

A nature recovery duty ought to be a general principle of GB Energy. It would hold the Government to account on the manifesto they were elected on. It would introduce a clear condition, ensuring that GB Energy and its partners operate in a way which seeks to contribute to the biodiversity targets introduced by the previous Government in the Environment Act.

Nature recovery must not be seen to inhibit the facilitation of the production, distribution and storage of clean energy. Instead, it must go hand in hand with the objectives of GB Energy, helping to protect and restore carbon-rich habitats. Indeed, it is complementary to the objectives of GB Energy surrounding clean energy generation and distribution.

We must be cautious that the establishment of this body to rapidly ramp up the installation and generation of renewable energy technologies does not adversely affect biodiversity in the UK. We must seek to mitigate the risk of further diminishing or undermining the UK’s natural assets. The amendment in my name would do just that by embedding a nature recovery duty into law.

Lord Teverson Portrait Lord Teverson (LD)
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My Lords, I shall speak to my Amendments 114 and 115. I agree very much with the spirit of the other amendments in this group. I say to the Minister that only one of my amendments is labelled as a probing amendment but they are both, in effect, probing amendments and I would not expect them to proceed beyond Committee as I have written them.

Amendment 114 is about national defence. Clearly, even since I wrote the amendment, this has become even more important in terms of offshore infrastructure, as we saw in the Baltic at the end of last year and following the serious shenanigans of “Eagle S”, the shadow Russian oil tanker which disrupted cables in the Baltic Sea, after which there was a NATO conference yesterday.

The purpose of this amendment is to hear from the Minister that GB Energy, in its offshore investments, will be plugged into the Ministry of Defence, and that the Ministry of Defence—which, if I may be slightly candid about it, has not always been positive about renewable energy onshore—will fully engage in these investments.

I think this is going to get more and more important. All sorts of technologies are coming out to ensure that, as soon as cables or pipelines are tampered with, it is quickly recognised and action can be taken. There is an Oral Question on this area in the House tomorrow, and I will be pressing more on the defence side, as we need to be a little more upfront in our reaction, as the Finns have been. I am really probing to see where that co-ordination with the Ministry of Defence is going to happen.

18:45
On fishing and the commercial shipping sector, I have spoken, as I am sure have other noble Lords, to fishing organisations in my area of Cornwall, such as the Cornish Fish Producers Organisation, and, nationally, to the NFFO. I am sure the noble Lord, Lord Offord, would be pleased if I had spoken to the Scottish Fishermen’s Federation as well, but I have not yet done that, for which I apologise. It is exactly as he said: there is genuine concern about being squeezed out of major areas of the UK’s near-coastal fisheries, increasingly because of floating offshore wind. There is that concern in the Celtic Sea. I am sure that there is a solution to this that can work but, given the strong role that the Government are giving to GB Energy to fulfil our energy needs, it is very important that there is serious and genuine consultation beforehand—I am not so much into reports—as I would expect with the Crown Estate as well, to talk to those operators, fishers and their organisations to find a way forward.
I used to be a board member of the Marine Management Organisation, and I found it rather disappointing that marine planning, which has been going on for years, does not solve this issue very easily or not sufficiently. There really needs to be strong trust built up with the commercial shipping sector, on which I am less educated, and the fishing industry to make sure that there is room for proper consultation between those organisations and sectors to ensure that we move from a situation of potential conflict with and fear of renewables, particularly floating offshore wind in the Celtic Sea, to something that is seen as a benefit to both. I do not know where the research has got to, but I am particularly interested in how, in many ways, offshore wind areas have become no-take zones for fisheries, and it seems to me that there is an opportunity here for biodiversity, as well as a threat.
I agree absolutely with the spirit of the amendment of the noble Baroness, Lady Bloomfield, on biodiversity, but I say again to the Minister, as I did briefly in a previous Committee sitting, that what I see as essential and what I am used to in working with the Green Investment Group since its privatisation is that there needs to be a strong external audit of individual investments in terms of their carbon reduction and protection or promotion of biodiversity. Again, that should not be in the Bill, but it is something that I would hope very much the board of Great British Energy would insist on—if nothing else for its corporate reputation.
Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom (Con)
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My Lords, I am a little confused by this conversation, because I always understood that oil rigs encouraged shoals of fish, providing them with a safe haven under which they thrived. If they thrive under oil rigs, why should they not thrive under wind turbines as well, if they are pinned to the bottom of the sea?

I agree that, if they are floating ones, it is more debatable whether fish could thrive under them, but, in my view, it does not necessarily follow that having such industrial structures in the sea goes against nature—it might actually go some way towards protecting it.

Lord Teverson Portrait Lord Teverson (LD)
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The noble Lord raises an important issue. As we know, when Shell wished to dispose of one of its oil rigs in the North Sea, to which a number of environmental NGOs strongly objected, there was a fair bit of scientific evidence that it made a positive contribution to North Sea biodiversity. Indeed, off the coast of Cornwall, an ex-naval vessel was sunk in order for it to become a reef, which increased biodiversity. We should not just reject the fishing industry’s views on this. The problem with offshore wind farms compared with oil rigs is the quantity—that is, the size of the area that would be an exclusive zone. That is the issue, but I take the noble Lord’s point.

Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom (Con)
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I am grateful for the noble Lord’s intervention. May I take him up on his point about the Ministry of Defence, which I used to work for at one stage? He said that the people there were very much against such schemes, but I think that it is mainly to do with communications: if their radar and other communication systems are blocked by wind turbines, they will object to them. That is understandable. We should not paint the Ministry of Defence into the position of being anti all forms of renewable energy because I do not think it is; however, it is always concerned if it cannot reach out and listen to the enemy, wherever they may be, because there are wind turbines in the way. This is an interesting subject that probably needs looking into rather more carefully—it is certainly not as straightforward as some of my noble friends make out.

Lord Teverson Portrait Lord Teverson (LD)
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I shall not prolong the conversation tonight but the noble Lord is, once again, absolutely right about national defence, radar and being able to see an incoming attack with missiles or whatever. The problem was that the Ministry of Defence did not man that area enough. Decisions were extremely slow. There was a rumour—of course, I have no proof of this —that it used to use its slowness and its objections to insist that developers helped it upgrade its military equipment. I do not know whether it was true—I am sure that it was not, of course—but that was the perception. The main problem was the slowness of response.

Earl Russell Portrait Earl Russell (LD)
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My Lords, I rise to speak to my Amendment 118A, which covers wider considerations. Let me be clear: it is also a probing amendment, as are all the amendments in this interesting and diverse group. I thank the noble Lord, Lord Macpherson of Earl’s Court, for adding his support to my amendment, which is about ensuring that communities benefit directly from the renewable energy projects that Great British Energy undertakes. I put it forward to see whether that is possible and to ask, from the Government’s point of view, what barriers to that might exist.

My amendment would ensure that 5% of gross revenue from all Great British Energy

“renewable energy projects generating over one megawatt”,

both onshore and offshore, would

“be paid into community benefit funds”.

The idea for it came from the honourable Angus MacDonald MP’s experience with Scottish Government Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments. This guidance promotes community benefits of a value equivalent to £5,000 per installed megawatt per annum, index-linked for the operational lifetime of projects.

My amendment requires that:

“Within six months of the day on which this Act is passed, the Secretary of State must prepare and lay before Parliament a report setting out proposals for ensuring that local communities benefit from renewable energy projects undertaken by Great British Energy. The report … must set out, but is not limited to, proposals for 5% of the gross revenue from all such renewable energy projects generating over one megawatt to be paid into community benefit funds”.


I will not go into the rest of the details; the amendment is before noble Lords. It simply puts into the Bill that local communities should directly benefit from renewable energy undertaken, and that there is a mechanism available for doing that. On the 5% figure, I am happy to have a conversation with the Minister if it is an issue. I note that Denmark’s Law on the Promotion of Renewable Energy 2008 had a 20% figure, in relation to which 5% is a lot lower.

To talk more about the spirit of the amendment, this is really about helping disadvantaged communities, particularly those that are hosting our renewable energy. A lot of them are in the highlands and in Scotland. They disproportionately suffer from poor infrastructure and poor public services, and a lot of them are living in fuel poverty. They are putting up with having their landscapes covered in turbines, dams, electricity transmission lines, substations and all the rest of it. I support community energy, as everybody knows—I have spoken to it in two other amendments and will not go into it here—but this is about more than that. This is not a nice-to-have; in my opinion, this is an essential part of the energy transition. It is about ensuring the continued long-term support for this journey that we are undertaking as a society.

Recent opinion polls on these matters are really strong. Where local communities benefit from the energy infrastructure, particularly the infrastructure that they host, their support for this transition is much stronger and more resilient. If this support falls away, that could be the end of the whole transition and of all this, so this is not just about being fair and supporting the communities that need it most and that host this stuff. It is also about making sure that these things go on beyond one Government and one term, that they are here, that we manage to take society with us on this journey, and that those who are hosting things that other bits of society need benefit from them.

Turning to the other amendments in this group, I signal my support for Amendment 118 in the name of the noble Baroness, Lady Bloomfield. I note that the Wildlife and Countryside Link put out a detailed briefing on that and why it needs to be there. I also support Amendments 114 and 115 in the name of my noble friend Lord Teverson. I will not go into too much detail on that. As he said, there is an Oral Question on this tomorrow. It is unfortunate that we have had more recent incidents, not just in the Baltic but off the coast of Taiwan. Obviously, the UK has a number of electricity interconnectors and gas pipelines —we had a conversation about gas in the House this week—and they will only ever increase. New contracts have been signed. We have about 7.7 gigawatts at the moment, and that will rise to 18 gigawatts by 2032, so this is a crucial part of our energy security and our journey to net zero.

I would ask the Minister one thing. We can have conversations about the other aspects later on, but I am worried about the Government going away, stepping up their appreciation of this risk and maybe recalculating some of their calculations around the security of supply as we transition to net zero in 2030 and beyond. Is there is a greater need to look at some of those things again? We will talk about the rest tomorrow.

If the Committee will excuse me, the noble Lord, Lord Macpherson of Earl’s Court, has left me a note. Does the Committee mind if I read that in support of my amendment?

These are his words: “My Lords, I would like to speak in support of Amendment 118A. I should first declare an interest as a director of two family-owned hydroelectric companies in Wester Ross. Having worked in the Treasury during the 1980s boom in North Sea revenues, I am all too conscious that Britain has a poor record in reinvesting the benefits of energy windfalls and an even worse record in passing on those benefits to communities directly affected by energy production. I think Shetland receives some money, but other places do not”.

“It is in the nature of renewable energy production that it tends to take place in remote areas. I am thinking in particular of the Highlands of Scotland, but the same applies to Cornwall, Devon, Wales and Cumbria. People living in these communities often have to live with negative aspects of renewable energy: towering windmills or hydroelectric schemes which change the natural environment and can particularly scar a hillside. Because of the remoteness, oil and gas and electricity connections cost more”.

“Successive Governments in Westminster and Edinburgh have supported the principle of requiring energy developers to support their local communities, and there have been some good examples of community investment. But practice is variable, and often contributions are set in cash terms and bear no relation to the subsequent success of renewable energy schemes. Great British Energy has a huge opportunity to lead by example in exercising best practice. By setting up community benefit as a fixed percentage of gross revenue, this amendment seeks to ensure communities benefit more fairly. A 5% contribution is relatively modest, as I understand it”—and he then goes on to make the Denmark point.

“Of course I hope that the noble Lord the Minister will agree to the amendment, but I have a feeling that he will argue that this amendment will cut across the operational independence of Great British Energy and that this Bill is the wrong vehicle for addressing community benefits. If that is the case, I would like to ask the Minister if he can go beyond fine words of general support for community benefits. Will he commit to setting out a clearer definition of what represents a reasonable and fair rate of community benefit for a given level of revenue for renewable energy projects?”.

19:00
Lord Cryer Portrait Lord Cryer (Lab)
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Before the Minister responds, I should have pointed this out before, but I was not aware: reading out speeches from another Member is not acceptable, according to the Companion. That is partly my fault. I apologise: I should have said something.

Earl Russell Portrait Earl Russell (LD)
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I apologise; I thought that it was acceptable. The noble Lord should have intervened earlier if it was not. I would not have done it if I had known that it was not acceptable, so I apologise to the Committee.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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We certainly got the noble Lord’s point.

This has been an interesting debate with which to finish today’s proceedings. I start with Amendments 106, 107 and 115. The debate between the noble Lords, Lord Teverson and Lord Hamilton, on the benefits of oil rigs and other structures for fish populations allows me to say that other energy infrastructure can also have a positive impact on nature. We know, for instance, that wind farms can coexist with farmland easily. We have examples of solar meadows, which is a practice of growing wildflower meadows on solar farms. I have heard talk of green corridors, where beautiful new pylons are built to extend the grid. I am not being facetious here, as we need to look at ways in which energy can contribute to nature recovery. It is an important point to make.

I agree on the importance of our coastal communities and commercial fishing, as reflected in Amendments 106 and 107. Amendment 115 would require GBE to consult annually with the commercial shipping sector and fishing industry. I would expect GBE to provide regular updates on its work on such issues through its annual reports and accounts. We know that the projects that Great British Energy is likely to be involved in will all be subject to relevant regulations, including environmental impact assessments. There will be statutory stakeholder engagement to understand the potential impact of development. In line with other energy developers, GBE will consider the impact and risk of its activity on the commercial shipping sector and fishing industry, as it will other affected stakeholders. I will draw these remarks to the attention of the chair of GBE, so he can understand the importance of the issue that the noble Lord, Lord Offord, has raised.

In relation to coastal communities, there will be many opportunities in the energy sector in the future. We talked about the challenge of the North Sea transition. We obviously hope that, as jobs reduce in the oil and gas sector, the people involved can take up other jobs, some of which I hope will be in the wider energy sector. But overall, GBE has an important contribution to make in this area.

On Amendment 114, the noble Lord, Lord Teverson, raised an important point on the Ministry of Defence and security agencies. Clearly, to ensure resilience, GBE will have to consider the impact and risk of its activity on offshore installation, including its pipeline and cable connections, within the context of relevant security regulations and hostile state action. It is a very important and serious matter. All nationally significant infrastructure projects, which include projects in the energy sector over 50 megawatts, undergo rigorous scrutiny to monitor and mitigate security risks. In the end, these decisions fall to Ministers to make in relation to development consent orders.

There was an interesting debate on air defence issues between the noble Lords, Lord Teverson and Lord Hamilton. I have to say that my department is working very closely with the Ministry of Defence on these issues. We are talking closely and working to ensure that our own offshore wind ambitions can coexist alongside air defence. MoD programme NJORD will deliver an enduring radar mitigation solution, which will prevent turbines from interfering with MoD radar systems. In the context of our more general working relationship with the Ministry of Defence, it will be a responsibility of GBE to consider and consult relevant stakeholders. My department will of course ensure that that happens appropriately.

Amendment 118, tabled by the noble Baroness, Lady Bloomfield, would place a nature recovery duty on Great British Energy. Let me say at once that we are absolutely committed to restoring and protecting nature and meeting our Environment Act targets. We want GBE to focus on its core mission to drive clean energy deployment, but I assure the noble Baroness that the projects that GBE invests in and encourages will be subject to all environmental and climate regulations, in the same way that every other company is.

I draw her attention to our recently published Clean Power 2030 Action Plan, which dedicates an entire section to

“Integrating clean power and the natural environment”.


I was going to quote from it, but I do not think I need to do now. We are launching an engagement exercise in 2025 to invite communities, civil society and wider stakeholders to submit their ideas on how we can best encourage nature-positive best practice into energy infrastructure and development. Feedback from this exercise will allow the Government to better understand how we can integrate nature restoration through the clean power 2030 mission. We very much agree with the substance of what the noble Baroness said.

Lord Teverson Portrait Lord Teverson (LD)
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As the Minister will know, terrestrially, there is now biodiversity net gain, which came through the Environment Act and is applied to terrestrial developments. I do not think this is for the largest of them yet, but that is due to happen. I understand it is the Government’s intention to introduce marine biodiversity net gain regulations. I presume GBE will be subject to those.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, I am going to have to take advice on that as I do not have the information. However, if there are regulations which apply to companies, GBE will be expected to comply, and to act consistently with general government policy towards biodiversity. I will write to him about that in some detail.

On community benefits, I take the point of the noble Earl, Lord Russell, and other noble Lords. In our manifesto, we committed to ensuring that communities which live near new clean energy infrastructure projects can directly benefit from them. We are considering at the moment how to effectively deliver community benefits for those who live near new energy infrastructure, which includes new energy generation and transmission technology. We are developing guidance on community benefits for electricity transmission network infrastructure and onshore wind, which we will be publishing in due course. We are also reviewing our overall approach to community benefits, both to ensure consistency and quality and to ensure that communities are properly recognised and are able to come with us on our net zero and clean power journey. This includes looking to existing examples in Europe and further afield to see what has worked elsewhere. I look forward to updating the House on our approach to community benefits shortly.

The role of Great British Energy has been set out in its founding statement, and our commitment to putting local communities at the heart of the energy transition is a very strong component of what we are doing. The local power plan will support local communities to take a stake in the shift to net zero, as owners and partners in clean energy projects. They are important in themselves, as there is a huge appetite in many localities for community power, engagement and involvement. I agree that seeing a tangible benefit for local communities is important in itself, but it is also growing general support for the move to clean power and net zero, which is very important indeed.

We take the noble Lord’s point. It is clearly important, we are working on the details and will be publishing further information in due course. In my first week as a Minister in the department, I visited Biggleswade onshore windfarm, a small windfarm with 12 turbines. The company there is voluntary and there is a good practice trade guideline of paying £40,000 a year to the local community for such things as the local parish church, the community hall and other things. It was really good to see and is an example of what can happen.

Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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I rise to close this group and indeed this sitting of the Committee today. It is worth saying that the chairman of Great British Energy, Jürgen Maier, has acknowledged the importance of communities. He used the words that GBE should be considered “a three-party partnership”, involving the private sector, the public sector and the community. If we also take account of the Labour assurances that have been given to communities along the way, I see no reason why we cannot consider these amendments further at the next stage, but for now, I beg leave to withdraw the amendment.

Amendment 106 withdrawn.
Amendments 107 to 110 not moved.
Committee adjourned at 7.14 pm.

House of Lords

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Wednesday 15 January 2025
15:00
Prayers—read by the Lord Bishop of Southwark.

Political Parties: Funding

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Question
15:06
Asked by
Lord Blunkett Portrait Lord Blunkett
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To ask His Majesty’s Government what steps they are taking to prevent political parties, and activities to promote political parties, from receiving funding from outside of the United Kingdom, and whether they plan to grant additional powers to the Electoral Commission in this regard.

Baroness Taylor of Stevenage Portrait The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
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My Lords, the Government committed in their manifesto to

“protect democracy by strengthening the rules around donations to political parties”.

Foreign money has no place in our elections and the rules already provide clear safeguards against foreign interference. We are considering changes which will help further protect our system from such risks and are engaging with the Electoral Commission as we do so. We welcome the views of and evidence from stakeholders. Details of our proposals will be brought forward in due course.

Lord Blunkett Portrait Lord Blunkett (Lab)
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I very much welcome the Answer from my noble friend but does she agree that true patriots and those who believe in the sovereignty of our democratic system in the UK will want to see off those—whether they are malign state actors or multibillionaires—who seek to interfere in our democracy? Is it not now that we must act to safeguard our future?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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I agree with my noble friend and assure him that the Government take the threat posed by disinformation and foreign actors interfering in our democratic processes very seriously. It is, and always will be, an absolute priority to protect the UK against foreign interference. While it is clear that foreign donations to political parties are not permitted, the Government recognise the risk posed by malign actors who seek to interfere with and undermine our democratic processes. That is why we will take all necessary steps to ensure that effective controls are in place to safeguard our democracy. I assure noble Lords that we share the sense of urgency, and as soon as we have developed our proposals we will inform Parliament.

Lord Leigh of Hurley Portrait Lord Leigh of Hurley (Con)
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My Lords, the Labour Front Bench tabled amendments to the Elections Bill in 2022 that would have granted many foreign nationals the right to vote in both local and parliamentary elections; indeed, the IPPR is suggesting this again. How would Labour be able to restrict such donations? What assessment has been made of the potential influx of foreign donations from Russia, China and Iran as a consequence of the Labour Government in Wales and the Scottish Government allowing their foreign citizens to be on the electoral roll?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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My Lords, the law is already clear that accepting or facilitating foreign campaign donations is illegal. Only those with a legitimate interest in UK electoral events can donate to candidates or political parties. Donations from individuals not on the electoral register are not permitted and strict rules are in place to make sure that foreign money is prohibited from entering through proxy donors, providing a safeguard against impermissible donations by the back door. We are looking at ways to make this even stronger. It is an offence to attempt to evade those rules on donations.

Lord Rennard Portrait Lord Rennard (LD)
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My Lords, does the Minister accept that there can be problems with very large donations to political parties, whether they may originate from abroad or be clearly from within the UK, and that the only way to prevent undue influence on political parties is to ban company donations and have a sensible cap on the size of all other donations? Does she then agree that political parties would still be able to campaign effectively if existing public funding was redistributed—for example, from the £100 million spent by the Government in the last two general elections on distributing candidates’ election addresses—and given to the parties to spend as they saw fit?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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I take it that that was a question about a cap on donations. That is not a current priority for the Government, but strengthening the rules around donations really is. Political parties play a vital role in our democracy, and it is important that they are able to fundraise effectively and communicate with the electorate as a very important part of our process. By law, it is the responsibility of political parties to take all reasonable steps to verify their donors and whether they are permissible. We will take necessary steps to ensure that those requirements are tightened and stuck to.

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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My Lords, during the Lords stages of the National Security Bill, the last Conservative Government and Conservative Ministers pledged to enhance data-sharing powers to allow public bodies to share data with political parties. That is what we need; it is not about the honest ones who come through but knowing who is coming through a tenuous route, so that political parties are assisted in their due diligence. Can the Minister tell me the status of those plans to provide more information to political parties?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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As I explained in my earlier Answer, we are reviewing all matters related to electoral donations. Those will be taken into account as we go through the process of developing any new legislation, including the issue raised by the noble Baroness.

Lord Dodds of Duncairn Portrait Lord Dodds of Duncairn (DUP)
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The Minister keeps referring to the fact that foreign donations are not allowed to parties in the United Kingdom but, of course, that is not correct because donations can come from the Irish Republic. In there lies a severe problem, in that funds from the United States, for instance, can be channelled via the Irish Republic into political parties in the United Kingdom with representation in these Houses, so will the Minister and the Government look at that issue?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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The noble Lord raises an important point. Political parties registered in Northern Ireland can also accept donations from Irish sources, such as Irish companies that meet prescribed conditions. Allowing Irish donations to Northern Ireland parties recognises the special place of Ireland in the political life and culture of Northern Ireland. The rules are consistent with the principles set out in the Good Friday agreement. Irish donations are subject to the same scrutiny by the Electoral Commission as donations from any other permissible donor and if there are any complaints about that, they must be referred to the Electoral Commission.

Baroness Hayter of Kentish Town Portrait Baroness Hayter of Kentish Town (Lab)
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My Lords, the last Government extended voting to people who had been out of this country for more than 15 years. That in itself was not very problematic but it meant that they all became permitted donors. People who had not lived in this country for 40 or 50 years could become permitted donors and give money, with absolutely no ability to check on its source. Can my noble friend assure me that when this is looked at, that aspect introduced by the last Government will also be properly scrutinised?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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My noble friend raises a very important issue. Political parties can accept donations only from registered electors but of course that now includes overseas electors. They are subject to the same counter-fraud measures as domestic electors, including having their identity confirmed as part of the registration process, but that very important issue will be looked at as we all look at all matters relating to elections.

Lord Hayward Portrait Lord Hayward (Con)
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My Lords, I welcome the response that the Minister gave to the noble Lord, Lord Blunkett, about a full consultation. However, she will be aware that the restrictions on election expenditure were set in the days when one could communicate with the electorate only through leaflets and the like. There are now many different ways of doing so, many of which are very cheap or low-cost. Will the Minister include in the review that she mentioned to the noble Lord, Lord Blunkett, some assessment of the restrictions on expenditure in general for elections at whatever level?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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I am grateful for that question. There is no doubt that the system of campaigning has changed very dramatically, particularly in the last few years with the advent of social media. However, in my experience of campaigning—which spans a number of decades—political parties have adapted their campaigning but have not let go of their traditional methods. So although social media can be a very effective and efficient way of campaigning, we do still rely on some of the traditional methods. But, of course, that will be looked at as part of the review we are undertaking.

Baroness Winterton of Doncaster Portrait Baroness Winterton of Doncaster (Lab)
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My Lords, voter registration is at shockingly low levels. Can my noble friend the Minister update the House on implementing automatic voter registration, as was also recommended by the Electoral Commission?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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I agree with my noble friend that there are a large number of people still unregistered. When one goes out campaigning it is very clear that there are people who are not registered to vote who probably should be. We all need to address this and look at whatever way we can of making sure that everybody who is entitled to vote is not only registered to vote but takes part in our democracy. That is a very important part of our process, and we will do all we can to increase both voter registration and participation in elections.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, the Intelligence and Security Committee’s Russia report hinted at the very considerable extent of Russian money flowing into British politics, both to some political parties and, of course, during the Brexit campaign. Will the Government consider whether the redacted parts of that report should now be published to inform the public fully?

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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I am happy to look at that. We are very aware that this is a real issue, and we continue to be concerned about it. We will continue to take whatever steps we can to avoid foreign interference in our elections.

State Schools: Creative Education

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Question
15:17
Asked by
Baroness Keeley Portrait Baroness Keeley
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To ask His Majesty’s Government what assessment they have made of the value to state school pupils of school visits to theatres, museums and galleries, and of the value of a creative education for all pupils.

Baroness Smith of Malvern Portrait The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)
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My Lords, a creative education and enriching experience must be for all, not just the preserve of the privileged few. Drama and theatre studies students at GCSE and A-level are entitled to experience live theatre, and schools can and do decide which other visits to offer to other students. But it is also important that students can benefit during curriculum and lesson time. That is why the independent curriculum and assessment review will seek to deliver a broader curriculum and consider how best to support a young person to develop the knowledge and skills needed to thrive.

Baroness Keeley Portrait Baroness Keeley (Lab)
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My Lords, there is evidence that the experience of attending live theatre helps children to learn, while structured arts activities at school increase cognitive skills across all subject areas. Companies like the Royal Ballet and Opera and the RSC are doing amazing work in opening their doors to schools, but the Sutton Trust still reports that state school trips were cut by 68% in the most disadvantaged schools in 2023. Further, since the introduction of EBacc and Progress 8 there has been a systematic downgrading of arts subjects and experiences in state schools. Can my noble friend the Minister tell me if it is a priority for the Government to start to reverse these trends and to ensure access to a creative education and arts experiences for all state school pupils in order to help build their confidence and skills?

Baroness Smith of Malvern Portrait Baroness Smith of Malvern (Lab)
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My noble friend rightly identifies that there has been a decline in student entries into, for example, the arts and creative GCSEs, a reduction in the number of staff available to teach them, and a fall-off in the ability of schools to support students with visits and the type of experiences that she rightly outlines. That is why it is so important for this Government that we ensure that creative subjects such as art, music and drama are important elements of the education that every child deserves, and that we do better in ensuring that culture is an essential part of supporting children and young people.

Lord Vaizey of Didcot Portrait Lord Vaizey of Didcot (Con)
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My Lords, I declare my interest as a trustee of Tate. May I say to the Minister how reassuring it is to see an Education Minister addressing this Question? To make arts education as effective as possible, close working between the Department for Education and DCMS is essential. I am afraid that money involved. For example, visiting a theatre or museum costs schools money and many of these museums have to find money from their own budgets as well. Will the Minister meet with her counterpart in DCMS and look at a strategy in the round to engage our schoolchildren in meaningful visits to theatres and museums, with some financial support to help that?

Baroness Smith of Malvern Portrait Baroness Smith of Malvern (Lab)
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The noble Lord is absolutely right. It is important for those of us in the Department for Education to work across government with DCMS colleagues in this area, and I assure him that that is already happening. We are making sure that, as he will know, the £444 million being invested in arts by this Government and the Arts Council is used to the best potential. He will also know that 79% of the national portfolio supported by that money is already delivering activities specifically for children and young people. We need to ensure that schools and children are able to benefit from that.

Lord Kennedy of Southwark Portrait Lord Kennedy of Southwark (Lab Co-op)
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We will hear from the Liberal Democrat Benches next.

Lord Addington Portrait Lord Addington (LD)
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I thank you for being allowed to speak. Will the Minister take on board that museums often tell you certain things about development, for example, and the importance of design and technology? Unless you can develop the mouse to work with the computer—something we can all use easily—it does not happen and does not become a mass tool. That information is best conveyed by showing it. Can the Minister make sure that this is an important part of the curriculum for those subjects?

Baroness Smith of Malvern Portrait Baroness Smith of Malvern (Lab)
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The noble Lord makes an important point about the benefits to children’s learning of being able to see the development and design of ideas; I wholeheartedly agree with him. That will be an important part of our thinking on how we support existing initiatives, so that children can benefit, and so that, through the curriculum, those opportunities are not only available but supported, particularly for disadvantaged children, who have too often missed out.

Lord Bird Portrait Lord Bird (CB)
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Can we also include, while we are at it, young people in the custodial system? I am here only because I did art and creative things when I was in a juvenile detention centre. Unfortunately, a lot of those opportunities have disappeared in our custodial system for young people.

Baroness Smith of Malvern Portrait Baroness Smith of Malvern (Lab)
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I have no doubt that a broad education, which also enables children and young people to engage in creative activities, is one of the things that protects against some of the circumstances the noble Lord identifies. As I have my noble friend Lord Timpson sitting alongside me on the Front Bench—

Baroness Smith of Malvern Portrait Baroness Smith of Malvern (Lab)
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He flits. I have no doubt that my noble friend has also heard what the noble Lord has to say. He is a strong advocate to me and other Ministers of the need to ensure that, in everything we provide, those in custody can also benefit, because of what it means for them as individuals and for their future ability not to reoffend.

Baroness Barran Portrait Baroness Barran (Con)
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I know that His Majesty’s Government are particularly concerned about opportunities for children with special educational needs and disabilities. Can the Minister update the House on how those children are able to access these trips, particularly bearing in mind the correspondence that I am sure she will have seen from the special educational needs and disabilities transport operators? They have concerns about the impact of the increase in national insurance contributions on their ability to take 200,000 children to school every day.

Baroness Smith of Malvern Portrait Baroness Smith of Malvern (Lab)
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The noble Baroness is absolutely right to identify that, if we believe that these opportunities are important for children, they must be perhaps even doubly important for children with special educational needs and disabilities. That is why, in trying to mend the special educational needs system we have inherited, we will focus on ensuring that it is inclusive and enables all children—whether in mainstream schools or special schools—to benefit from the things that will support them. We will also find ways—for example, through the music opportunities pilot, launched last autumn—to offer disadvantaged and special educational needs pupils across primary and secondary schools the opportunity to learn to play an instrument of their choice or to learn to sing, with free lessons. We are committed to this, and we will continue to develop it.

Lord Bishop of Leeds Portrait The Lord Bishop of Leeds
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My Lords, schools feed in to universities, and the number of arts and humanities departments in universities has been in decline. I learned recently—and I speak as a linguist—that if all the students currently training in modern languages at university were to go into teaching, we would still only fund 70% of the language-teaching posts. This is a systemic problem in the arts and humanities. Trying to get PhD funding for arts and humanities is increasingly difficult. Will the Government commit to looking at the whole stream of the educational system in this respect, and not just schools?

Baroness Smith of Malvern Portrait Baroness Smith of Malvern (Lab)
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The right reverend Prelate is absolutely right that, in order to offer opportunities to children, we need to have the qualified teachers in place to deliver them. That is why this Government are committed to recruiting 6,500 more teachers and, of course, have in place the £10,000 tax-free bursary for teachers of art and design and music. It also means that we have to ensure that our higher education institutions receive the support necessary to develop these subjects. That means overall support for the financial sustainability of higher education, alongside the specific funding we make available to support high-cost subjects such as performing and creative arts subjects and media studies. There is also the government grant that we provide for small and specialist providers that are recognised as world-leading, of which, out of the 20 we support, 12 are creative and performing arts providers.

Courts: Backlogs

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Question
15:27
Asked by
Baroness Hazarika Portrait Baroness Hazarika
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To ask His Majesty’s Government what plans they have to tackle court backlogs, and whether they have considered reducing trial by jury.

Lord Ponsonby of Shulbrede Portrait The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)
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My Lords, the Government remain committed to bearing down on the Crown Court backlog, but the challenge in doing so is significant. The Lord Chancellor has commissioned an independent review of the criminal courts, led by Sir Brian Leveson, to recommend long-term reform. Sir Brian has been asked to specifically consider the merits of hearing more trials outside the Crown Court. Jury trials will always remain a cornerstone of our justice system for the most serious cases, but we must consider bold action to tackle the backlog in our courts.

Baroness Hazarika Portrait Baroness Hazarika (Lab)
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I thank the Minister for that Answer. He is right that, because of the terrible inheritance of these court backlogs, we have to think radically and challengingly. We have to think about the victims. Some victims now are having cases listed as far away as early 2028. Is it right that a class C drugs offence sits in the Crown Court queue, while a vulnerable rape victim has to wait five-plus years from report to court? That often risks them walking away and allowing a potential rapist to escape. Does he agree that justice delayed is justice denied?

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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Yes, I agree with my noble friend that justice delayed is justice denied, and I agree with the sentiments she expressed in her question. But that is the argument for bold and ambitious reform—and we very much hope and expect that that is what Sir Brian will deliver. The review will consider the merits of longer-term reform, as well as court efficiency. Sir Brian will consider court reform options that would reduce demand on the Crown Court, including reclassification of offences, consideration of magistrates’ sentencing powers and the introduction of an intermediate court. The review will provide findings on court reform by spring this year, and its findings on efficiency will come forward by autumn this year.

Lord Marks of Henley-on-Thames Portrait Lord Marks of Henley-on-Thames (LD)
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My Lords, will this Government distance themselves from the Conservatives, who blamed the backlogs on Covid and on criminal barristers, who had no option but to strike to secure proper remuneration? Will the Minister tell the House what immediate steps they propose to address the real causes of these record backlogs, which delay trials and frustrate justice—in particular, too few judges, lawyers and court staff; a wrong-headed cap on court sitting days, severely criticised by the Lady Chief Justice, which has led to unplanned courtroom closures; and trials adjourned through listing and prisoner transport mistakes?

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, the two factors to which the noble Lord referred are real factors—Covid and the action by barristers. However, there is an underlying problem of increasing cases coming to Crown Court, which overlays the other problems to which the noble Lord referred. The Government have increased the number of allocated sitting days to 108,500, the highest level in almost a decade, and increased the sentencing powers of magistrates’ courts from six months to 12 months. Nevertheless, with those two increases, there needs to be further radical reform to address the problem to which the noble Lord referred.

Lord Keen of Elie Portrait Lord Keen of Elie (Con)
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My Lords, as the Minister noted, much of the Crown Court backlog can be traced back to the effects of the Covid epidemic. Indeed, I acknowledge that there has been an increase in the number of sitting days for the Crown Court. However, the Lady Chief Justice has indicated that there are a further 4,500 sitting days available. We are in a situation in which many major Crown Court centres are sitting at only half capacity, with many of the courts simply empty. There are courts and judges available, but I am repeatedly advised that there are not suitable defence counsel available, many having been driven out of criminal practice due to the absence of a sustainable fee income. A recent increase in legal aid fees has been granted to solicitors in criminal practice. Is it not time for this Government to address a similar increase for barristers in criminal practice?

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, the noble and learned Lord is right to draw attention to the 12% increase in fees for criminal aid solicitors. That is a substantial amount of money. The Government are exploring options to incentivise the early resolution of cases, which includes the remuneration of everyone in the criminal justice sector. The Government are informed by the 2021 report of the noble and learned Lord, Lord Bellamy, and considerations are ongoing on this matter.

Lord Sentamu Portrait Lord Sentamu (CB)
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My Lords, sitting with two assessors, I tried a brutal rape and GBH case. The perpetrator was found guilty. Had we had trial by jury, it would have added weight to the conviction and sentencing. Is not the best way to deal with the court backlog that we request the Lord Chancellor and the Judicial Appointments Commission to appoint more judges and persuade retired judges, including the noble and learned Lords, to put all hands to the pump? They are sprightly.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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I thank the noble and right reverend Lord for his observations. We are taking a different approach, which is to look at the overall working efficiency of the court system. I acknowledge that there are substantial backlogs, particularly in rape cases, because they are often very complex cases. There is also the added distressing fact that many rape victims drop out of the process because of the lengthy delays. I acknowledge that that is a problem, but we believe that the best way to address this is to look at how the system operates as a whole. We are looking forward to receiving Sir Brian’s recommendations in due course.

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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My Lords, I hope my noble friend the Minister knows that I have a lifetime of respect for professional tribunals, lawyers and judges, including Sir Brian, and their fair remuneration. Notwithstanding concerns about the backlog, which are considerable, I hope he agrees with me that there will always be benefit in jury trial for the most serious cases. That benefit is about public confidence, legitimacy and participation in the legal system on which the rule of law depends.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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I completely agree with my noble friend: public confidence is absolutely paramount. That is one reason why jury trials were persisted with—quite rightly—during the Covid period. Having said that, there are certain types of cases where it is maybe not appropriate that a jury trial should be available. I anticipate that Sir Brian is looking at those sorts of cases.

Lord Burnett of Maldon Portrait Lord Burnett of Maldon (CB)
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My Lords, the current outstanding backlog in the Crown Court is a little over 73,000; it was only 40,000 when Covid struck. The Minister has already indicated that the volume of cases coming into the Crown Court continues to increase. Has any solution occurred to him or his colleagues other than to restrict the right to jury trial for the relatively low-grade cases of the sort that the noble Baroness, Lady Hazarika, spoke of, which clutter up the Crown Court?

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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The noble and learned Lord makes a very fair point. It is regrettable that the numbers are so high and are increasing—that is the underlying problem with which we are grappling within the Ministry of Justice. It is interesting that in the family court system we are back down to the pre-Covid numbers; that is good, and we are trying to bear down on that further. Nevertheless, the noble and learned Lord makes a very good point and I am sure that Sir Brian Leveson will address these points.

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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My Lords, the Minister will be aware of considerable concerns articulated by the Magistrates’ Association, among others, on the single justice procedure and the impact on vulnerable people, such as those with dementia or cancer, who have been brought to court. As he knows, that system is a magistrate with a lay expert supporting him. Will those issues, which are long standing since the establishment of the single justice procedure in 2015, be part of the ongoing review, as articulated by his right honourable friend Heidi Alexander two months ago?

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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I have sat as a single justice on certain types of cases. I understand that there are concerns about the single justice procedure, but I am not sure of the answer to the noble Lord’s question about whether it is part of Sir Brian’s review. I will write to him on that question.

Gaza: Peace Talks

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Question
15:38
Asked by
Lord Hain Portrait Lord Hain
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To ask His Majesty’s Government what assessment they have made of the prospects for the current peace talks involving Israeli and Palestinian leaders.

Baroness Chapman of Darlington Portrait The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
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My Lords, resolving the conflict has been a priority since day 1 of this Government. The fighting must stop and all sides must seize the opportunity to open a pathway to lasting peace and stability. We are encouraged by the progress being made on ceasefire negotiations and urge all parties to show the flexibility needed to reach an agreement. We continue to use every diplomatic lever to bring about a ceasefire and secure the safe release of hostages in co-ordination with international partners.

Lord Hain Portrait Lord Hain (Lab)
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My Lords, does my noble friend not agree that Palestinians, Israelis and indeed the whole world need a permanent ceasefire—not a quick fix, but a real end to hostilities? All the hostages should be out and Palestinian civilians should be returned to what little remains of their Gaza homes north and south. There should be no more starvation—which means preserving UNRWA—no reduction in the size of this integral part of the state of Palestine and no Israeli settlements. A Marshall-type plan is needed for the recovery of Gaza, with everyone held to respecting international law. Surely, this is the only path to real and stable peace for both Israelis and Palestinians. How will the Government help achieve that?

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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I thank my noble friend and acknowledge the work that he did as Minister for the Middle East and North Africa. He is absolutely right that a permanent peace is what we need to seek. A ceasefire would only ever be the first step. The hostages must be released and be home with their families. We also agree on the importance of UNRWA being able to continue its work. My noble friend asked about reconstruction. We are thinking very much about the next phase of planning in Gaza and building up its governance and security institutions. This must be predicated on tangible progress towards a Palestinian state.

Lord Callanan Portrait Lord Callanan (Con)
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My Lords, I am sure that the whole House is united in wishing to see peace in this terrible conflict. The key to a sustainable end to the fighting in Gaza remains, first, the elimination of Hamas and, secondly, the release of the hostages, whose suffering is truly intolerable. It should be intolerable for anyone who cares about human dignity and human rights. Does the Minister have any information on the well-being of the British national hostage, Emily Damari?

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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The noble Lord is completely right in everything he said about the hostages. My honourable friend Hamish Falconer the Minister for the Middle East, the Foreign Secretary and the Prime Minister have met on several occasions Emily’s family and others with British links who are wrongly held in Gaza. We are doing everything we can, using all levers to secure their immediate release.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed (LD)
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My Lords, any agreement that will allow the hostages to come home and the violence against the Palestinian civilians to end cannot come too soon. Does the Minister agree that the most represented group among Palestinian deaths and verified casualties are children between the ages of five and nine? The suffering will continue even if there is a ceasefire, because there are no educational facilities separate to those provided by UNRWA and no health facilities, especially for girls. Will the UK play a crucial role, as it did after the liberation of Mosul, to support pop-up education and psychosocial support for young children in particular? If there is to be long-term sustainable peace, we cannot allow a traumatised generation of children to continue to suffer.

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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I agree with the noble Lord. The ceasefire would be only the beginning. He is also right to remind us that around 50% of the bodies identified in Gaza so far have been of children and women. We are providing substantial aid to UNRWA and other agencies that are providing the support that he wishes to see in Gaza and in neighbouring places as well. That includes education, food, medicine and the psychosocial support that they are going to need for some years to come.

Lord Grocott Portrait Lord Grocott (Lab)
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My Lords, I strongly welcome the possibility of an end to the killing, but is not the sad lesson of the history of this region that the world’s attention is strongly on it and the need for solutions as long as violence is threatened or immediate? As soon as the violence goes away, the world’s attention moves elsewhere. After the slaughter that has taken place, is it not vital that we try to build something constructive out of it? That can occur in the long term only if the Palestinians have a state of their own.

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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That is right. The United Kingdom Government stand ready to play a leading role in reconstruction and securing a stable Palestinian state alongside a secure Israel. Gaza’s recovery and reconstruction must be Palestinian led, though, and support for future governance of the Palestinian Authority in Gaza and maintaining the viability of a future Palestinian state are an important part of the UK’s approach.

Baroness Foster of Aghadrumsee Portrait Baroness Foster of Aghadrumsee (Non-Afl)
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My Lords, to follow on from the last question, it is vital that a sustainable reconciliation process happens, hopefully after any peace deal. Bearing in mind what happened with us in Northern Ireland dealing with domestic terrorism, is it not important to set rules in relation to any elections that take place to any Palestinian Authority? Would not those rules have to include a commitment to non-violence and recognition of the State of Israel?

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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These issues of reconciliation and truth and the process that needs to be undergone are fiendishly difficult, as the noble Baroness has experienced and which we can see when we look at any of these processes anywhere in the world, from Chile to South Africa to Northern Ireland—and I hope in the future in Israel-Gaza. She made her point very well.

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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My Lords, I am sure I speak for all in your Lordships’ House in recognising the importance of a peace agreement; we are on the brink. We hope, and those of faith pray, that this agreement is reached. Will the Minister acknowledge, as I do, the important role that the United States—and indeed the incoming Administration—Egypt and in particular Qatar have played in their persistence in ensuring that this deal is reached? We all want to see the hostages released; we want to see aid into Gaza, and we want to see peace and security across the Holy Land. Will the Minister ensure that, as others have said, the momentum is sustained? You must be in the game, you must persist, and you must keep the momentum going to see the peace and security that we all so desire and that, most importantly, Israelis and Palestinians need now.

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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The noble Lord is right. It is important that we acknowledge the role of all players who have been instrumental in facilitating negotiations and smoothing this along, including, as he says, the United States, Egypt and Qatar. Of course, we have hope, given recent announcements, but I would draw a strong distinction between hope and optimism. We need to be realistic and patient, but our hope remains, and I have more hope today than we perhaps did a week ago.

Lord Dubs Portrait Lord Dubs (Lab)
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Does my noble friend agree that there has also been an increase in violence in the West Bank? Will the Government confirm that they are totally opposed to any expansion of settlements in the West Bank no matter what the American Government decide?

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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As we have discussed previously, the problem with settlements and some of the activity we have seen around them is that it makes the two-state solution more difficult to deliver in practical terms—so we do have concerns, as the noble Lord says.

Lord Soames of Fletching Portrait Lord Soames of Fletching (Con)
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My Lords, can the Minister confirm that in respect of these particular talks, quite apart from the vital necessity of the release of the hostages, it is very much the imperative that the Israelis are made to open more spaces for relief to starving Palestinians in Gaza and elsewhere?

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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The Israeli Government have a responsibility to allow aid to those who need it. The situation is urgent: the hunger and the deaths from the cold that we have seen among young children because of the change in the weather are appalling. We appeal to the Israeli Government to allow the necessary aid to reach those who need it.

Baroness Hayman Portrait Baroness Hayman (CB)
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My Lords, will the Minister take this opportunity to recognise the courage and commitment of those groups of Israelis and Palestinians working for peace who have continued to do so throughout this conflict? Will she also ensure that they are involved in the desperately difficult process that will follow any ceasefire of building a sustainable peace?

Baroness Chapman of Darlington Portrait Baroness Chapman of Darlington (Lab)
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As in many conflicts, there are some incredibly courageous individuals who risk their own lives to bring forward the cause of peace. It is only right that we are reminded of those people today. We should also remember the more than 300 aid workers who have been killed throughout this conflict. I thank the noble Baroness for her comments.

Data (Use and Access) Bill [HL]

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Order of Consideration Motion
15:51
Moved by
Lord Vallance of Balham Portrait Lord Vallance of Balham
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That the Bill be considered on Report in the following order:

Clauses 1 to 56, Schedule 1, Clauses 57 and 58, Schedule 2, Clauses 59 to 65, Schedule 3, Clauses 66 to 70, Schedule 4, Clause 71, Schedule 5, Clauses 72 to 80, Schedule 6, Clauses 81 to 84, Schedules 7 to 9, Clauses 85 to 102, Schedule 10, Clauses 103 to 107, Schedule 11, Clauses 108 to 111, Schedule 12, Clauses 112 and 113, Schedule 13, Clauses 114 and 115, Schedule 14, Clauses 116 to 119, Schedule 15, Clause 120, Schedule 16, Clauses 121 to 138, Title.

Motion agreed.

Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Unique Identifiers (Application of Company Law) Regulations 2024
Motions to Approve
15:51
Moved by
Lord Leong Portrait Lord Leong
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That the draft Regulations laid before the House on 22 May and 31 October 2024 be approved. Considered in Grand Committee on 13 January.

Motions agreed.

Free-Range Egg Marketing Standards (Amendment) (England) Regulations 2024

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Motion to Approve
15:52
Moved by
Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock
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That the draft Regulations laid before the House on 21 November 2024 be approved. Considered in Grand Committee on 13 January.

Motion agreed.

Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Motion to Approve
15:52
Moved by
Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage
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That the draft Regulations laid before the House on 19 November 2024 be approved. Considered in Grand Committee on 13 January.

Motion agreed.

Drones: High-security Prisons

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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Commons Urgent Question
The following Answer to an Urgent Question was given in the House of Commons on Tuesday 14 January.
“This is not a new issue. Effective prison security is fundamental to the rehabilitative nature of prisons and ensuring public confidence in the criminal justice system. The availability of illicit items in our jails, including drugs and mobile phones, undermines prison officers’ ability to do their jobs. Drone sightings around prisons in England and Wales are a matter of great concern and pose a major threat to prison security.
The Government inherited a prison system in crisis, with violence and drug use on the rise. We are working hard to deter, detect and disrupt the use of drones. It is not possible to talk in detail of the tactics we use to disrupt drones, given the obvious security implications. What I can say is that His Majesty’s Prison and Probation Service invests in targeted countermeasures such as improvements to windows, netting and grilles to stop drones from successfully delivering cargo such as drugs and weapons. In January 2024, restricted fly zones were introduced around all closed prisons and young offender institutions, supporting police and prison staff to disrupt illegal drone use.
Ultimately, it is crucial that we tackle demand. Almost half of people entering prisons have a drug problem, so we must get them into the right treatment to tackle the drug misuse that is so often a driver of their reoffending. Contraband supply and the illicit economy drive violence, self-harm and instability, and prevent offenders from engaging in rehabilitative activity. We are working to crack down on the levels of violence and drugs in our prisons.
The illicit economy is unfortunately highly profitable, with prices for drugs and other commodities between 10 and 100 times their street values—an A4 sheet of paper laced with drugs can be worth £1,000—so we must tackle the organised crime gangs behind it. That is why we have invested in a dedicated serious and organised crime unit, which will work with law enforcement agencies to disrupt these sophisticated criminal networks. We will continue to take a multifaceted approach to drones and the disruption that they cause to our prison system”.
15:53
Lord Keen of Elie Portrait Lord Keen of Elie (Con)
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My Lords, the Chief Inspector of Prisons has just delivered a devastating report on conditions at His Majesty’s Prison Long Lartin and His Majesty’s Prison Manchester. At HMP Manchester, almost 40% of prisoners have failed standard drug tests. The Chief Inspector of Prisons has reported that criminal gangs now, in effect, control the airspace above this high-security prison using drones. A number of years ago, the use of drones was emerging, and they could be controlled by physical defences such as nets and blocked windows. Unfortunately, even these basic defences were neglected at HMP Manchester. However, there have been recent and rapid developments in drone technology. First-person viewing drones, GPS-controlled drones and others are all capable of delivering not only drugs but weapons and even explosives. Will the Minister address not only the existing security failures at HMP Manchester but the possible introduction of electronic countermeasures at high-security prisons such as HMP Manchester?

Lord Timpson Portrait The Minister of State, Ministry of Justice (Lord Timpson) (Lab)
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The noble and learned Lord is completely right that drones pose a major and serious threat to all our prisons. I have been visiting Manchester prison for over 20 years, and I went there just before Christmas, in the light of the problems that it has. I saw for myself the issues that staff are dealing with, with 49% of the prisoners arriving in the prison being addicted to drugs. I cannot share the counter-drone tactics as that would play into the hands of sophisticated and serious organised criminals. I can assure the noble and learned Lord that we are currently getting on with a number of fixes, but the biggest fix is ensuring there is no market for drugs and weapons in the first place, and that people in prison are there to get on with their sentence, get educated and do purposeful activity, so that when they are out, they stay out.

Lord Reid of Cardowan Portrait Lord Reid of Cardowan (Lab)
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Will the Minister confirm the magnitude of the challenge that he has inherited? Is it not the case that, during the period of the previous Government, there was an increase in drug finds of 44%? In the year until March last year, there was an increase in weapon finds of 24%. The Minister now faces a challenge because of the fact that, over the past 14 years, very little has been done to confront the challenge.

Lord Timpson Portrait Lord Timpson (Lab)
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The noble Lord is completely right that the prisons I am visiting now are very different from the prisons I visited 15 or 20 years ago. The buildings are often in decrepit states of repair. We have a lot of new staff who are still learning the skills of being a prison officer and we have an awful lot more to do to ensure that people, when they are in prison, spend their days purposefully, not just sitting in their cells.

Lord Rooker Portrait Lord Rooker (Lab)
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Can I ask my noble friend about Long Lartin? I am going beyond the Question, but is the safety of the inmates as such today that they are able to exercise in every exercise yard? Long Lartin’s proximity to the countryside and the geography around it allow potential problems from the outside against the inmates. I should like an assurance that that matter has been dealt with since I visited some years ago.

Lord Timpson Portrait Lord Timpson (Lab)
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Like the noble Lord, I visited some years ago, so I do not have an exact picture in my mind of the layout of the exercise yards. I can assure him that every male closed prison now has X-ray scanners. In 2003, there were over 1,000 drone sightings. They were up 770% between 2019 and 2023. We have a serious problem but if I know any more details, I will let him know.

Lord Carlile of Berriew Portrait Lord Carlile of Berriew (CB)
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My Lords, does the noble Lord agree that the focus for prisoners should be on not taking drugs when they come out of prison? Does he agree that there is still a gap in making sure that prisoners know what will be done to help them to stop taking drugs on their release and that, if there was greater co-operation in that regard, we might not have quite as big a problem with drones as we have today?

Lord Timpson Portrait Lord Timpson (Lab)
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The noble Lord is completely right. There are far too many people in prison who arrive addicted and stay addicted. They need an incentive and support not to take drugs. That is why I am a big fan of substance-free living wings and engaging with probation early so that, when people are released, we have a seamless link whereby probation picks up with all the drug workers on release.

Baroness Hamwee Portrait Baroness Hamwee (LD)
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My Lords, a major component of security regarding prisons must be stable, expert and sufficient staffing. The Minister referred to staff. When it give evidence to our Justice and Home Affairs Committee, the Prison Officers’ Association referred to the recruitment process as being simply not fit for purpose and said that it was not surprising that corrupt and underqualified officers were being recruited—referring in particular to online interviews. Can the Minister give the House any news about improving the recruitment process and the number of staff?

Lord Timpson Portrait Lord Timpson (Lab)
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I thank the noble Baroness for the question. Having run a business for many years and tried to find fantastic superstars to work with, I am well aware that we always want to find the best colleagues to work in our prisons. I am very engaged with the POA team as well. Noble Lords may be interested to know that we are currently at 99.5% staffing levels. That does not mean that everybody is trained and in the right place, but MoJ colleagues have made good progress on that. As regards the way recruitment works in our prisons, professionally trained assessors always take part in the interviews.

Lord Hogan-Howe Portrait Lord Hogan-Howe (CB)
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My Lords, our prisons are very good at keeping people in; I am afraid they are not as good at keeping things out. There are two symptoms of that: the large number of mobile phones and, as has been said already, the amount of drugs in prisons. Some 40% of the people who enter have a drug problem, but 60% of those who leave have one; they get their problem in prison. Drones are clearly an issue, but I am afraid that corruption is a bigger one. One of the biggest challenges is, I am afraid, that nobody is really concentrating on this issue in terms of investigation: the NCA is too diffuse, local forces are too busy, and the Prison Service has no investigative capacity. Would the Minister be interested in attending a short meeting on two distinct proposals to see how they might be able to do something about this? There would be some cost, but I promise him not too much.

Lord Timpson Portrait Lord Timpson (Lab)
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I thank the noble Lord for the question; I would be delighted to meet up and to learn more. The problem we have with serious organised crime in our prisons is that these people are in there to make money. They do that by selling phones and drugs, which creates debt and violence, so it is essential that we tackle this. We are giving more focus to our dedicated serious and organised crime unit and we are working across government, but the noble Lord is right that this is vital.

Lord Woodley Portrait Lord Woodley (Lab)
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My Lords, yesterday the Justice and Home Affairs Committee heard from the chair of the Prison Officers’ Association that it was only a matter of time before arms were sent into prison via drones. There were even concerns that, with drones now being able to carry 75 kilograms, they could be used to facilitate some form of escape. Can the Minister please explain what anti-drone technologies we have in place, and will they be whizzed out across the rest of the empire?

Lord Timpson Portrait Lord Timpson (Lab)
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I thank my noble friend for the question. I am afraid that, due to security reasons, I cannot go into any details on the measures that we have and that we will have. However, I can assure him that we will spend £520 million on maintenance over the next two years, because we have inherited prisons in such a bad state. A lot of that money will be spent on repairing nets, grilles and windows.

Lord Kennedy of Southwark Portrait Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
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Let us have the Conservative Benches and then the Cross Benches. If noble Lords are very quick, we will get both in.

Baroness Sugg Portrait Baroness Sugg (Con)
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My Lords, can the Minister update the House on any improvements since the introduction in January 2024 of the no-fly zones around certain prisons? Have they been a success, and how can we boost their effectiveness?

Lord Timpson Portrait Lord Timpson (Lab)
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The no-fly zones have been a great success and have been an important part of the work we are doing, but there is still further work we need to do. I reiterate that the demand is just as big a problem as the supply.

Lord Carter of Haslemere Portrait Lord Carter of Haslemere (CB)
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My Lords, drugs getting into prisons, whether by drones or otherwise, give rise to self-inflicted deaths. Coroners issued 12 prevention of future deaths reports to the Ministry of Justice in 2024, relating precisely to this issue of the link between drugs and self-inflicted deaths. Of course, the Government have a legal duty of care towards prisoners and a legal duty to respond to these prevention of future deaths reports, which I do not think has happened. Can the Minister assure us that this will be looked at and that the reports’ recommendations will be implemented?

Lord Timpson Portrait Lord Timpson (Lab)
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The noble Lord is right that any death in custody is a death too many. One of the most difficult jobs I have, when I read my emails every morning, is when I get notified that we have had a death in custody. That is someone who was in our care, and I take that very seriously.

Financial Assistance to Ukraine Bill

Second Reading (and remaining stages)
16:04
Moved by
Lord Livermore Portrait Lord Livermore
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That the Bill be now read a second time.

Lord Livermore Portrait The Financial Secretary to the Treasury (Lord Livermore) (Lab)
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My Lords, it is a privilege to open this debate and to speak alongside so many expert noble Lords. I take this opportunity to welcome the noble Baroness, Lady Batters, to your Lordships’ House and very much look forward to her maiden speech.

More than 1,000 days since Russia launched its illegal invasion of Ukraine, the Ukrainian people face a third winter of struggle for survival. They have paid a heavy price—thousands of lives lost, families torn apart, and whole communities destroyed beyond all recognition. Russian artillery continues to target civilian infrastructure and degrade Ukrainian energy networks, leaving ordinary people to freeze in icy cold conditions. Every day on the battlefield, Ukrainian soldiers give their lives in defence of their homeland and the common values that we share. Despite all this, the spirit of the Ukrainian people remains unbroken and Ukrainian forces continue to take the fight to their Russian aggressors with courage and conviction.

We should be under no illusion about the stakes. As the Foreign Secretary has said, Putin’s invasion of Ukraine is being driven by an “imperialist” desire to expand his

“mafia state into a mafia empire”.

It has involved forcibly seizing territory to which Russia has no legal right and for which the Russian people are paying an enormous price. It is a strategy built on corruption and the crushing of dissent—including courageous opponents such as Alexei Navalny—and is backed by the spread of disinformation at home and abroad.

Noble Lords will note that this is a fight not only for Ukraine’s territorial integrity and the safety of its people but for the future of Europe’s collective security and prosperity. The Government have consistently been clear that Putin must fail, but our words of condemnation are not in themselves enough. Action is required. That is why the UK’s support for Ukraine has never wavered, regardless, I am pleased and proud to say, of which party has been in government. I pay tribute to noble Lords opposite who stood side by side with President Zelensky and the Ukrainian people in their hour of need. We are united in saying that we will continue to stand with Ukraine for however long it takes.

Last year, the Prime Minister announced the Government’s commitment to provide £3 billion of military support to Ukraine each year for as long as is needed. Overall, the UK’s combined military, humanitarian and economic support for Ukraine now stands at £12.8 billion. That includes state-of-the-art Challenger 2 battle tanks and Storm Shadow missiles, as well as NLAW anti-tank missiles produced in Belfast that helped Ukrainian soldiers bravely repel the initial attack on Kyiv. Through the hugely successful Operation Interflex, UK Armed Forces have helped train more than 50,000 Ukrainian military personnel.

In total, the UK has now delivered around 400 different military capabilities to Ukraine, with a new £225 million package of drones, boats and munitions announced in December. This builds on the introduction of the most wide-ranging sanctions regime ever imposed on a major economy. As a result of this, we have successfully restricted Russia’s access to global financial markets, reduced its energy revenues and weakened its ability to finance this illegal war. This includes sanctions on more than 2,100 individuals and entities, amounting to over £20 billion. More than 100 ships used for transporting Russian energy have been targeted, including 93 oil tankers that form part of Russia’s shadow fleet, used to illicitly transport billions of pounds’ worth of oil across the globe. The oil price cap has reduced Putin’s tax revenues from oil by 30%.

We are continuing to keep up this pressure. Just last week, the Foreign Secretary announced the designation of two Russian oil giants that together produce more than 1 million barrels of oil per day. The UK has also taken steps to bolster the Ukrainian economy, including by signing the UK-Ukraine digital trade deal to ensure that Ukraine benefits from cheaper and quicker trade. UK Export Finance has provided over £500 million in loan guarantees, including for Ukraine’s own defence industry. We have committed £4.1 billion in fiscal support through loan guarantees on World Bank lending.

However, we cannot stop there. We must continue to back Ukraine, to help its people deter Russian aggression so that they can secure a just and lasting peace on their terms. That is why the Chancellor has committed £2.26 billion to the G7’s extraordinary revenue acceleration loans to Ukraine scheme. This scheme will provide a combined upfront loan of £50 billion from G7 lenders—including the US, Canada, Japan, the UK and the EU. This loan will be repaid from the extraordinary profits generated on holdings of immobilised Russian sovereign assets held in the Euroclear bank in the EU. Euroclear is an international central securities depository with a unique business model, allowing for these profits to be generated.

The EU has already enacted the necessary regulation to operationalise the Ukraine loan co-operation mechanism, which will distribute the profits from the immobilised sovereign assets. The UK’s contribution to the scheme will be provided to Ukraine as budgetary support earmarked for military procurement such as air defence and artillery. It will be delivered in three tranches over three financial years, with the first tranche intended to be delivered early this year. The funding will be issued from the Treasury estimate and was scored in the Budget in October. This new funding is additional to the £3 billion of bilateral military support, which, as I have said, the Government are committed to providing for as long as it takes.

I am aware that the noble Lord, Lord Blencathra, has tabled an amendment to the Motion, calling for immobilised Russian state assets to be used to fund financial assistance to Ukraine. I commend the noble Lord for his work on this issue and the support he has shown for Ukraine. The Bill does not allow for the seizure of assets themselves, in the EU or elsewhere. The Government continue to actively consider all lawful options for ensuring that Russia pays for the damage it has caused in Ukraine. Any action must be taken in tandem with the G7—this is vital to maintain the strength and unity the G7 has already shown in the face of Putin’s aggression. The Bill before your Lordships’ House is designed to deliver new funding to Ukraine as quickly as possible.

Importantly, the Government have agreed with our G7 allies to ensure that Russian sovereign assets remain immobilised across our jurisdictions until Russia ceases its war of aggression and pays for the damage it has caused to Ukraine. G7 lenders have worked closely together to design the scheme in a way that allows repayment in a scenario where profits cease and Russia pays reparations to Ukraine. The sole purpose of the Bill is therefore to provide the Government with a spending authority to deliver this contribution to the G7 scheme. It enables the Government to sign the loan agreement with Ukraine and begin dispersing funds.

By unlocking new funding backed by profits generated from immobilised Russian sovereign assets, we will enhance Ukraine’s ability to defend itself and step up international pressure on Putin’s war machine. We know that this war is already costing Putin dearly. It is a fight for land to which Russia has no right and for which the Russian people are paying an enormous price. To restore peace we must ensure that Putin has no path to military victory. That means deepening our resolve by working in partnership with G7 allies to provide the support Ukraine needs for as long as it takes, not only in defence of Ukrainian sovereignty and the safety of its people but for the liberal democratic values we cherish and the security we depend on. I beg to move.

16:12
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Con)
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My Lords, I thank the Minister for his helpful and descriptive introduction. I will not repeat all the detail he kindly gave us. Like him, I much look forward to the maiden speech of the noble Baroness, Lady Batters. She is a near neighbour of mine in Wiltshire and a trailblazing first female president of the National Farmers’ Union. We worked together professionally, and I know the House will benefit hugely from her talents and energy.

It is clear from discussions in the other place that there is practically universal support for helping Ukraine in its struggles. The United Kingdom was a first mover in supporting Ukraine in 2022. Prime Minister Boris Johnson led the charge and there has been an encouraging consistency in support through the premierships of Liz Truss, Rishi Sunak and, of course, our Prime Minister Sir Keir Starmer. We have pledged over £12 billion since 2022 and sanctioned more than 2,000 entities. Moreover, many people in Britain have generously welcomed displaced Ukrainian families into their homes.

The proposed arrangement is an unusual one, of which the UK was a vociferous advocate. From these Benches we support the UK loan to Ukraine of £2.26 billion, which will be repaid from revenue earned on frozen Russian assets. We also support the decision to earmark the UK contribution towards military expenditure, including on air defence, artillery and other equipment so desperately needed by our Ukrainian allies. This is particularly important as the £20 billion coming from the United States is being handled by the World Bank, which I believe means that it cannot be used for military purposes.

We therefore support the Bill. We would, however, need convincing if the Government were minded to contemplate seizing Russian assets themselves. That would be a large step with wider ramifications and would need detailed scrutiny.

I should add that I have some professional experience of dealing with Ukraine and, to speak frankly, there were issues with the siphoning off of expenditure in the health area, which the not-for-profit development body I chaired helped to end—with the support of some brave reformers in the Ukraine Government. This was before the accession of Mr Zelensky, and I know that his leadership is determined to avoid a return of this kind of practice. However, it means that the detailed arrangements for the loans need to be clear and transparent, so I have some questions to ask the Minister about the practical application of the Bill.

First, can he outline for the House the specific mechanisms by which our UK loans will be distributed and managed? Ensuring that this significant financial commitment is deployed in a timely way will be critical to achieving the desired impact.

Secondly, what parties will be involved in the transfer of these loans? Will the money be transferred directly by HM Treasury to the Government of Ukraine, will it be added to a shared pot with the G7 or will the Government use a third party, as the US is doing, which in our case might be a law firm, a specialist bank or some other body?

Thirdly, I have a novel point since we will have a new United States President in a matter of days. He has expressed a determination to bring the war in Ukraine to an end, so we need to reflect on the ramifications for this Bill. Any Trump deal might contain financial provisions. The Government need to be vigilant in ensuring that any terms ensure that the repayment of the sums provided by the Treasury continues—otherwise, there will be a substantial and unplanned cost to the UK taxpayer. The Minister will wish to comment and let us know whether the arrangements planned make that a needless concern, as I very much hope.

As we provide financial aid, we must also remain vigilant about the broader security implications of this conflict. The war in Ukraine is a stark reminder that the peace and stability we often take for granted are not guaranteed but must be actively defended. The international situation is more concerning by the day, whether in the Middle East, North Korea or the South China Sea. In recent weeks, NATO chiefs have issued warnings that the alliance must increase defence budgets to match the levels of threat we face. The new US President has called for a major increase in spending by European states, so this is a matter of key concern. The Government are yet to announce when they will reach the target of 2.5% of GDP on defence spending, a figure that many influential observers now consider to be too low. There is a strong case for speeding up this announcement. Perhaps the Minister will be kind enough to update us on the Government’s plans.

Furthermore, it is vital that we take a long-term view on this issue. Have the weapons that we have sent Ukraine been replaced? While immediate military aid to Ukraine is crucial, we must also ensure that our own Armed Forces are adequately equipped, trained and funded to address a broad spectrum of potential threats. This includes not only conventional military readiness but investments in emerging domains, such as cyber defence, where adversaries are increasingly active.

Although the moneys under discussion today do not come out of the defence budget, it is important, in an increasingly dangerous world, to focus on our defence. Can the Minister reassure the House that the Government remain fully committed to raising defence spending to 2.5% of GDP as soon as possible?

In conclusion, supporting Ukraine is not only a moral imperative but a strategic necessity. This Bill, which we support, represents a new step in reinforcing our commitment to Ukraine’s sovereignty and independence. However, it is incumbent upon us, as legislators, to ensure that this financial assistance is delivered effectively and transparently. I look forward to hearing from all noble Lords and to receiving answers to my questions from the Minister. Let us together send a clear and united message that the United Kingdom stands firmly with Ukraine.

16:19
Baroness Smith of Newnham Portrait Baroness Smith of Newnham (LD)
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My Lords, from these Benches, as always, I associate my comments with those of the Minister and the noble Baroness, Lady Neville-Rolfe, on our unwavering support for Ukraine. One thing that has been notable over the past almost three years is the extent to which there has been unwavering cross-party support for Ukraine. The previous Government were clear in their commitments and the present Government are making the right noises and the right commitments to Ukraine. I welcome the Minister’s tone in seeking to reiterate that support for Ukraine in opening the debate.

As the noble Baroness, Lady Neville-Rolfe, reminded us, this is not just a question of Ukraine and its sovereignty but a wider issue. I would like to take the discussion a little beyond the G7 and further than the Official Opposition position. The Liberal Democrat Benches would like the Government to consider going further and seizing frozen Russian assets—to go beyond spending the revenue, which is welcome, and look at the assets.

We are wholly committed to the Bill and do not in any way wish to delay it. It needs to go through today to demonstrate the commitment to the G7 agreement and to allow the £2.26 billion British loans to go forward, but we would like the Government to think again. My understanding is that the regret amendment in the name of the noble Lord, Lord Blencathra, may be about going further. From these Benches we would like to go further but not at the expense of delaying the Bill, which would not be appropriate.

As part of the international community, we have given much support to Ukraine. As we have heard, the United Kingdom has given significant military support and financial aid. That is vital. As the noble Baroness, Lady Neville-Rolfe, said, if our renewed commitments and the loans go towards military defence for Ukraine, that will be welcome. At the same time, as the noble Baroness pointed out, we need to reassure ourselves and the country, as well as our NATO allies, that we are committing sufficient resources to our own defence. There is a very real concern that our defence expenditure is too little and our Armed Forces are too small, not adequately resourced and without sufficient equipment. The 2.5% commitment is essential.

Is the Minister able to help the House understand when the spring fiscal event may happen? One thing about parliamentary or governmental time is that it does not necessarily fit with a standard calendar. For most of us, spring starts either on 1 March or in late March, depending on which approach you take and whether you look to the moon or to the calendar. For the Government, sometimes an Autumn Statement has happened in late December. Can the Minister reassure the House that a spring fiscal event might happen well before Easter and will ensure not just that the £3 billion in military support for Ukraine is still in place but that His Majesty’s Government are not making any cuts to defence, providing us with a clear timeline for 2.5% of GDP for defence?

Earlier in the week, there was discussion in the other place about the Chancellor’s visit to China and the fact that, since taking over last July, the Prime Minister has been very active on the international scene. It is very welcome that Government Ministers talk frequently to our partners and allies in the G7 and NATO, and to the wider international community. The discussions with China are perhaps a little more unusual.

Is the Minister able to tell the House whether the Chancellor was able to talk to China about the sanctions that have been imposed? While the Minister was very clear that we need to work with the G7 and the European Union in terms of the imposition of sanctions, those sanctions would be so much stronger if China were also fully on board.

Further, what conversations have the Foreign Secretary, the Prime Minister or the Chancellor—or indeed any other Minister—had with our Commonwealth allies? While the response from the West, including the United States, so far to the Ukraine crisis has been very strong, the support from our Commonwealth partners has not been so strong. If the international relations in which the Government are currently engaged are really to be as effective as they might be, using the opportunity to engage with our Commonwealth partners to try to explain to them the importance of the sanctions regime and the importance of supporting Ukraine would reinforce the United Kingdom’s place on the international scene and help us give additional support to Ukraine.

In short, from these Benches we support the Bill, but we would like to see the Government go further and use all the tools at their disposal, diplomatic as well as military and financial, to give Ukraine as much support as we can as it reaches the third anniversary of the Russian invasion.

16:26
Amendment to the Motion
Moved by
Lord Blencathra Portrait Lord Blencathra
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At end insert “but regrets that the Bill as introduced does not include provisions to allow immobilised Russian state assets, reserves, or any other property to be used to fund financial assistance to Ukraine”.

Lord Blencathra Portrait Lord Blencathra (Con)
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My Lords, I beg to move the regret amendment standing in my name on the Order Paper. I too am looking forward to the maiden speech of the noble Baroness, Lady Batters, and her take on the situation in British agriculture at the moment, which is quite interesting.

Let me make it absolutely clear that I will not press my regret amendment to a vote. I will do nothing to delay the passage of this Bill and, in the highly unlikely event that there is a vote on the Bill, I shall vote for it. I support the Bill, but I have had to adopt this tactic because I cannot table a simple amendment I would like—because it is a money Bill—to add a little additional power to the Bill. I simply cannot understand why the Government are not taking that power, as the United States and Canada have done. Having said that, I congratulate the Minister on his speech and congratulate the current Labour Government for being as robust on Ukraine as my right honourable friend Boris Johnson was when this appalling war first started. I

I am proud of the financial assistance that this United Kingdom has already provided to Ukraine. We have committed £7.8 billion in military support and £5 billion in non-military support. In hard cash terms, the United States has given $135 billion, Germany $16.5 billion and I think our £12.8 billion is $15 billion. However, in terms of GDP we find that Estonia has committed 3.5% and Denmark 1.8%. Norway, Lithuania, Latvia, Finland and Poland also stand out as the highest donors in terms of GDP. The closer you are to Russia, the more you have to fear and the more you spend on defeating the aggressor. In GDP terms, the US contribution is only 0.32%, Germany’s is 0.57% and we are at 0.55%.

Nevertheless, in these difficult financial times we have done a remarkable job in assisting. Of course, as the Minister pointed out, we have done other things as well. We have trained over 51,000 Ukrainian troops and sent over 400 different types of military capabilities and kit, including drones, boats and munitions. Defeating Putin is a point the United Kingdom—including the present Government—repeatedly makes at the United Nations and we have imposed sanctions on over 2,100 individuals and entities, including 100 ships and shadow tankers. We are taking a leading role in the recovery and reconstruction of Ukraine, co-hosting the London Ukraine Recovery Conference in 2023.

Then we come to the G7 summit in Italy in June 2024, which is the father of the Bill before us. The official communiqué said:

“We, the Leaders of the Group of Seven … gathered in Apulia … reaffirm … Ukraine’s fight for freedom and its reconstruction for as long as it takes … we decided to make available approximately USD 50 billion leveraging the extraordinary revenues of the immobilized Russian sovereign assets, sending an unmistakable signal to President Putin”.


The important words there are

“leveraging the extraordinary revenues of the immobilised Russian sovereign assets”.

So what are those assets? The figures vary, but total immobilised Russian assets are believed to be from $280 billion to about $300 billion. About $240 billion is in the EU, up to $28 billion to $30 billion in the United Kingdom and the rest elsewhere. The US does not have much at all. The $50 billion loan will be advanced to Ukraine under the G7’s extraordinary revenue acceleration scheme—the ERA—and is due to be paid back to lending countries from the interest that we are making from those immobilised Russian assets. The UK, as the Minister said, is about to extend our share of £2.26 billion under the ERA loan scheme, to be repaid from approximately 15 years-worth of interest on those Russian state assets that have been immobilised in the EU.

That $50 billion in ERA loans is, however, merely a temporary financial buffer. It falls far short of addressing Ukraine’s long-term needs, with damage requiring reconstruction surpassing $486 billion, according to the World Bank’s February 2024 assessment, and western contributions to Ukraine’s defence expenditure of roughly $105 billion annually.

The little amendment that I wanted to make to this Bill was simply to add after the words “money provided by Parliament” a sentence that said, “or out of any assets, reserves or any other property held within the jurisdiction of the United Kingdom directly or indirectly by, for or on behalf of the Russian Federation”. That would permit us, if we so decided—it is a permissive power—to utilise the whole of the $30 billion of Russian assets that we have. I am very happy to use taxpayers’ money in the Bill, but I am more keen to use Russian money. The whole purpose of my amendment today is to ask the Government: why on earth not take that permissive power to utilise Russian assets? Why are those words not in the Bill?

Since it is morally and legally right in international law to keep the Russian money immobilised but spend the interest raised on it to help the reconstruction of Ukraine, it must also be legally right in international law to spend the capital assets themselves to help Ukraine. Canada and the United States have taken this path. In 2022, Canada introduced legislation that enables its Government to seize state and individual assets frozen in Canada in cases of grave breaches of international peace and security. In 2023, the United States passed the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act—the REPO Act—which allows immobilised Russian sovereign assets seized and transferred under US jurisdiction to be sent to Ukraine.

Some have suggested that our Treasury has blocked this because of a misguided fear that it will deter foreign investment in the City or the UK, since it could send a message to foreign investors that the UK will suddenly seize their assets without good reason. That is just not the case and is not going to happen. The concerns that seizure would lead to the withdrawal of global reserves held in the G7 currencies and their ultimate devaluation are grossly exaggerated. The practical impact of indefinite immobilisation, as we have done, and confiscation is exactly the same. Three years of immobilising these Russian assets have not led to a flight of capital from the US dollar, the euro or Great British pounds, and there are no grounds for believing that confiscation will have that effect either.

In January 2024, the United Kingdom and Ukraine signed an agreement on security co-operation. Among the 66 paragraphs or articles were the following:

“The Participants reaffirm that the Russian Federation must pay for the long-term reconstruction of Ukraine. Russian sovereign assets in the UK’s jurisdiction will remain immobilised until the Russian Federation has paid for the damage it has caused to Ukraine. The UK, working with its partners, will continue to pursue all lawful routes through which Russian assets can be used to support Ukraine … As a priority, the Participants will continue to work together with others, including G7 states, to explore options for the development of appropriate mechanisms to provide reparation for damage, loss, or injury caused by Russian aggression”.


That is what the last Government said, but what do the current Government say? It seems exactly the same, I am pleased to say.

On 6 December last year, in answer to a Written Question from my noble friend Lord Banner, the Minister said:

“This Government is clear that Russia must be held responsible for its illegal war. That includes its obligations under international law to pay for the damage it has caused in Ukraine. Working with allies, we continue to pursue all possible lawful avenues by which Russia is made to meet those obligations. Our agreement with G7 partners to provide approximately $50 billion in additional funding to Ukraine, repaid by the profits generated on sanctioned Russian sovereign assets, is an important step towards ensuring Russia pays.”


Note the words, “an important step”—not the only step. The only way that Russia can be made to pay is to use all the immobilised assets held in the UK, EU and US. These should be transferred to an international fund, as the Council of Europe has called for.

It is morally right to use those assets; it is legally right under international law to use those assets. The whole point of my Motion today is to plead with the Government to take those permissive powers, to use when the time is right. Will the Government please explain to me and the House in more detail why they are not taking that route? I beg to move.

16:36
Lord Browne of Ladyton Portrait Lord Browne of Ladyton (Lab)
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My Lords, it is a pleasure to have the opportunity to rise to offer unambiguous support for this Bill. I thank my noble friend Lord Livermore, the Financial Secretary to the Treasury, for his characteristically clear introduction to this debate. I, like others, am looking forward to the maiden speech of the noble Baroness, Lady Batters. I am pleased to follow the noble Lord, Lord Blencathra, and to commend him for the same reasons my noble friend the Minister did: his consistency and his contribution in this area, with particular reference to the issue that informs his regret amendment—which I regret I cannot support. I will come back to that in a few minutes.

This is a short Bill, but one freighted with enormous consequences, as we have heard from the contributions thus far, which were characteristically cogent for your Lordships’ House. It gives effect to our commitment to devote £2.26 billion to the G7 extraordinary revenue acceleration loans to Ukraine scheme, the ERA. This is separate from the £3 billion of military aid that we will also provide this year. I applaud Ministers for their decision to hypothecate these funds and to ensure that they are directed squarely to military procurement.

It is worth being clear-sighted about the purpose of this disbursement. It is to enable Ukraine to stand against unprovoked aggression and to ensure that the new era of great-power competition that is already upon us does not see the normalisation of such aggressive expansionism—a course taken by powers who see their own strength as justification enough for such actions. It is clear that the incoming US Administration cannot necessarily be relied upon either to shoulder its share of the burden in the provision of military support for Ukraine, or indeed to enforce international norms around the appropriate behaviour of great powers or aspirants to that status.

Last week, the President-elect offered a justification for his threat to annex Greenland either by force or via economic pressure. In a somewhat circular piece of logic, he asserted that such a course of action is justified by the fact that the US “needs” Greenland for its economic security. Although Putin’s speech that launched the invasion of Ukraine was more rococo in style, the central message was remarkably similar: that Russia had the moral right to invade to protect its own security interests. In making this comparison, I emphatically do not suggest a scintilla of moral equivalence between the two men or the countries they represent. But taken together, the US, Russia and China will help shape the new norms of this era of great-power competition. As we debate this Bill, we have to ask ourselves what lessons President Xi, for instance, will draw from recent history as he contemplates what he considers to be the daily annoyance of a free and independent Taiwan.

Being mindful of these precedents is one of two reasons why I believe this Bill and our wider aid for Ukraine is important. The other is the state of public opinion in western Europe. In democratic politics, public opinion today is in general a pretty accurate guide to the attitude of leaders tomorrow. That being the case, polling conducted by YouGov in December makes sobering reading. It reveals that in seven key European countries, including our own, support for continuing assistance for Ukraine has fallen markedly. Equally, support for ceasing support and reconciling ourselves to a compelled peace, even on terms markedly unfavourable to Ukraine, has increased.

To some extent, this is a consequence of the more ambivalent US attitude Europeans expect from the new Administration when they take office. The figures are striking, none the less. In Germany, Spain, France and Italy, support for continuing assistance to Ukraine is now lower than for concluding a peace favourable to Russia. Even in Britain, there is only 4% between the two options.

Concerning though these figures are, the purpose of government is not to act as a weathervane reflecting public opinion but to lead it. I applaud the efforts of Ministers in the previous Administration—not least the noble Lord, Lord Ahmad, who I regret is not in his place to hear this—in the support they afforded Ukraine. I also have complete confidence in the Ministers on our Front Bench and in the other place; I am sure they will prove equally adamantine in their resolve.

What Ukraine needs is constancy, and the mechanism to which this Bill gives effect provides that. An ebbing of our support and that of our allies would lead to a collapse of the rules-based international order, a spiralling refugee crisis and the subjugation of a free and sovereign people. It would be not only morally wrong but run counter to our own interests and those of any country which values stability and collective security.

In 1941, President Roosevelt gave one of his celebrated fireside chats in which he described the US as an “arsenal of democracy”. It contained some words which apply to our situation, as they did to his:

“We have furnished … great material support and we will furnish far more in the future. There will be no ‘bottlenecks’ in our determination … No dictator … will weaken that determination by threats of how they will construe that determination”.


It is in that spirit that I offer this Bill my unambiguous support.

There is more to do in exploring the use of frozen Russian assets, but that lies outside the scope of this legislation. I am sure that those who support that ambition and who are yet to speak, or who will speak on other occasions, are aware that there was a Back-Bench debate on this issue in the other place, led by the Liberal Democrat Mike Martin, on 6 January. I draw noble Lords’ attention—I am not stepping in for the Minister; he is perfectly capable of doing this himself— to column 671 of that debate. Stephen Doughty, the Minister of State at the Foreign, Commonwealth and Development Office, responded to the debate. I will read the following passage in full to your Lordships:

“The fundamental questions about what more we can do to use Russian assets for the benefit of Ukraine were at the heart of the debate. The Government and our G7 partners have repeatedly affirmed our position. Russia’s obligations under international law are clear: it must pay for the damage it has caused to Ukraine. The ERA loan and our contribution will ensure that Ukraine can receive the financial support that it needs now—it was right to focus on getting that out the door, because we urgently need to support Ukraine now—with the profits generated on sanctioned Russian sovereign assets providing that. I reassure colleagues throughout the House who have rightly asked a lot of searching and challenging questions that we are committed to considering all possible lawful avenues by which Russia can be made to meet its obligation to pay for the damage it is causing to Ukraine. We continue to work with allies to that end”.”.—[Official Report, Commons, 6/1/25; col. 671.]


Thereafter, the contributions, few that they were in that debate, were supportive of that position, as I am.

It is in the spirit of President Roosevelt that I offer the Bill my unambiguous support. I am proud that we have devoted to Ukraine more assistance than any other single country save the US and Germany, and trust that we will continue our support, conscious that Ukraine is not defending merely itself but the UK and all its European allies and friends.

16:46
Baroness Anelay of St Johns Portrait Baroness Anelay of St Johns (Con)
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My Lords, I strongly welcome the Bill. It gives a clear signal of our continuing commitment to the people of Ukraine and our defence of European security. We are reminded every single day of the appalling impact on Ukraine of President Putin’s illegal and unprovoked invasion.

Today, the Minister has given us a very clear and welcome exposition of the purposes of the Bill. It is quite simply to unlock the UK’s contributions to the G7’s extraordinary revenue acceleration scheme by using the extraordinary profits generated on immobilised Russian sovereign assets held in the EU.

I was interested in paragraph 6 of the Government’s Explanatory Notes for the Bill. That makes it clear that the Government consider that the legal basis for this UK action—and I welcome that—is rooted in EU regulation 2024/2773, which was adopted by the European Parliament and Council of the European Union. Paragraph 6 states:

“This provides a legal basis within the EU for the UK to receive repayments from the ULCM, from the extraordinary profits on the immobilised assets, proportionate to the UK’s contribution to the initial funding for Ukraine provided by the G7 as a whole”.


That contribution was $3 billion. I was just thinking about what my noble friend Lord Blencathra said. When I read this, I found it both intriguing and potentially encouraging for future legal action, and I emphasise “legal”.

Paragraph 14 of that European regulation offers two routes by which the UK, as a post-Brexit third country—in EU parlance—can legally make payments to assist Ukraine. First, it says:

“It should be possible to support the Mechanism by providing extraordinary revenues stemming from the immobilisation of Russian sovereign assets held in relevant jurisdictions other than the Union. To that end, it should be possible for third countries or other sources to contribute to the mechanism”—


so far, so good indeed. Secondly, it says:

“Furthermore, it should be possible for third countries to directly use extraordinary revenues stemming from the immobilisation of Russian sovereign assets within their jurisdiction to reduce the repayment needs of any respective bilateral loan provided to Ukraine, thereby supporting the Mechanism by reducing the total level of support that would be required for that loan”.


My question, therefore, is: can the Minister confirm today—just for clarity for the House—which of those two avenues has been adopted? I appreciate that we are following an absolutely legal route.

Of course, I welcome the fact, as the Minister explained earlier, that we are using the contribution that we are making for improving even further our contribution to the military needs that Ukraine has to defend itself. I welcome everything he said in that regard. Like my noble friend Lord Blencathra, I am tempted now—and I go beyond temptation—to range a little more widely. I am grateful to the Minister for giving such a very clear explanation and for adding—as was alluded to by the mention of the comments of the Minister in the other place—that the Government were open to other options, subject to genuine conditions about legality. Of course, I hope that if an agreement were to be reached within the G7 in the future that said that the Russian sovereign assets themselves could be seized and used to assist Ukraine, that might provide a legal basis on which we could then fulfil what my noble friend has put down in his amendment to the Motion today.

I recognise what my noble friend on the Front Bench Lady Neville-Rolfe said about how one has to be very careful and look at the consequences. However, I have in mind the response to a Question that I put to my noble friend Lord Cameron of Chipping Norton— I think that my noble friend knows what is coming—when he gave evidence to the European Affairs Committee just over a year ago. In this regard, I asked him how we could go further and what the Government were doing—this was the Conservative Government in December 2023 —to take some really gutsy action. I got a gutsy answer. He said in response:

“We are in a real fight for the sort of security on our continent that we believe in, and extraordinary times require extraordinary measures, so I am instinctively in favour of trying to do this”—


that is, to get agreement with the G7 to go further. I have to ask the Minister whether he is also “instinctively in favour” of trying to go further—within international law. I always agree with that.

To go a little more widely still, UK Governments, both Conservative and now Labour, have been admirably consistent in their imposition of sanctions on those who support the illegal invasion of Ukraine, either directly or indirectly. In relation to that, I will refer very briefly to the unresolved matter of Mr Abramovich’s delaying tactics to avoid fulfilling the commitment that he made way back in March 2022 to use the £2.5 billion of frozen assets arising from his sale of Chelsea Football Club that he promised in support of Ukraine.

For over a year now I have been asking Ministers in both Conservative and Labour Governments during evidence sessions in the European Affairs Committee why we have had to wait so long and still nothing seems to happen. We do not seem to be able to break through Abramovich’s prevarication and obfuscation and hold him to his promise. The response from Ministers in both Governments has been that they are thoroughly determined—they are on the case, and they want to ensure that the long-promised charitable foundation will be established and deliver funds to those in need in Ukraine, both now and during the reconstruction of the devastation caused in Ukraine by Russia. Can the Minister update us? Is there any progress with this negotiation with Mr Abramovich? If the Minister is not in a position to answer my questions today, I will not try to hold up the debate any longer—I just hope that he will write to me.

I look forward to the noble Baroness, Lady Batters, giving her maiden speech, and I look forward to the Bill getting Royal Assent ASAP and the money reaching those who need the extra-military defence in Ukraine.

16:53
Lord Beamish Portrait Lord Beamish (Lab)
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My Lords, I join other noble Lords in looking forward to the maiden speech of the noble Baroness, Lady Batters. I represented a rural constituency in the other place for 23 years, I worked with the NFU, and I know the effectiveness of her leadership of that organisation. I am sure that she will bring to this House not only her knowledge of the farming sector but her passion for it.

Next month, we will see the third anniversary of Russia’s illegal and brutal invasion of Ukraine. Few people imagined back in February 2022 that Ukraine would be able to resist its much more powerful neighbour and the brutal way in which it invaded a sovereign state—but it has, which is down to the determination of the Ukrainian people, along with the bravery and innovation shown by its armed forces.

That is why I welcome today’s Bill to help the Ukrainian people to continue to resist aggression and to defend the principle that a sovereign nation’s territory should never be taken by force. That principle was one of the cornerstones of the international rules-based order that came out of the ashes of the Second World War, which is today being defended on the battlefields of Ukraine. Along with the determination of the Ukrainian people, the financial support provided by the UK, US, Europe and international partners has been vital in resisting Russian aggression.

The agreement by the G7 is an example of why our membership of international organisations is so important. That collective effort and endeavour not only keeps us safe but means that our voice is stronger when it is deployed with those who share our values and interests. Three years into the war, this Bill and the efforts of the G7 send a very clear message to Russia that its aggression will continue to be resisted. As a member of the NATO Parliamentary Assembly, I also know from our meetings with Ukrainian parliamentarians that the single voice that is put out by the UK Parliament is very much appreciated by Ukraine. I am pleased to see that, today, that is again echoed in the cross-party support for this Bill.

The $50 billion produced by the agreement by the G7 will provide vital funding for Ukraine to support its military, humanitarian and—as already outlined in the debate—economic recovery. The UK’s £2.6 billion contribution to the ERA fund will be earmarked for military procurement to bolster Ukraine’s self-defence. We can look at the way in which Russia has indiscriminately fired missiles into Ukraine’s civilian population to see why that investment is important. As the Minister said, this is in addition to the £12.8 billion that the UK has already given in support of Ukraine. It is also in addition to the support given by ordinary men and women in this country who opened their doors to Ukrainian refugees in the early stages of the conflict.

The unique nature of this agreement means that the loan will be paid not by Ukraine but from the extraordinary profits made on sanctioned Russian sovereign assets that are held by the EU. As we know, many of those assets, both private and state, will have been stolen from the Russian people to benefit the elites around Putin. The sanctions and asset freezes, as the Minister pointed out in his opening address, have been an important tool in limiting the Russian aggression in Ukraine, not only by the Russian state but, it can be argued, by individuals who are perpetuating the myth that Ukraine is part of sovereign Russia.

More needs to be done, however, whether controlling Russia’s use of its grey tanker fleets to evade oil sections or the export of UK and EU goods through third countries to Russia to avoid sanctions. Sanction-busting exports range from electronic goods that are useful to the Russian military all the way to Rolls-Royce motor cars. What more can be done to clamp down on this circumvention of sanctions, not only through exporting to third countries but through companies in this country whose products are still ending up in Russia?

I do not know whether the Minister saw the article in the latest Sunday Times about the export of Rolls-Royce cars to Russia. In it, Chris Brownridge, Rolls-Royce’s chief executive, commented that there was no evidence of its dealers breaking sanctions. Considering the unmistakeable evidence that Rolls-Royce motor cars are still appearing in showrooms in Moscow, this seemed quite a pathetic response; he clearly does not have a very inquiring mind in asking how they are getting there. Rolls-Royce cars may be one of the more visible signs of sanctions evasion, but we know that components for electronic and other goods are being sent through third countries to Russia to help in the building of components for military equipment, which is then being used in Russia’s war in Ukraine.

I have some sympathy with the amendment tabled by the noble Lord, Lord Blencathra. More needs to be done on how we free up these assets. We also need to look at what else can be done to find assets in this country that have clearly been used and salted away with third parties to avoid sanctions or freezing.

I once again welcome the Bill and the continuing cross-party support for Ukraine in its struggle against Russian aggression. This will be a clear message from both this House and the other House that Russian aggression will be resisted, and that Ukraine has our full, united support.

17:02
Lord Banner Portrait Lord Banner (Con)
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My Lords, I too support this Bill. As has been said, it will enable the payment to Ukraine of the UK’s share of the $50 billion financial assistance package agreed by the G7 in summer 2024. I congratulate the Government on bringing it forward.

However, I also emphatically support my noble friend Lord Blencathra’s regret amendment that the Bill does not also contain a provision allowing the transfer of the circa £30 billion of immobilised Russian state funds located in the UK. As my noble friend said, the noble Baroness, Lady Chapman, stated in response to a Written Question that I tabled before Christmas that the provision of the $50 billion loan, backed by the interest made on the immobilised Russian assets in the EU was

“an important step towards ensuring Russia pays”.

This is right, but it is only the first such step. I find it hard to understand why, having agreed to use the profits from the immobilised Russian funds, the Government are not now taking the opportunity to legislate at least through enabling powers and at least for the possibility of transferring the entire amount of Russian immobilised funds to Ukraine. Again, as my noble friend said, if there is a legal way to transfer the interest, it follows that there is a legal way to transfer the capital. In banking law terms, the interest and the capital are owned by the same person. There is no coherent basis for a legal distinction between the two in this context.

About a year ago, the previous Foreign Secretary, my noble friend Lord Cameron of Chipping Norton, confirmed his view that there is a legal route to seizing and transferring the entire amount—and rightly so. I explained the legal basis when I last spoke on this issue in the House before Christmas. The current Government have told us repeatedly that the issue is being considered—or “actively considered”, as the Minister put it. Will he please confirm how much longer this process of consideration is going to go on before a decision is actually taken?

With respect, there comes a point when protracted consideration may start to be perceived as dithering, and I suggest that we are not far off that point. I hope I am not right to fear that the Government may be disinclined to use the independence that the UK now has following withdrawal from the EU to take a lead on this issue, instead preferring the herd mentality of waiting until Europe finally has a collective position on the subject—if it ever does.

Either way, whether I am right or wrong in that fear, Ukraine cannot afford to wait—that is the important point. The $50 billion loan will provide vital support and is of course to be welcomed, but how long will it provide that support for? The money will literally be used to keep the lights on during the war, but Ukraine’s wartime budget deficit is around $40 billion per year. Even taking into account other sources of financial support, the loan will last through this year and no further.

It will also not fund any military support for Ukraine, an issue that is becoming increasingly pressing in light of the return to the presidency of Donald Trump in the US in a few days. According to the US Government, the US has provided some $93 billion in military support since the start of the full-scale invasion, as my noble friend explained. Should that stop or be reduced, funds will have to be found to plug the gap. It has often been rightly said by the Government, in this House and elsewhere, that it must be for the people of Ukraine alone to choose how much longer the war goes on for. But without the right support, it is not a meaningful choice; these are empty words without the support that Ukraine needs.

I commend and welcome the Minister’s comments that we must support Ukraine for as long as it takes, no matter how much it costs, but those comments need to be translated into actions, and it surely must be Russia and not the British taxpayer footing the bill, as far as we are concerned.

The illegal war in Ukraine is in its third year or, for those from the east of Ukraine or Crimea, its 11th year —it has been going on since 2014. It is now a war of attrition. Only this week, the Financial Times reported that Russia’s war economy is on the edge of collapse, as “a house of cards”. The western sanctions are working. Our task must now be to convince Putin that the Russian economy would not be saved by giving him back the immobilised funds as some sort of prize or reward for ending the war. The only resilient response and future-proof way of ending this war is if Putin knows that unless he stops for good and does not repeat the actions of the last 10 years, he will lose his grip on Russia’s economy completely and, with it, his grip on power.

I urge the Government to catch up with the US and Canada and finally introduce—as they have done—legislation permitting seizure of Russian state funds, if only to send a clear message to Russia that waging a war of aggression does not pay and that there will be serious consequences for the continued flouting of international law. Let us not wait any longer: let us get on with it and show leadership on the global stage on this issue. The Bill is a missed opportunity to do that, and I urge the Government to bring forward the necessary legislation without delay. I now very much look forward to hearing the maiden speech of the noble Baroness, Lady Batters.

17:08
Baroness Batters Portrait Baroness Batters (CB) (Maiden Speech)
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My Lords, it is a great honour to address this House for the first time, and I thank the Minister and the noble Baroness, Lady Neville-Rolfe, for their kind words.

In March 2022 I had a request to speak with Mariia, director of the Ukrainian Agrarian Forum. I will always remember that first call. Mariia talked of farms, miles away from towns and villages, being individually targeted: poultry sheds and dairies bombed and destroyed; cows and calves left to burn alive; and fields planted with crops that were deliberated mined to destroy the farmers and the harvest. Russia stopped exporting nitrogen fertiliser three months before the illegal invasion of Ukraine, and your Lordships’ House should be under no illusions that the war in Ukraine is as much about food as it is about territory—and this at a time when England was paying farmers not to produce food.

As an ambassador of Farm Africa, I dedicate my maiden speech to the many farmers I have met across the world, and especially the 46,000 members of the National Farmers’ Union that I was privileged to lead. The NFU is an organisation led by farmers for farmers. Its great strength is the professional team of staff that I was fortunate to work alongside, and I am delighted that a few of the London team are in the Gallery today.

I am a fifth-generation tenant farmer on the Longford Estate in Wiltshire. We have a herd of Aberdeen Angus cross suckler cows and grow spring barley and British cut flowers, alongside a wedding barn and holiday cottages. Back in 2010 I became the NFU county chairman of Wiltshire, a role I very nearly did not take on due to my fear of public speaking. I hope the fact that I was elected as the first woman to lead the National Farmers’ Union in 118 years gives hope to others that fear of failure can be overcome.

Having four Prime Ministers—three in one year—was challenging, but for me 2020 was the standout year. In March we left our NFU headquarters in Stoneleigh Park, Warwickshire, to work from home. My twins’ GCSEs were cancelled. Prime Minister Boris Johnson and President Trump planned to conclude a UK-US trade deal by August. There was one point, at the beginning of lockdown, when the Government thought we would run out of food. I remember a text from a Government Minister that read, “You can have as many people and as much money as you want, as long as we don’t run out of food”. For a few days, the reality of being seven meals from anarchy was very real. Farmers were key workers then, and I am enormously proud of the role the NFU played, working with government, to keep the country fed.

Brexit posed the ending of farming under the common agricultural policy. Farmers in England are nearly at the end of the transition into the environmental land management scheme. In this time, we have rewritten primary legislation for farming in England into the Agriculture Act 2020, raising the standards of environmental protection and animal welfare above those of the European Union. It was and remains an unacceptable contradiction to raise standards for farmers here and not for our trading partners.

Our history is littered with either embracement or abandonment of whether producing our own food matters. The Arab spring was the last time that government advisers and scientists gave serious thought to our role in delivering global food security. Post the financial crash of 2007 to 2009, the markets took off. Since then, the line given by officials is that the UK is a wealthy nation and can afford to import its food. The increases in farm taxes proposed in the Budget are a symptom of this all too often desk-based advice to Ministers. On this issue I urge the Government to listen to my successor, Tom Bradshaw, to pause and to consult with the industry. With so much change in the last six years, farming and our food security are at a major crossroads. Much will depend on the Government delivering their manifesto commitment to make food security national security.

I would like to finish with three points. First, the global population is set to rise to 10 billion by 2050. We will need to produce 50% more food with half the water and energy we have now. To achieve this, farmers will need access to the best science and innovation. Government must invest in and incentivise the optimisation of sustainable food production. The UK, with its maritime climate, should be producing much more of its own food. With targets for renewable energy, housing, nature, trees, water and air, it is wrong that we still have no target for food. Instead, we continue to rely on countries such as Spain and north African countries to produce so much of our salads, fruit and vegetables. It is unsustainable, both for them and for us.

Secondly, food and nature must become mutually inclusive. I am opposed to any form of nature bank. Instead, we must enable these vital environmental markets to come to fruition. Nature reserves are the jewels in the crown but they are a minuscule area, less than 8% of land in England. Over 70% of the country is farmed and can deliver food, nature and biodiversity net gain within a farmed landscape, at the scale that is needed.

Finally, I ran a catering business for 25 years. I am passionate about good food and cooking from scratch. Learning how to cook, for every child, should be as fundamental as maths and English in the school curriculum. The principles of a garden city should be applied to every urban area—orchards, allotments and beautiful green spaces for everyone, everywhere.

I conclude by thanking the amazing people who have helped me on this journey: the Defra Minister the noble Baroness, Lady Hayman; former Prime Minister Rishi Sunak; and my supporting Peers, the noble Duke, the Duke of Wellington, and the noble Lord, Lord Soames. And enormous thanks to every single member of staff: Black Rod, the clerks, the Doorkeepers, the security staff and the catering staff, who most certainly do know how important food is to this House. Thank you—you have made me feel so welcome. Finally, my thanks to my family and those who work for me. Like all working mothers, the juggle is real and seldom mentioned. So, to my own mother and my two children: thank you so much for the sacrifices you have made on my behalf.

17:18
Baroness Wheatcroft Portrait Baroness Wheatcroft (CB)
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My Lords, what an honour it is to follow such a brilliant maiden speech. Clearly, the noble Baroness, Lady Batters, has overcome any fear of public speaking. What she is not afraid of is bringing not just her knowledge and intelligence but her emotion to this Chamber, and we should applaud her for it. It will be an honour for the Chamber to have in its presence a woman who has brought such change to the farming industry, who has been a voice that many of us will have been very familiar with. I feel that I have woken up with Minette Batters over many years, courtesy of Radio 4. Now it is a delight to see her here among us and to listen to her impassioned speech on behalf of an industry to which she has given so much.

We should be aware that the noble Baroness is a co-founder of Ladies in Beef. Even women who are not great meat-eaters may feel that that organisation gives them something to strengthen their resolve in holding their own in what may still, for some, be a bit of a man’s world. I am also intrigued to see that she has chosen to be the noble Baroness, Lady Batters, of Downton. No abbey was mentioned, but perhaps there is a new series in the making—I am sure we will all look forward to it. I also thank the noble Baroness for bringing the attention of the Chamber to the plight of farming in Ukraine, the importance of farming to all of us, and the importance of food security—which, of course, brings me to the Bill.

I welcome the Bill as far as it goes—but how much further it could and should go. The money pledged in it is a fraction of what Ukraine needs. Restricting the funds involved to the income that would be generated by the Russian assets frozen in the EU is simply not enough. Others have already talked about this. Huge Russian assets have been frozen which should be handed to Ukraine as quickly as possible.

The noble Baroness, Lady Neville-Rolfe, voiced concerns about such a move, but even some of her colleagues in the other place have come to this conclusion and have voiced their views not only there but in a letter to the Times on 6 January. They say that there is at least £25 billion in UK accounts which the Government should hand over, and now. The noble Lord, Lord Blencathra, made an eloquent plea for the UK to be braver, and I commend his stance, although, like him, I would not wish to do anything to jeopardise the Bill directing funds to Ukraine as quickly as possible. The noble Baroness, Lady Smith of Newham, raised this issue too.

There are those who have qualms about the legitimacy of a country not only freezing another’s assets but seizing them. However, that view is based on the concept of sovereign immunity, and I argue that Russia has forgone any right to such immunity. Many will feel that Putin’s outrageous assault on Ukraine is enough to have cost it any immunity. But it is Russia’s behaviour in the UK which surely has eradicated any such rights. Russian operatives have come to the UK with the sole purpose of committing murder. Whether it was the poisoning of Alexander Litvinenko or the Salisbury poisonings, they showed no respect for the sovereignty of this country. Why, then, should we respect sovereign immunity in the case of Putin’s Russia?

If Canada and the US can be braver, as the noble Lord, Lord Blencathra, explained, can the Minister explain why the UK is still only considering its position on whether it can go any further on such a vital issue? It might be one small step towards redressing the unedifying reputation the UK has gained as a hub for dirty money. The “London laundromat” was a popular destination for Russia’s billions, which was often money obtained through dubious means. The former Prime Minister Boris Johnson was praised for his staunch support for Ukraine’s fight, and it is true that he was there at the beginning. But it was also Boris Johnson who, in 2010, as Mayor of London, opened a new department at City Hall devoted entirely to attracting Russian investment to London, and I beg to suggest that not all that investment came from the most respectable of sources. I am not sure that that was top of the list of priorities at the time.

Bill Browder has gained a very big reputation for his bravery in pushing through the Magnitsky Act in many legislatures around the world. He had good reason to do that, as he had fallen victim to the Russian state and his lawyer, Sergei Magnitsky, was murdered in jail in Russia—or at least, he died there, and it was thought not to have been accidental. Because of that, Browder has worked steadfastly to get people alive to exactly what is going on in that country and to take action, rather than just speaking about it.

One of the reasons that he cites, which others have not yet mentioned but which we really should be taking account of, is that, if this war is not won, it will precipitate a refugee crisis that will make the small boats look minuscule in proportion. The refugees will flood not from Ukraine but from all the neighbouring territories that are so fearful of what a powerful Russia might do next. The numbers are put at anything up to 25 million. That is one reason—if only one were required—why urgent action is required to get the money to Ukraine and to get it there quickly, handing over the income from the money that is held in the EU, let alone the UK. However, doing it in three tranches, as this Bill talks about, may be a start, but it is such a small start. Surely, the UK could and should do more.

17:26
Lord Balfe Portrait Lord Balfe (Con)
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My Lords, I add my congratulations to the noble Baroness, Lady Batters, on her maiden speech. I came across the NFU many years ago through my very good friend Lord Plumb, who introduced me to this Chamber. He taught me quite a bit about the NFU and mentioned the noble Baroness to me as one of the up and coming stars of the institution. I am surprised that she had difficulty with public speaking, but clearly she has overcome it extremely well. We all look forward to many contributions in this House, given her special knowledge of agriculture, Ukraine, Africa and other subjects.

You can always depend on me when we have a debate on Russia. I am the one who makes the speech no one wants to hear. Today, unfortunately, my two co-religionists, the noble Lords, Lord Skidelsky and Lord Campbell-Savours, are not present, so I am left to do this all on my own. My message has not changed over the years. My message is very simply this. We have all agreed that Russia was wrong to invade Ukraine. It does not take an O-level in geography to recognise that. But what we have not been very good at is looking at the consequences of where we are now and where we are heading to. We need to remember my good friend John Major’s advice: in a hole, stop digging.

We need to look at some perspective. The Minister in the Commons, Darren Jones, said that we were going to carry on until Russia ceases its war of aggression and we win. I will first ask a very simple question. What is “win”? I have seen no evidence of any movement in Crimea to go back into Ukraine. Nor have I seen any evidence from Luhansk or Donetsk to the same effect.

The Ukraine Government made, as I have said many times, a tragic and stupid mistake when it outlawed the Russian language in places where 100% of the people spoke Russian. That alienated the eastern provinces, and the chasing out of Viktor Yanukovych did the rest. We now have to live with the consequences and build for the future.

The extraordinary revenue acceleration is a Group of Seven agreement, but has it been implemented elsewhere? Is this particular programme on the statute book of the US Senate? Will it sustain itself in the face of a President Trump? Is it passed by the Canadian Parliament? Will it sustain itself with a Prime Minister Poilievre, whom Canada is likely to get? Is it on the statue book of the Federal German Republic? Will it survive a new Chancellor in Germany? Has it gone through the French Parliament? That Parliament appears unable to pass any legislation at all at the moment, let alone something like this.

I am unclear as to where we are, apart from the fact that we are passing the Act. What about the rest of the people on the list? What is actually happening? In the case of Italy, Italian support of Ukraine is not at a very high level at the moment. From what I know of Prime Minister Meloni, I wonder what her Government are doing? It would be good to know—not because I will vote against the Bill or try to stop it; it is a government Bill that seems to have the support of everybody in this House apart from me, so it will go through. But we need to know where we are with the Bill.

We also need to know pretty soon where we are with the new United States Administration because, let us face it, they will call the shots; we are not going to. This will be like Afghanistan—the US Administration will decide on a policy, we will be lucky to get a phone call and we certainly will not be able to carry on on our own. We need a European dimension to all this that looks at it from the interests of Europe. Those interests clearly involve the rebuilding of Ukraine but also involve coming to an arrangement with the Russian Federation that will stick. We seem to forget that we expelled Russia from the Council of Europe. “Great”, we said. We expelled 135 million Russians from the protection of the Court of Human Rights. We do not talk about that, though, do we?

We need a reset of our relations with the Russian Federation, with Ukraine and with the riparian countries of eastern Europe that rightly feel alarmed about Russia but also feel a little alarmed about the capacity and willingness of those of us further west to defend them. It is fine to say, “We have Article 5 of the NATO treaty”. I talked not so long ago to a Portuguese admiral —noble Lords will be surprised who I tend to know—who said, “Oh, yes, Article 5 says an attack on one is an attack on all”. It does not say what we have to do about it, though, does it? He said, “Do you honestly think that the people of Portugal would send troops to Ukraine? They would not”.

This is going to be difficult, but it has to be done. We need to think again about European security. We have spent too long behind an American blanket, expecting them to look after us. The fact of the matter is that 80 years after the end of the war, we have to start redesigning a Europe that works for Europe. We cannot continue to rely on the United States.

In building that new unity, we have to get closer to the European Union. I really am on my own on that—in this party, anyway. The European Union and the countries that are closer to us geographically in Europe are our future. I say to both parties that if neither of you can come to terms with Europe, you will lose the youth vote and it is not impossible that we will end up with that little Bench down at the end sitting on that Bench over there, and God knows who sitting on this Bench. Let us think our way through to a brighter future and stop repeating all the shibboleths of the past.

17:36
Baroness Goudie Portrait Baroness Goudie (Lab)
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My Lords, I congratulate the noble Baroness, Lady Batters, on her speech today. I listened to her many times during Covid on the radio and television, and I was so thrilled to hear she was coming to this House. I look forward to working with her on food and other issues in the future.

This Bill is a welcome example of international co-operation. The additional financial assistance to Ukraine from the United Kingdom and other parts of the G7 is £38.6 billion of loans. These loans will be repaid from immobilised Russian assets held in the EU and will not be repaid by Ukraine. These assets will be divided between the G7 lenders in proportion to their contribution, £2.26 billion in the case of the United Kingdom. A crucial element is that the EU has adopted a regulation that will govern the repayment mechanism. This provides the legal basis within the EU for the UK to receive the repayment.

Like colleagues, I hope that throughout all this there will be no hold-ups, little glitches here and there or amendments. We have to make this happen now. This is an illustration of how vital it is for the UK and the EU to work closely together. This is crucial when the context is supporting Ukraine, helping it to resist and defeat the wicked, illegal and reckless Russian invasion and providing security for Europe as a whole.

The noble Baroness, Lady Wheatcroft, spoke about refugees in countries nearby. I have had calls from people in those countries, in Vilnius and even in Poland, who are worried about what the future holds for them and what the future could be for us and other countries. They are really worried. This Bill is an important aspect of the package of measures in a battle that has been well described as one of the defining issues of our age.

The World Health Organization has reported more than 2,000 attacks on health facilities, further straining Ukraine’s capacity to address mental and physical health needs. In 2024, 14.6 million people in Ukraine were estimated to need humanitarian assistance. This includes access to water, healthcare, shelter and psychological support. In the third quarter of 2024, the share of temporary protection decisions for children increased to 31%. As we know, children are now being taught in the underground during the day. They want to go to school to learn, but are frightened of what they might come back up to. The fighting and air strikes have caused more than 30,000 civilian casualties, including children.

The people of Ukraine are fighting for us all and our freedom. We are sending a message not only to Putin but to autocrats around the world that the international community will always oppose violence against national sovereignty.

17:40
Lord Kempsell Portrait Lord Kempsell (Con)
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My Lords, I join in the expressions of welcome and praise for the noble Baroness, Lady Batters. I am sure that her excellent, touching maiden speech will have great resonance with working mothers everywhere. I know that the whole House looks forward to her contributions on the importance of British farming and so many other issues.

I welcome the measures in the Bill, which will continue to provide Ukraine with the financial support it so desperately needs. The funds in question are drawn from immobilised Russian sovereign assets, and rightly so. The extraordinary revenue acceleration mechanism is an innovative example of what is possible when the focus of our G7 partners is rightly directed at the aggressor. Russia unleashed this illegal war on the people of Ukraine, and Russia will have to pay. It is heartening that that sentiment has been nearly universally agreed to in your Lordships’ House this afternoon. As President Zelensky said, the measures we are debating are a strong signal that:

“Russia must pay for its brutal war”,


because

“accountability for acts of war is inevitable”.

I hope the Bill will be passed as swiftly as possible. I join others in thanking the Minister for his work on this, which I know has taken much of his engagement and focus.

On the payment timetable and the disbursement of funds, we understand that the G7 has agreed that payment will be in three equal tranches over the next three years. Given the urgency of the matter, and the many questions raised today in your Lordships’ House about the military use of the UK’s contribution to ERA, I ask the Government to consider submitting a speedier timescale than three years. That is what is needed. As we have heard so many times in your Lordships’ House, Ukraine urgently needs all the military equipment it can get, as soon as possible, so military use must be allowed.

To that end, I associate myself with the powerful and cogent arguments of my noble friends Lord Blencathra and Lord Banner about what has been left outside the scope of the Bill. I understand that the Government must seek to pass legislation as soon as they can in this area and the difficulties of designing legislation and drawing its scope, but we have heard here this afternoon some powerful arguments for widening the scope of this measure to the seizure and transfer of Russian sovereign assets in the United Kingdom.

Today’s proceedings raise a more significant issue than the technical details of the Bill. The Bill, though welcome, cannot be a substitute for the Government setting out a clear vision for the future of Ukraine and what they would like to see achieved in this crucial year. It is right that the UK’s financial, military and humanitarian support continues and has been maintained by the new Labour Administration. It is right that Ministers continue to visit Ukraine, although I note that, despite his busy and demanding travel schedule, the Prime Minister is yet to visit the country since he has been in office. I hope that he is able to visit very soon—I am sure he will. But none of that is the same as the Government setting out and articulating a vision for what should actually happen in 2025, because this is a critical moment for Ukraine and for the entire western alliance.

I know that Ministers will not want to risk the UK’s leadership or risk any accusation that the UK Government have turned down the volume on their leadership of big-picture vision for what should happen next. When I spoke in the debate on Ukraine in your Lordships’ House in October, I said I was concerned that the UK was at risk of losing that leadership. I said that because the same anxiety had been expressed in those direct terms by President Zelensky himself. Ministers must communicate to the public what this Government believe Ukraine’s destiny to really be. Ukraine is destined to be a free, sovereign, independent, European state in the western alliance. It is not destined to be part of a revanchist, reinvented Russian empire in any sense.

Ukraine’s future was arguably in contention for decades, but Russia’s illegal war has, ironically, settled the issue, because Ukrainians are now completely clear-eyed about what they want. I have heard it from Ukrainians themselves, including from servicemen injured on the front lines, as I made numerous trips to Ukraine last year. I say this in part to answer the questions posed by my noble friend Lord Balfe about what victory means. Ukrainians want to be inside the NATO security architecture. They want the capabilities and permissions to win the war, militarily, in no uncertain terms and for permanent western security guarantees to be in place. To anybody outside your Lordships’ House who might doubt that position, I suggest that they talk to Ukrainian armed forces service men and women themselves, because they possess the most up-to-date and expert experience available to NATO of fighting Russia.

As my noble friend Lady Neville-Rolfe said, when Russia invaded, former Prime Minister Boris Johnson was the leading voice when it came to giving Ukraine the military, financial and humanitarian support needed. But he also set out a vision. He understood that this is more than a kinetic war; it is a battle of ideas about how the world should be. I am worried that that language is slowly changing nowadays. Standing with Ukraine for as long as it takes and helping it pay for this war as long as it takes is, at face value, a laudable concept, but there are some inside the Russian Government who view that as sign of weakness because it suggests that there is an open-ended timetable for concluding this conflict.

I want to commend and thank the Government for supporting a series of Conservative Administrations while they were in office and for continuing that support for Ukraine on entering government. This Bill rightly develops that, so nothing should stand in its way or be done to slow down its passage. That said, I hope the Government will use this opportunity to set out what they believe to be their agenda to regain international leadership on how this conflict is settled. The UK should lead with moral and strategic clarity, because the denouement of this conflict is important to resolve in the best interests of the free world, including of course, and most pre-eminently, Ukraine.

17:49
Lord Purvis of Tweed Portrait Lord Purvis of Tweed (LD)
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My Lords, it is a pleasure to follow the noble Lord with his very considered remarks, most which I agree with entirely. His points reflected the three words that I thought could sum up this debate—the need for urgency and clarity, and at scale. These are the priority areas where we would wish to see the Government continue to move. Notwithstanding, as my noble friend Lady Smith said, that we support the Government’s work on this entirely, those aspects, the next steps on how we are going to be moving at pace, will be of fundamental importance.

We are still technically debating the regret amendment from the noble Lord, Lord Blencathra. As a long-standing former Minister and Chief Whip, he knows that this is a Budget Bill and that he cannot amend it in this place, but, as anybody who has seen the speakers’ list will know, he also knows how to get the last word. I commend him for that, because these Benches agree with the thrust of his argument. If there is anything that we can do to help him persuade his noble friends on the Front Bench to support our positions on seizure, he can count on our support.

The debate also had the outstanding maiden speech by the noble Baroness, Lady Batters. My former constituency was on the north side of the border, so I used to deal with NFU Scotland rather than the NFU. I recall that at my first meeting with NFU Scotland as a brand-new Member of the Scottish Parliament, I thought that I had listened attentively, but it was rather complicated, with lots of very difficult, technical words. I jotted them down, but at the end, I went home and had to ring up the then president of NFU Scotland, who was the noble Baroness’s counterpart. I said, “I’m really sorry. I’ve looked at my notes and can’t now remember what the animal disease or the animal medicine is, because the words are so complicated”. He said, “Jeremy, you don’t need to understand what we say; you just need to understand that you do what we say”. With the clarity of the noble Baroness’s contribution, I hope that Ministers will do what she says in this House, and she is most welcome.

The sober element of this debate was the recognition that the toll on the Ukrainian economy and country has been enormous. We often try to get a picture of what the toll is on the Russian economy; sometimes we get information showing that there is a significant toll on it from our sanctions and from external actions. The news, which I think was from just last week, that one rouble is now worth less than one US cent is one illustration that a toll is being taken, but as my noble friend indicated, there is still too much sanction circumvention and there are still too many areas where the Russian economy is gaining—whether it is the shadow fleet, which we are still seeking to pursue, or other elements of avoiding sanctions. Constant work is of fundamental importance in this area.

I have previously raised something with regard to British Overseas Territories which I hope the Minister will be able to clarify. How are we ensuring that all the actions and all the work that we are doing are consistent across all parts, including the overseas territories?

With regard to the impact on Ukraine, it is now estimated that there has been well beyond £500 billion of war damage. That is just a modest estimate by the World Bank. It is inconceivable that Russia will voluntarily pay compensation, so any thought that if it retrieves assets, they will voluntarily be used for some form of reconstruction in a ceasefire agreement is for the birds. A fundamental question therefore needs to be asked: why would we not use the entirety of the assets for the reconstruction purposes which we know Russia will deny in the future? Given that Ukraine is suffering a budget deficit of well over £10 billion and that, in context, it allocates more than £40 billion—about half of its entire budget—to the defence sector, which shows the scale of what Ukraine is having to do, timing is of fundamental importance, as well as scale.

It is welcome, of course, that there is the G7 consensus on this, but it was agreed in June last year to use the profits on immobilised assets. It was in January last year, when we were in Grand Committee on the Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations, that I called on behalf of these Benches for the equivalent of what the Bill is now. The timing is of importance, but it is also not just about the cost of recovery and contributing to Ukraine now; it is also an argument about accountability.

Our friends in Canada have passed legislation. Given the other debates that we have secured, including in the other place on 6 January this year, as the noble Lord, Lord Browne, and my noble friend indicated, and given the points that my honourable friends in the Commons made in Committee of the whole House on the Bill, the argument is not simply about funding Ukraine’s efforts now for its economy and the war. It is also about ensuring that there is Russian accountability. If part of the argument is that the Putin regime should be held to account for what it is doing, why would it then be able to profit and, in effect, have assets back and be able to use them?

We probably know—the noble Lord, Lord Kempsell, perhaps alluded to this—that there is a distinct incentive for Putin to have some form of ceasefire: to pause, recoup and then string this on. There is therefore no long-term security, and if part of the funds are simply being immobilised so that the profits from them can be used rather than the asset value itself, then unfortunately there is an incentive for Putin not to have a long-term solution. I suspect that that is why there is a last-ditch attempt in the last days of the Biden Administration, as CNN reported yesterday, for them to move towards the seizure aspect. I hope that the Minister might have an opportunity to respond to that.

To help us understand the position—this is where clarity comes in—I hope that the Minister will be able to look kindly on what my honourable friend James MacCleary put forward as an amendment to the Bill. It was to seek government reports: an immediate report but also, for clarity, a report regarding our

“share of the principal loan amount”

and what is able to be seized, if we had the intent to do that. There are ways in which the Government could demonstrate more clarity—as the United States has done, having been asked by Congress, and as Canada has done—as to what the scale of the opportunity is.

Perhaps the Minister could clarify another question for me. How much of what has been committed so far under the G7 programme has been disbursed? My understanding is that, as reported, the US committed £20 billion as a portion to the World Bank in December but that only £1 billion has been disbursed. I wonder what the status is likely to be for when the disbursements will be in place, especially the UK contribution. If the intent of this fund is for the purchase of munitions on a very urgent military operation, it goes without saying that any delay to the disbursement is not to the advantage of our Ukrainian friends and allies.

Let me close by reiterating what my noble friend Lady Smith said at the outset. We believe that it should be the UK’s intent that we move on this, as far as seizure is concerned, and that it is unjustifiable that these assets should be utilisable by Russia in the future. Russia’s actions should not be forgiven by it being able to recoup assets which we have found justifiably should be frozen. Those assets should be seized at pace and at scale and be used for the defence of Ukraine and as part of its reconstruction. That would also show accountability for those terrible crimes that Russia has inflicted on Ukraine.

17:59
Lord Livermore Portrait Lord Livermore (Lab)
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My Lords, it is a privilege to respond to this Second Reading of the Financial Assistance to Ukraine Bill, and to the regret amendment tabled by the noble Lord, Lord Blencathra. I join others in congratulating the noble Baroness, Lady Batters, on her incredibly powerful maiden speech. She brings a wealth of experience to your Lordships’ House, particularly on agricultural and rural issues, and is widely respected for her stewardship of the National Farmers’ Union. We might not always agree, but I very much look forward to her further contributions in debates such as this.

I am grateful to all noble Lords for their contributions and for the unity the House has shown in supporting Ukraine. I am very grateful in particular to the noble Baronesses, Lady Neville-Rolfe and Lady Smith of Newnham, for their support for the Bill. Many noble Lords have spoken movingly about the ongoing plight of the Ukrainian people in the face of Russia’s illegal invasion. It is important that we keep them in our minds today as Ukraine endures a third winter at war. The consequences of Putin’s war are profound: thousands dead and wounded, families torn apart, and enormous damage wrought to Ukraine’s infrastructure and economy that will take many years to rebuild. Despite the carnage that the Russian war machine has wreaked, including scores of innocent civilians killed and thousands of communities devastated right across the front line, the spirit of the Ukrainian people endures, and their resolve to defeat Putin’s army remains undiminished.

In case it needs saying, I profoundly disagree with the contribution from the noble Lord, Lord Balfe. I am heartened by the fact that there has otherwise been near uniform support across your Lordships’ House. The Government’s position remains resolute: Putin must fail, and we must stand with Ukraine for however long it takes, including by working with our G7 allies as part of this scheme. The Government will continue to stand with Ukraine as it wages this fight for freedom. That is why, to date, the Government have provided £12.8 billion in combined military, humanitarian and economic support to Ukraine. The UK has also introduced the most wide-ranging sanctions regime ever imposed on a major economy, depriving Putin of vital finance for his war machine.

My noble friend Lord Beamish asked about circumvention of sanctions, which the noble Lord, Lord Purvis of Tweed, also mentioned. The Government are assessing and enhancing the UK’s sanctions enforcement. This includes working with international partners to build capacity and technical expertise within our own systems and to improve sanctions compliance in their private sectors, as well as deploying increased UK sanctions resources across our overseas network. This is a fight not only for Ukraine’s territorial integrity and the safety of its people but for the future of Europe’s collective security and prosperity. That is why the Prime Minister has committed to providing £3 billion annually to support Ukraine for as long as it takes.

Maintaining international pressure on Putin also requires working in close partnership with G7 allies. The Bill before your Lordships’ House does just that. It would unlock £2.26 billion of new funding for Ukraine, backed by profits generated from immobilised Russian assets as part of the G7’s extraordinary revenue acceleration loans to Ukraine scheme. The scheme demonstrates our shared commitment and solidarity in the face of Russian aggression and will provide approximately $50 billion of additional funding overall to Ukraine, taking account of the combined contributions of our G7 allies.

The noble Baroness, Lady Smith of Newnham, asked whether the Chancellor of the Exchequer raised Ukraine with her counterparts during her recent visit to China. In China last week the Chancellor was clear that, although we must co-operate in areas of mutual interest, we will confidently raise concerns where we disagree. She expressed her real economic and trade concerns with the Chinese, including on economic security. We have secured China’s commitment to improving existing channels so that we can openly discuss sensitive issues and our economy. If we do not engage with China, we cannot express our very real concerns.

The noble Lord, Lord Banner, suggested that we are not meeting or matching our words with actions, a sentiment echoed by the noble Baroness, Lady Wheatcroft. The UK has already provided £12.8 billion of military, humanitarian and economic support to Ukraine since the war began. We are committed to providing a further £3 billion of military aid each year for as long as it takes. This is a significant investment. The new spending the Government are committing as part of the G7 scheme is in addition to these existing commitments and is proportionate to our GDP share within the G7 and the EU.

The noble Baronesses, Lady Smith of Newnham and Lady Wheatcroft, and the noble Lords, Lord Banner, Lord Purvis of Tweed and Lord Kempsell, asked why the Government have not gone further by seizing Russian sovereign assets in the UK. This is also the focus of the regret amendment tabled by the noble Lord, Lord Blencathra. I fully understand that strong views exist on this issue, and I assure noble Lords that we will continue to actively consider all possible lawful avenues by which Russia can be made to meet its obligations to Ukraine under international law. I of course agree that Russia must pay for the damage it has caused in Ukraine. However, the Government believe that any action taken should only be in tandem with the G7. It is in this spirit of collaboration that we have agreed the extraordinary revenue acceleration loans to Ukraine scheme, and we continue to work closely with our G7 partners. Our focus now is on delivering this scheme rapidly to provide the immediate support that Ukraine requires.

The noble Baroness, Lady Anelay of St Johns, asked whether I am instinctively in favour of going further. I can only say that I am in favour of considering all legal routes. She also asked about those legal routes that we have taken. Due to Euroclear’s unique business model as an international central securities depository, it is able to generate extraordinary profits on the holdings of these assets, which legally accrue to Euroclear rather than to Russia. We do not believe the specific circumstances that provide profits generated in this way can be emulated in the UK as we do not believe that any UK-based financial institutions employ this business model. The UK is not required by the Ukraine loan co-operation mechanism to provide any extraordinary profits made from assets held in the UK; we are simply providing a financial contribution to that scheme.

The noble Baroness, Lady Neville-Rolfe, asked whether the UK’s contribution to this scheme will count towards the NATO target of spending 2.5% of GDP on defence. The UK’s contribution will be provided to the Government of Ukraine as a loan from the UK Government to spend on military procurement; it is not direct UK defence spending. The £2.26 billion loan will therefore not count as NATO-qualifying UK defence spending; it will be in addition to current NATO- qualifying UK defence spending. The noble Baroness also asked when the Government will meet this target, as did the noble Baroness, Lady Smith of Newnham. The Government have made a clear commitment to spend 2.5% of our GDP on defence, and this commitment has not changed. We will set out the pathway to 2.5% at a future fiscal event.

I will touch briefly on the nature of the UK’s contribution to this G7 scheme. The funding we are providing will be used for budgetary support earmarked for military procurement, bolstering Ukraine’s capacity for self-defence and providing vital equipment and support to the front line. As my noble friend Lord Beamish said, this funding is additional to the £3 billion of bilateral military support which the Government have committed to providing for as long as it takes. The Bill’s sole purpose is to provide the Government with the spending authority to deliver our contribution to this scheme, or any subsequent arrangements that supplement or modify it. It is not designed to facilitate any other spending on Ukraine or spending for any other purpose. The Bill enables the Government to sign the loan agreement with Ukraine and begin disbursing funds to it.

The noble Baroness, Lady Neville-Rolfe, asked specific questions about how disbursals from the fund will work—a point also raised by noble Lord, Lord Kempsell. The Government intend to begin disbursals early this year to ensure the funding supports our Ukrainian allies as soon as possible. We intend to disburse the UK’s £2.26 billion loan in three equal tranches over three financial years, starting in 2024-25. The G7 has agreed that all funds from this scheme will be disbursed by the end of 2027, although we plan to begin disbursals much sooner.

To further address the points raised by the noble Baroness, Lady Neville-Rolfe, this is a bilateral loan whose parties are His Majesty’s Treasury and the Ministry of Finance of Ukraine. The Government have begun talks with their Ukrainian allies to agree the terms of the provision of this funding. We do not intend for there to be geographical restrictions on where funds may be spent, and are instead ensuring that the purchase of much-needed vital military equipment is prioritised. There will be opportunities for the UK defence industry to benefit where this provides good value for money for the UK and for Ukraine. The Government are aware of the corruption risk in Ukraine and we are taking steps in our loan negotiations to mitigate it. I cannot comment on these negotiations in detail as they are still ongoing.

On the UK being repaid for this loan, as my noble friend Lady Goudie said, under the terms of the scheme the UK will be repaid by the extraordinary profits generated from immobilised Russian sovereign assets in the EU on a six-monthly basis as they accrue. The EU has already enacted the necessary regulation, known as the Ukraine loan co-operation mechanism, which will distribute the profits. This came into effect on 29 October 2024.

My noble friend Lord Browne of Ladyton spoke about international support for Ukraine, and the noble Baroness, Lady Neville-Rolfe, asked about the United States’s contribution to the scheme and the approach that will be taken by the incoming Administration. Although it would be wrong to speculate on any policy decisions that the incoming Administration may make, the UK Government have welcomed sustained bipartisan US support for Ukraine, which has been key in the international effort.

In answer to the noble Lords, Lord Balfe and Lord Purvis of Tweed, the US has already dispersed its $20 billion contribution to our financial intermediary fund at the World Bank. The EU has already passed and implemented its legislation, which covers all the European countries listed by the noble Lord, Lord Balfe.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed (LD)
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My point was less about the US providing $20 billion to the World Bank; my question related to how much Ukraine has actually received.

Lord Livermore Portrait Lord Livermore (Lab)
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I do not have that information to hand, but I will happily check for the noble Lord.

The noble Baroness, Lady Neville-Rolfe, asked whether the UK’s contribution to the scheme would increase if the United States or another participant chose to withdraw. I can confirm to noble Lords that this would not affect the UK’s contribution, which will remain at £2.26 billion. We are clear that that is the right and balanced approach, reflecting our fiscal pressures and Ukraine’s needs. The £2.26 billion figure is also proportionate to our GDP share within the G7 and the EU. We will of course continue to co-ordinate with G7 partners on the scheme going forward.

The noble Baroness, Lady Anelay of St Johns, asked for an update on the proceeds from the sale of Chelsea Football Club. The Government are working hard to ensure the proceeds from the sale reach humanitarian causes in Ukraine as quickly as possible. The proceeds are currently frozen in a UK bank account while a new independent foundation is established to manage and distribute the money. Creating an organisation of this scale is complex and officials continue to hold discussions with relevant parties to reach a resolution. As you would expect, we must review the details of any such arrangement to maintain the integrity of our sanctions regime.

In conclusion, we must ensure that Putin has no path to military victory in Ukraine. That means continuing to provide military and economic support to enable Ukraine to defeat Putin’s war machine. The combined $50 billion of new funding, delivered together with our allies in the G7 and backed by profits from immobilised Russian assets, will provide a crucial boost to Ukraine as it continues its third winter at war. It represents an investment not only in Ukraine’s future but in the security and prosperity of Europe more widely, and it demonstrates the shared resolve of the international community in the face of ongoing Russian aggression. I welcome the fact that noble Lords from all sides of the House have been united in saying that we must stand with Ukraine for as long as it takes. This Bill will allow us to honour that commitment.

Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Con)
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Before the noble Lord sits down, there was one question about the announcement on the 2.5% of GDP. The noble Lord helpfully clarified that the money in this Bill was extra, which is good news, but I think several of us were concerned to know when decisions would be taken on the timing of the 2.5%.

Lord Livermore Portrait Lord Livermore (Lab)
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I answered that exact question from the noble Baroness. As we have said all along, we will set out a path to 2.5% at a future fiscal event.

18:12
Lord Blencathra Portrait Lord Blencathra (Con)
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My Lords, I begin by congratulating the noble Baroness, Lady Batters, on a superb maiden speech, which impressed everyone in this House. I particularly liked her remarks on food and nature. British farmers can grow more food and we can also do nature recovery; the two are not mutually exclusive. I may be one of the few in the House who is not surprised at the noble Baroness’s powerful speech- making because, for the last six years, I was the deputy chairman of Natural England, and at times I felt that her powerful rhetoric was targeted against us as we sought to implement some of the ELM schemes. Nevertheless, she made a very powerful contribution to this House and she will be an excellent replacement for the late Henry Plumb in my opinion.

I am very grateful to all noble Lords who have supported, in various ways, the amendment I put before the House. In particular, there was powerful support from the noble Baroness, Lady Wheatcroft. I thank her and my noble friends Lord Banner and Lord Kempsell for their very strong support. I have now had to change my opinion on a matter. I always believed that no one under 50 could make any worthwhile contribution in this House, but the two noble young Turks behind me have proved me utterly wrong.

I am also grateful to those who gave some sympathetic support, including the noble Lord, Lord Beamish, and my noble friend Lady Anelay of St Johns. Please do not tell my noble friend Lord Forsyth of Drumlean, but I have to praise the two Lib Dem spokespersons who gave qualified support; they support the concept of what I was trying to do.

I must say to my noble friend Lord Balfe that of course, like many others, I profoundly disagree with what he said. But I admire and respect the fact that he said it in this House. While we may disagree with him, we respect his right to speak. It is something that other institutions outside this building could take note of—to let people speak their minds, even if we profoundly disagree with them.

I will pick up on just two points he made. First, he said that the Council of Europe, of which I was a member, expelled Russia. I voted for that to happen, but I was agonising about it. I like Churchill’s expression that jaw-jaw is better than war-war. I thought that maybe if we kept the Russians inside, we could communicate with them. But what they did in Ukraine was so evil that I voted to have them expelled. The noble Lord also made the point that by expelling Russia we deprived 135 million Russians of the right to go to the European Court of Human Rights. That is true, but a fat lot of good it did them when they did have the chance to go, because Russia never implemented any of the decisions of the court.

Secondly—I am coming to my conclusion—the noble Lord asked who was calling the shots. Well, it will be President Trump calling the shots on how much money the United States gives in military aid to Ukraine. He will call the shots on what non-military aid the US gives to Ukraine. But he will not be calling the shots on the immobilised Russian assets, because America has hardly any of them. Over 90% of those assets are held by the EU and United Kingdom. So, while he might dictate other measures, he cannot stop the EU and the United Kingdom taking this permissive power to spend that money.

I will not breach the conventions of the House by regurgitating the points I have made, but I just want to clarify one thing. My amendment is not calling for us to immediately confiscate those assets and start spending them in Ukraine. We cannot do that in any case because the Council of Europe—I think it is the Government’s policy as well—wants to see an independent fund. When the assets are confiscated, they will be transferred to that independent fund to then be given to Ukraine and spent on reconstruction.

We do not have that fund yet. My amendment is simply calling for us to take the permissive power so that, when the time comes, in conjunction with our allies—I am not asking us to confiscate that money tomorrow—we will not have to pass any new law; we will have the permissive power to use that money in the defence of Ukraine. That is the only point I wanted to stress and clarify. As I said at the beginning, I am not in the business of delaying this Bill any further. I beg leave to withdraw my amendment.

Lord Blencathra’s amendment withdrawn.
Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.

Football Governance Bill [HL]

Committee (7th Day)
Relevant document: 8th Report from the Delegated Powers Committee
18:20
Clause 60: The mediation stage
Amendment 295A
Moved by
295A: Clause 60, page 49, line 21, after “given” insert “and to the extent that the question or questions for resolution relate to financial distributions, that mediator must be appointed in accordance with the requirements in section (Appointment of mediator) to section (Guidance and review)”
Lord Birt Portrait Lord Birt (CB)
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My Lords, I rise to move Amendment 295A and to speak to my other amendments, 297A through 297G. While I have, of course, had expert help in the drafting, the approach in these amendments is entirely my own. They are my response to discussions I have had within football and right across this House about the single most radical measure in the Bill: the process for determining fund flow down the football pyramid.

I have already made clear my conviction that the precious and unparalleled role that football clubs play in their communities justifies regulation. Fans should be listened to, and they deserve protection from the occasionally bad, if generally well-intentioned, stewardship of owners and management who take ill-considered risks and lose control of their finances—the overwhelming reason why clubs fail and falter.

I wholeheartedly welcome the provisions in the Bill for promoting good and prudent management. They should have a major and beneficial—indeed, radical—impact on English football. I believe, however, that the precise mechanism set out in the Bill for determining fund flow carries severe risk and could adversely impact the whole of the English game. I note the cogent reservations about the mechanism set out in the EFL’s own briefing paper from last November. I note, too, that the Bill’s progenitor, Dame Tracey Crouch, described the backstop mechanism as the “nuclear equivalent for football.” She observed, quite rightly, that in a nuclear conflict, he who pulls the trigger may not be the winner.

The backstop is an inappropriate measure to resolve issues between two groups who live cheek by jowl and whose membership is interchangeable every 12 months. Next year, any club might find itself sitting on the other side of the table. The essential task of establishing an appropriate flow of funds down the leagues is to balance two public goods, and “balance” is the key word: on the one hand, to maintain the extraordinary success of the Premier League; and on the other, to share sufficient of the fruits of the Premier League’s success to encourage the healthy operation of the whole of the football pyramid and to ensure that any well-managed club can rise to the very top.

Why is the Premier League the world’s most successful sporting league? It is because 40% of the world’s best footballers play in it—twice as many as in any other league. In its squad, Liverpool has nine players, from all over the globe, who captain their country. I mention only Egypt, the Netherlands, Scotland, Brazil and Japan. Premier League players are trained to extremely high levels of fitness. Their skills are honed and developed by the most expert professional support staff available anywhere. Game by game, they are schooled in ever more sophisticated tactics by the world’s best managers.

Ian Graham, the pioneering data scientist who had such a profound impact on the modern Liverpool football club, tells me that all the top Premier League teams are now far stronger than any national side anywhere in the world. So—and this is the absolutely critical point—week after week, fans and viewers all over the globe experience not just the best football in the world, but the best football the world has ever seen. That is the core reason why the Premier League attracts such high revenues and why we must do nothing to threaten that.

The second reason for the Premier League’s success is that English football is so competitive: 51 clubs have played in the league since its inception and only six clubs have survived the whole journey so far from 1992. It might surprise noble Lords to be reminded that Man City are not one of them. Three seasons ago, Nottingham Forest were in the Championship. This day, they are second in the Premier League, and the only team to beat Liverpool in the league this season—unfortunately, a game at which I was present. Eleven seasons ago, Luton were playing in the Conference Premier League. Over 10 years, they rose up through League Two, League One and the Championship to the Premier League. Most impressive of all, in 2008, Leicester were in League One. Eight years later, they won the Premier League, 10 points clear of Arsenal in second place. Plainly, therefore, the necessary balance of which I spoke has been struck: sufficient funds have been flowing down the football pyramid to enable well-managed clubs to prosper, and that must continue.

Currently, around £500 million each year flows down from the Premier League to the rest of the football pyramid, which is hardly parsimonious; but I entirely accept that a regulator must bring conceptual clarity and rigour to this critical arrangement. I have sympathy, for instance, with the EFL’s unease about the balance between parachute and solidarity payments. The current process set out in the Bill for setting the precise quantum of fund flow is, however, unlike anything I have experienced in a long and varied career. It would be divisive, and it could be destructive. It is likely to lead to both sides gaming, not to rational, evidenced negotiation aimed at achieving the necessary balance I have identified.

The core process set out in my amendment embraces the valuable concept in the Bill of a state-of-the-game report; requires the regulator to appoint a heavyweight, experienced commercial arbitrator; allows both leagues first to meet each other alone to discuss their response; and then proposes that the two sides convene under the chairmanship of the arbitrator to try to reach an agreement. If they fail to reach agreement, the arbitrator then determines the settlement according to the detailed and comprehensive criteria set out in these amendments —criteria notably absent from the Bill as it stands.

Keeping everyone in the room and talking is key. Arbitration is a proven process for crafting a solution that balances the interests of all sides, for a substantial and neutral person in the room encourages constructive dialogue and discourages posturing. Moreover, arbitration is likely to foster tailored solutions consistent with the complexity of football’s ecosystem.

Perhaps most importantly, unlike the nuclear and binary final-offer process proposed in the Bill, arbitration is widely used in commercial contexts where relationships are of critical importance. English football would surely benefit more from collaboration and dialogue than from conflict and division. Moreover—and this is no small matter—the criteria set out in these amendments are rooted in public law principles and neutral considerations of sporting competition, thus making it far less likely that the regulator’s decisions would be challenged in the courts.

I do not make these proposals lightly. I hope all sides of the House will see the benefits that this approach would bring. Above all, I hope the Minister will not reject this approach out of hand, but rather, agree to reflect on it and to consult with the key parties before we move to the next stage of this important Bill. I beg to move.

Baroness Evans of Bowes Park Portrait Baroness Evans of Bowes Park (Con)
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My Lords, I have added my name to amendments in the next group that also propose changes to the resolution process, to which I will speak shortly. However, if the Minister is favourable to the proposed arbitration approach of the noble Lord, Lord Birt, as set out in these amendments— as opposed to those I have added my name to—and would be willing to accept and reflect further on the noble Lord’s proposal, I will be fully in support of that as I believe that his model is unquestionably preferable to that in the current legislation.

The intent behind the noble Lord’s approach is the same as mine—as he eloquently set out, to avoid the divisive approach currently contained in the Bill that could lead to both sides simply facing each other down, and instead to propose a mechanism that would ensure a tailored solution to the distribution of revenues that balances the interests of all sides and encourages constructive dialogue and collaboration to the benefit of the game and clubs at all levels.

As the noble Lord, Lord Birt, set out in his remarks, arbitration is a proven process; it is widely used in a range of commercial contexts and would lend itself effectively as a mechanism for helping to determine the revenues that flow through the football pyramid. In appointing an independent, experienced arbitrator to oversee the process and work with a set of detailed published principles, the regulator itself would remain one step removed, which the Minister has referred to in previous comments. I very much hope that she will look favourably on this well-considered and credible proposal.

18:30
Lord Addington Portrait Lord Addington (LD)
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My Lords, the amendments in front of us seem very appealing on the face of it, but I wonder why we have not got there already. If the Minister has some idea about the process that led to the position that we have, which does not seem to have been universally popular, I would be grateful to hear it—and I think the Committee would benefit from that.

Lord Markham Portrait Lord Markham (Con)
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I wish all noble Lords a happy new year, because this is the first time I have been here. I wish that my noble friend Lord Parkinson was joining us here instead of being in the Caribbean, from where he sends his best wishes. I really appreciate the time, effort and work that the noble Lord, Lord Birt, has put into this, although I am not sure about his statistic that 40% of the best players worldwide play in the Premier League. I would be interested in understanding where that statistic comes from, particularly as there seemed to be a Liverpool bias in that statistic.

The point behind all this, as the noble Lord said, is that a redistribution power gives unprecedented power to a regulator—unlike any other regulator in the country. As noble Lords have heard me say before, you do not see the FCA giving money from one bank to another or Ofwat giving from one water company to another. This has to be at odds with what the Sports Minister said just today—that they were looking to put in place a light-touch regulator. Instead, they are giving the regulator more powers than any other regulator in the country, which feels as if it is going in the opposite direction. The amendments in the second group seek to address that by suggesting that maybe we should not have those redistribution powers. But given a scenario in which we have those powers, the noble Lord has tried to set out a thorough and well thought-out process that is designed to foster compromise and avoid gaming. That is my concern about this.

I particularly appreciate the amendment on the criteria for settlement, which would make sure that there is a wider set of criteria in all this—looking to the competitive nature, audience appeal and continued investment. Without that, you are really just asking the expert panel to go back to the original objectives of the Bill, which are very simple and talk only about the financial resilience of the league, safeguarding heritage and financial soundness. There is a very easy way in which to achieve all those things, pointing the expert panel to saying that whichever suggestion gives the most money is going to achieve that, without having any other objectives. We could say, “Hang on a moment; going with the one that gives the most money does not at all take into account the appeal of the Premier League or the competitive nature of it all—it just makes sure that it is financially sound by giving it as much money as possible”. That cannot be right, but that is what we are setting up the regulator to do, if those are the only criteria and measures that it has to guide by. That is why I appreciate the wider set of measures set out in the amendment, which is very much a guide to how to do that, similar to the amendments tabled by my noble friend Lord Parkinson, which are in my name as well, on having a financial investment duty on the regulator in deciding any final proposal.

I also support Amendment 297F, which is about putting in place a proper appeals process. It is about getting as sensible, thorough and transparent a process as possible, and I look forward to hearing from the Minister how the Government would look to take on board these sensible provisions.

Lord Moynihan Portrait Lord Moynihan (Con)
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Before the Minister responds, I thank the noble Lord, Lord Birt, who sat through many hours of Committee and held his council until this moment, when he has made some very forceful and powerful points geared specifically towards having a co-operative, thoughtful and collaborative response to mediation. The legislation at present is not like that; it is divisive and nuclear, to use two of the words that the noble Lord used. This is one area where there can be agreement across the Committee, and I hope that there will be agreement from the Minister that we can return on Report to look at this, so that we can be more in line with other regulatory mechanisms for mediation. None is as divisive and polarised as the one in the Bill, and I very much hope that the support will be universal for the noble Lord, Lord Birt. I am grateful to him for the thought that he has given to this.

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
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Will the noble Lord acknowledge that you can have mediation only if both sides are willing to participate? What we have seen from the Premier League in recent years is that it is not willing to do that.

Lord Moynihan Portrait Lord Moynihan (Con)
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I disagree with the noble Baroness on that. Through the history of the backstop powers and the parachute payments, this has been subject to consistent and constructive negotiations. Some negotiations are tougher than others; there is no doubt that in recent months and the last couple of years there have been examples of both sides failing to reach an agreement. I do not believe that putting this regulatory pressure into a binary system is going to resolve that. Yes, negotiations are tough and are frequently going to lead to detailed iterations before a satisfactory position is reached—but the last round of negotiations in particular was very close to reaching an agreement. I do not believe that the imposition of regulatory pressure is going to resolve that beneficially for the future of the Premier League, or indeed the EFL, at all.

Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab)
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My Lords, before the noble Lord completely finishes his point and before we get to the Minister, from whom I think we all want to hear on this, does he accept that there has not been any progress in negotiations for 18 months? That is a very long time. The Premier League has to come somewhere close to where the EFL is if there is to be some sort of progress, and there has been no progress in that time—so I am not sure that the noble Lord is right.

Lord Moynihan Portrait Lord Moynihan (Con)
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I am equally keen to sit down so that we can hear the Minister respond. I was party to the letter from the EFL and to the reply from the noble Baroness, who set out clearly the steps taken during these negotiations, and it is simply not true to say that over the past 12 months no progress has been made. I hope that the noble Lord will agree that the proposal made by the noble Lord, Lord Birt, is a far more efficient, professional and collaborative way in which to make progress, and I very much hope that the Minister will echo that in her response.

Lord Pannick Portrait Lord Pannick (CB)
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My Lords, my response to the noble Baroness, Lady Taylor, is that the experience in litigation over recent years is that a requirement on parties to acrimonious disputes to mediate does often ensure a consensual settlement of disputes that seemed unable to be resolved—the formal process of mitigation. I declare, as I always do, my interests as counsel to Manchester City in disciplinary proceedings. I am a season ticket holder at Arsenal. I am interested to hear that the noble Lord, Lord Parkinson, is in the Caribbean; I had intended to go to the Emirates Stadium tonight to see Arsenal play Tottenham Hotspur, but I decided, on the basis of their recent form, that it would be far more entertaining to listen to the noble Lord, Lord Birt, and other noble Lords.

I just make two points about the amendments from the noble Lord, Lord Birt. I agree that they deserve close attention and I look forward to hearing from the Minister. The first is on Amendment 297A, on the appointment of a mediator. The noble Lord proposes that the person to be appointed must have held high judicial office. I say to him that, based on my experience, the best mediators are not necessarily those who have been judges. A mediator is not deciding anything; a mediator needs empathy and the ability to build a relationship of trust with the warring parties. I therefore respectfully suggest to the noble Lord that he may want to think about that point.

The second point that I raise with the noble Lord and the Committee is on his Amendment 297F. If I have understood his scheme correctly, there is a mediation stage, then there is an arbitration stage and then the ability for either party who is dissatisfied with the arbitration to take the matter to the Competition Appeal Tribunal. I point out to noble Lords that it is customary, where there is arbitration, that the power to take a matter that has been consensually arbitrated to a court or tribunal is very limited. That is the whole point of arbitration; it is to reduce the possibilities of further lengthy and expensive proceedings. The Arbitration Act, in most circumstances, limits the ability to go to court or to another tribunal thereafter to very specific and limited grounds. Again, the noble Lord may want to give thought to that.

Lord Hayward Portrait Lord Hayward (Con)
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My Lords, during the Second Reading debate, I made a contribution in relation to this specific issue and I disagreed with some of my colleagues. I indicated that I had worked for many years as a negotiator on behalf of management, on behalf of some of the largest corporations in this country. I negotiated with trade unions. It is easy to talk about mediation, arbitration and swing arbitration, which is in fact what is proposed in this Bill by the Government, but they all tackle an issue in different ways.

I am impressed by the arguments from the noble Lord, Lord Birt. I said at Second Reading that I was not averse to the proposal, but I wanted to see what the alternatives were. I will listen to the Minister with care, because I think it is important that one addresses the different forms of mediation and arbitration that are available to two sides, whether they are, in my case, management and trade unions, whether they are industrial organisations or whether, in this case, they are particular bodies that have an interest in coming to an agreement.

That is my observation, but I put one specific question to the Minister. According to press reports, the Chancellor is meeting regulators tomorrow to emphasise to them that they should prioritise growth. Given that so much of our debate has been about maintaining the growth of the football industry while tackling issues, I just seek clarification as to whether the shadow regulator has been invited to that meeting with the Chancellor. If so, is he going?

Baroness Brady Portrait Baroness Brady (Con)
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My Lords, I refer the Committee to my interests as declared on the register. I want to address a comment made by the noble Baroness. The assertion that the Premier League has made no substantial proposals during negotiations is not true and not borne out by the facts. The Premier League has put forward multiple comprehensive proposals alongside detailed financial models and heads of terms, which were also provided to DCMS. Each was designed to significantly increase solidarity contributions while ensuring financial controls that the additional funding encouraged sustainability and not wage inflation.

I am informed that the EFL did not keep its clubs fully apprised of the proposals made by the Premier League, nor did the EFL at any stage recommend the Premier League’s proposals to its member clubs or recommend to its board that they may be accepted. So there has been progress, and offers have been made by the Premier League that have not been put by the EFL. It is categorically wrong to suggest that any delay is wholly or in part because of the Premier League.

18:45
Baroness Twycross Portrait The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
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My Lords, I thank noble Lords who are here for this debate, especially those who have missed football matches to take part in a game for the greater good of football—that is something we all agree on, whether or not we agree with the exact form of the regulator or whether we have amendments on which noble Lords may have a different view from me and the Government.

Before I address the amendments in this group, I would like to make a brief clarification regarding a comment that I made in Committee on 18 December. It pertains to an issue that comes up in the next group, but I felt it important to clarify it at this point of the debate. In response to a question from the noble Baroness, Lady Brady, regarding whether there was a similar final offer mechanism in use in the UK and how it has delivered the outcomes that this model intends to achieve, I said that the Competition and Markets Authority had used a final offer mechanism. While the CMA does have a similar final offer mechanism, it was incorrect for me to say the process had been used, as the Digital Markets, Competition and Consumers Act only received Royal Assent on 24 May 2024, so the new regime has only just come into effect and has not yet been used by the CMA to come to a determination. We are clear, however, as the previous Government were clear, that this is an evidence-based model developed in tandem with leading economists, which has successfully achieved intended outcomes in other jurisdictions. I hope that through this evening’s debate I can reassure noble Lords that this is also the correct model for use in this case. As I mentioned, the model is discussed in considerable depth in the next group.

I note the question from the noble Lord, Lord Hayward, and I will seek clarity before the end of the debate. If I do not get it, I will come back to him on that particular point. Like him, I noted the request from the Chancellor on that point.

Moving on to the specific group that we have just debated, I thank the noble Lord, Lord Birt, for his amendments and insightful contributions. I also welcome his broad support for the principle underpinning the Bill around the independent football regulator. His knowledge and expertise are hugely beneficial in supporting the House to scrutinise this legislation. It was also helpful to have a reminder of the movement and the fluidity within and between leagues. That is an important point for your Lordships’ House to note and remember. The noble Lord, Lord Birt, has played an important part in the development of football broadcasting in this country and, as we have heard today, has a number of really valuable thoughts around this issue. That is also apparent in the thorough scrutiny that the noble Lord’s amendments provide on the design of the backstop process. It is important for us to examine why the Government believe that the backstop process remains the model that we should rely on when we come to setting the independent football regulator to work.

To reflect on the concerns of the noble Lords, Lord Birt and Lord Markham, and the noble Baroness, Lady Evans of Bowes Park, among others, I first restate that the intent behind this mechanism is not to create a heavy-handed regulatory intervention. There is a mediation process built in and we agree with the noble Lord, Lord Pannick, that this is an important step. To respond to the noble Lord’s specific concerns, the intent is to provide a last-resort process, only to be triggered if the leagues cannot come to an agreement themselves. It is genuinely intended to be a backstop. It cannot take place until mediation has concluded.

A number of noble Lords questioned why government intervention in this space is even necessary. A clear distribution agreement is in the interest of both the public and of football. Indeed, the Premier League recognises that financial redistribution is needed to ensure the vibrancy and sustainability of the football pyramid. As the noble Baroness, Lady Brady, has outlined on a number of occasions during Committee, that is why it already voluntarily distributes its revenues to lower leagues.

The EFL and the National League are important talent pipelines to the Premier League. Similarly, the Premier League is an important financial supporter of various programmes across the lower leagues. The football pyramid is a mutually beneficial structure, but only when a suitable distribution agreement or order is in place. The mechanism would not be necessary if the industry were able to come to a new agreement. I want to reassure noble Lords that, should the leagues choose to come to an independent agreement without the backstop, the regulator will not need to get involved and will not do so. One of the leagues has to apply to trigger the regulator’s process. It has to meet a high threshold, so leagues cannot unilaterally trigger it. This is not regulatory overreach into corporate agreements. If a voluntary corporate agreement is made between the leagues, then there is no role for the regulator. It is an alternative route by which a suitable deal and distribution scheme can be put in place, should the leagues require it. We recognise the value of preserving the competitiveness of English football. This process is designed to ensure its long-term financial sustainability and not to force a regulator-designed agreement on an industry.

Taking the points made by the noble Lord, Lord Birt, sequentially, I want first to address Amendments 295A and 297A. We acknowledge and respect the amendments’ intent to ensure that the mediator has the appropriate legal expertise to mediate successfully a complex financial and legal agreement alongside preventing potential conflicts of interest. I am not going to repeat the points made by the noble Lord, Lord Pannick. I agree with the sentiment expressed by the noble Lord, Lord Birt, that the mediator should be a relevantly qualified individual. However, we think that adding these specific requirements would disqualify potentially qualified and appropriate candidates and limit both the leagues and the regulator in their selection of potential mediators. As drafted, these principles for hiring may be too prescriptive and could lead to an inability to appoint a mediator if no suitable candidate were found who met all the conditions.

Amendment 297B seeks to add a formal arbitration mechanism to the backstop by providing another forum for negotiation before a final decision is made by the regulator. I must reiterate the point that the leagues have not been able to agree a new deal under an existing agreement since 2019. The addition of another negotiation step after the mediation stage would require not only the hiring of another formally qualified arbitrator but the introduction of a new set of statutory timelines. These new timelines, by which various crucial decisions must be made, would make the backstop process functionally unusable from a timing and resources perspective. It is also unclear what formal arbitration would be likely to achieve after a mandated and guided mediation process. The leagues can already come to an alternative agreement at any stage in the backstop process. This ability is explicitly protected in the Bill, so this added arbitration step would add complexity and would potentially—or even likely—delay the process.

On Amendments 297C and 297D, the introduction of a determination process would fundamentally override the final offer stage of the existing process, representing a significant shift in government policy towards a different type of arbitration process and moving away from the final offer mechanism. The process outlined in the amendment would offer the arbitrator greatly increased discretion regarding the design of the final proposals, requiring them only to consider evidence presented by the parties rather than to accept the design of one of their proposals. While we are sympathetic to the desire for the regulator to be required formally to consider expert analysis, systemic implications and the practicality of the proposals, allowing a third party to propose their own form of determination would remove entirely the incentive which the original process is designed to create. With a third-party decision-maker introduced to the process, it is likely that competition organisers would simply dig in to an inherently adversarial position rather than move closer to a middle ground and allow the third party—the arbitrator—to decide for them. It is our view that this amendment would increase reliance on the regulator and move us further from an industry-led solution.

Amendment 297E seeks to ask the regulator to provide more detailed information about the implementation of their decisions. This would include outlining transitional arrangements and compliance requirements, alongside outlining when orders can take effect. Again, I am sympathetic to the sentiments expressed by the noble Lord, as minimising adverse unintended impacts on business should be a top priority for the regulator when implementing a decision. The Bill requires distribution orders to include a summary of the questions for resolution, a copy of the final order, information detailing the reasons for those decisions and information on potential consequences of non-compliance. We would also expect the regulator to stay in constant communication with the leagues throughout the implementation process.

Amendment 297F would add to the ability of the leagues to appeal decisions made as part of the backstop process to the Competition Appeal Tribunal. Regulatory decisions made as part of the backstop process are already considered “reviewable decisions” open to appeal under the existing appeals process outlined in Part 9 of the Bill. Functionally, therefore, this amendment only makes more explicit a process that could already be triggered under existing clauses.

Finally, I turn to Amendment 297G, which would require the regulator to publish guidance on their decision-making and implementation processes and for them to keep this guidance under review for potential update in future. While we are not opposed in principle to the idea of regulatory guidance and the backstop, there is already provision in the Bill for guidance to be prepared by the regulator at their discretion and in consultation with such persons as they consider appropriate. In addition, the amendment would lock the appointment of a mediator behind the publishing of the guidance. In practical terms, this would significantly affect the timeliness of the process and open a window of opportunity for the process to be stalled by the leagues via extended consultation. We are keen for the leagues’ views on the process to be heard and taken into account by the regulator, but we are also conscious that football has already gone quite long enough without a suitable new arrangement. To reiterate, a timely, satisfactory agreement is in the public interest, as it is vital to the continued sustainability of the game. I repeat that I am always happy to engage with any noble Lords and other stakeholders on this point and to go through how the process might work, as I have already done with the Bill team. For the reasons I have outlined, I must reject the amendments from the noble Lord in this instance and ask him not to press them.

Lord Birt Portrait Lord Birt (CB)
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I am genuinely grateful to the Minister for her long, detailed and considered response. It gives me hope as I hope it gives hope to other noble Lords across the Committee. In going into the detail, the Minster registered how complex these issues are. This must be capable of being improved. Some of the doubts that exist on all sides of the Committee should be further considered to be sure that all these considerations are truly reflected at the next stage of the Bill when we come back to this matter, as we definitely will.

I am also very grateful for the broad support for this approach from right across the Committee, including from the noble Baroness, Lady Evans of Bowes Park, and the noble Lord, Lord Markham. I did not divine the 40% figure myself—as noble Lords know, there are a lot of data scientists operating in football. I am sure that it is highly arguable, but, intuitively, it rings true for me, not least because the Premier League has far greater resources than any other league, so it would be surprising if that did not result in it having by far the highest proportion of the world’s best players. If there is one key performance measure here about the appeal of British football, it is that we have the best players in the world playing in it. That is something we cannot forget. We cannot afford to reduce that percentage, whatever it is.

I am particularly grateful to the noble Lord, Lord Moynihan, who has made many excellent contributions to the Bill. Above all, I am very pleased that the noble Lord, Lord Addington, retains an open mind about the possibility of improving this important part of the Bill. I ask the noble Baroness, Lady Taylor of Bolton, and the noble Lord, Lord Bassam, to please read the amendment as written, because it is designed to avoid the very situation that they stood up to complain about. It is designed to bring mediation, collaboration and consideration, and, at the end of the day, binding arbitration. It has everybody in the room. It has not worked these last couple of years because the right people have not been in the room in the right circumstances. I want a resolution in the interest of the whole of football and I firmly believe that the approach set out in my amendment is far more likely to deliver it than the potentially divisive process in the Bill as it stands.

19:00
As always, I listened very carefully to what the noble Lord, Lord Pannick, said. He needs to be applauded for not attending Arsenal’s game tonight. He will be aware of the stat that I gave, that Notts Forest are second. By the end of our evening, Arsenal may be second, and I am very pleased that he thinks that coming here offers him greater entertainment than the prospect of his club breathing down the neck of mine. I also much enjoyed his candid appraisal of his profession, and I am very open-minded about improving the drafting of those amendments to take on board some of the points that he made.
The Minister suggested that she is open to further discussions from the key stakeholders, as well as from others in this House, and we should welcome that. In the meantime, I beg leave to withdraw my amendments.
Amendment 295A withdrawn.
Amendments 296 and 297 not moved.
Clause 60 agreed.
Amendments 297A to 297G not moved.
Clause 61: Final proposal stage
Amendments 298 and 299 not moved.
Debate on whether Clause 61 should stand part of the Bill.
Lord Markham Portrait Lord Markham (Con)
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My Lords, I rise to oppose the proposition that Clauses 61 to 64 should stand part of the Bill and I am grateful for the support of the noble Lord, Lord Birt. I will also speak to my Amendment 310, which is also in the name of my noble friend Lord Parkinson, who unfortunately cannot be with us today. I appreciate that there is quite a bit of overlap here with the debate we have just had, so I will try to keep this concise.

For me, the main thing about all of this is, what are we trying to solve here? We all agree that we have a very successful league—the most successful in the world. I love the statistic that 40% of the best players play in it. I would say that even more of the best managers are there when you look at it.

I looked up the solidarity payments and compared the 14% that the Premier League pays with the UEFA figure—in terms of the solidarity payments it pays to clubs not in the European competition but in the leagues —which is 5%. So we have a situation whereby the Premier League is paying almost three times the amount, creating a very successful situation. Of course, a lot of the reason for that is because it realises there is a great degree of fluidity, as per the statistic that the noble Lord, Lord Birt, mentioned earlier and which I have mentioned previously. The fluidity means that over 50% of the 92 clubs at some stage have been in the Premier League, and by definition have fallen out again. So, it is in all of their interests to make sure that the whole structure of football is successful. The fact that the Premier League pays 14% in solidarity payments, far more than UEFA and other leagues, shows all of that.

The statement has been made that we need to step in here as a regulator because there has not been agreement for years. As soon as it was known that a regulator was going to come on to the pitch, so to speak, it is not surprising that you do not get an agreement at that point. If I was the English football league in that, it would be entirely logical to think, “Hang on a moment, if a regulator comes in with powers in this space, that is going to give me more leverage” So, clearly, under that circumstance, it is rational for me to hang on because I am likely to get a better deal under that situation. I cannot get a worse deal than the one the Premier League has already suggested, so why not hang on for the regulator to come into the picture? So, to my mind, it is not surprising that we have not had an agreement as a result. It is actually because of the offer of the regulator that this has not happened.

So my main question about all of this is, what are we trying to solve here? It is not clear to me that there is a problem. In fact, I would suggest the opposite. I do not believe that this is the time to give unprecedented powers to a regulator which no other regulator in the country has, as I mentioned before. The regulator’s only criteria are to promote the financial soundness, financial resilience and heritage of English football. There is nothing else: nothing to do with its success, its audience appeal or the rights money it gets in, just those very narrow objectives. To fulfil those, it is always going to look to the mechanism which redistributes the most amount of money, because those are the narrow criteria it has been given. So I believe that that really gives us a danger of setting in motion a set of unintended consequences.

Given that I accept that there is a small chance those points will not be agreed by the Minister, I will move on to the other amendments we have added. My Amendment 310 states that, when making a determination under Clause 62, to which a final proposal to accept is made, the expert panel must have due regard for Section 7(2), which establishes the negative outcomes that the regulator must take all efforts to avoid. I must say that in all of this I actually prefer the amendments made by the noble Lord, Lord Birt, to any of these following ones that we put down. I am mentioning them in terms of completeness, but my first choice is that the regulator does not have the powers to redistribute at all. If it does, my second choice is that it adopts an approach similar to the one set out by the noble Lord, Lord Birt, which is a very well thought through process. I will speak to all of my amendments with that context in mind.

As I said, Amendment 310 tries to make sure that the expert panel takes into account the unintended consequences set out in Section 7(2), making sure that the expert panel has a duty to consider the impact on the leagues and on the competitiveness of English football, which is what makes it exciting and the best in the world.

I also support Amendment 304 in the name of my noble friend Lady Brady, which deals with precisely the issues that have been identified: the binary nature of the final proposals process. My noble friend’s amendment is simple and very reasonable. It permits the committee of the expert panel to include elements of both final proposals when making a distribution order. This will prevent the regulator simply choosing one proposal and ignoring the other, thereby achieving a real compromise while at the same time ensuring that the regulator is not imposing its will on the competition organisers. Amendment 304 seeks to strike a balance and better meets the aims set out in the Minister’s letter of incentivising compromise. I urge the Government to support these amendments.

Lord Watson of Invergowrie Portrait Lord Watson of Invergowrie (Lab)
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My Lords, I had not intended to speak to this group of amendments, but the noble Lord, Lord Markham, has prompted me to do so. He said just now that he does not think the Bill or a regulator are necessary because his aim is— I am quoting him; I hope he thinks I am doing so accurately—“to make sure that the whole structure of football is”, and remains, “successful”.

Lord Markham Portrait Lord Markham (Con)
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Noble Lords will remember that, in earlier debates, I said that there are many good things that the regulator should be set up to do, so I agree with that. The MK Dons is a very good example. The “fit and proper persons” test and the breakaway league are both very positive reasons to have it. An earlier proposal was that every club should have two non-executive independent directors, which, from memory —I cannot quite remember—had widespread support. All those sorts of things are good; it is the financial redistribution of the moneys that I believe is a step too far.

Lord Watson of Invergowrie Portrait Lord Watson of Invergowrie (Lab)
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I thank the noble Lord for that, but I do not thank him for mentioning MK Dons, which, as a supporter of AFC Wimbledon, strikes a bit of a raw nerve with me. But I understand the point he was making.

I come back to the noble Lord’s argument about making sure that the whole structure is “successful”—yes, I want that. As a supporter of a club in League Two, I want to make sure that more of the money available in the game filters downwards. I do not even want it to be contained within the Championship; I believe that the Championship has a disproportionate amount of the revenues that come from the Premier League.

I do not believe in parachute payments. All the money, including the parachute payments, should be spread throughout the three divisions below the Premier League—I have argued that before in your Lordships’ Committee in earlier debates. We are told that clubs are disincentivised to get promoted to the Premier League if they cannot have some guarantee. But, from memory, I can think of some clubs who are in the Premier League for the first time and have established themselves after several years—Brentford and Brighton are obvious examples—without having parachute payments to get there. Bournemouth have been in for some time; although they dropped out for a season, they came back again. For this season, somebody mentioned Nottingham Forest, who are second place; they have been in the Premier League for 25 years or so. Ipswich have made it after a similar gap.

I do not think that the parachute payments are anywhere near as essential as has been suggested. However, the money used for parachute payments, if it is spread more equitably, particularly down to League One and League Two to a greater degree, would enable the structure of English football to be successful in the way that the noble Lord, Lord Markham, suggested.

Lord Markham Portrait Lord Markham (Con)
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The noble Lord, Lord Watson, referred to Brighton and Brentford. I have spoken to the chair of Brentford and the CEO of Brighton. Both say that without the parachute payments—that safety net—they would never have invested in the players when they got promoted. If they were relegated without the parachute payments, they would have faced real financial difficulty. So it was the safety net of the parachute payments that gave them the confidence to invest in players, which then allowed them to have a strong enough team to stay up. I think that they would argue—in fact, they have argued this; it was in the letter that I circulated from the Brentford chairman—that the parachute payments were fundamental to their success in the Premier League.

Lord Pannick Portrait Lord Pannick (CB)
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My Lords, I cannot support the noble Lord, Lord Markham, on this. We undoubtedly have a very successful Premier League. Two questions arise from that. The first is whether the Premier League clubs have an obligation to provide some of their financial riches to clubs lower down the pyramid. It seems to me that the answer to that is undoubtedly yes. Those clubs, some of which are in a perilous financial state, are vital to their communities, and the pyramid is vital to the success of the Premier League, so they do have an obligation. The noble Lord, Lord Markham, said, very helpfully, that he agrees.

If that is right, the second question is whether the amount of money that the Premier League should provide downwards should be determined exclusively by the 20 clubs of the Premier League. The answer to that, in my view, must be no, of course not. There must be an independent, qualified person who assesses how much is appropriate, in all the circumstances, for the Premier League to provide downwards.

19:15
Baroness Brady Portrait Baroness Brady (Con)
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My Lords, I will speak to Amendments 302, 303 and 304 in my name, which would deliver two improvements to the backstop mechanism: a funder preference model and the ability for the regulatory panel to select elements of both parties’ proposals. These changes are intended not only to mitigate the extreme risks inherent in the current model but to enable a balanced, effective and generous approach to Premier League funding for the football pyramid.

I reiterate that Premier League clubs, and the league itself, are not opposed to regulation per se, and there are versions of the Bill, and indeed the backstop, that could be made to work. I say that notwithstanding the fact that the Premier League already shares its revenues more generously than any other major football league. The current voluntary approach to the distribution of our revenues has helped make the Championship the sixth richest league in Europe. The Premier League and its clubs are not afraid of doing the right thing. I believe that we would back ourselves to be fair, generous and innovative in addressing the needs of the pyramid. While we may not like it and believe it to be unnecessary, we are not remotely frightened of a regulator that is empowered to determine the right answer.

However, that is not what the Bill enables. The reality is that this untested idea is just not the right way to achieve the Government’s aims. As drafted, this backstop poses intolerable risks to the Premier League, its clubs and the wider football ecosystem. At its core, the backstop represents an unprecedented and untested intervention in what has historically been a voluntary and collaborative arrangement for revenue distribution. Far from coming up with the right answer, the pendulum arbitration model forces the IFR to choose one proposal in its entirety: either the Premier League’s or the EFL’s. This binary approach is not only crude but inherently adversarial. It incentivises extreme and divergent proposals, turning negotiations into high-stakes brinkmanship.

It is important to remember that this model does not simply decide funding levels; it also governs critical aspects of the football pyramid’s structure, such as merit rakes, the conditions of funding and even the existence or form of parachute payments, which we will return to in the next group. As I said in Committee before Christmas, this mechanism therefore periodically throws all the pieces of the pyramid into the air, with enormous uncertainty as to where they might land.

The inclusion of parachute payments in the backstop has only amplified these risks. We know that abolition or near abolition is not a hypothetical risk, because it is the clear position of the EFL. Make no mistake: its vision would fundamentally level down the Premier League, stripping smaller clubs of the tools they need to survive and thrive, and replacing aspiration with survival as the ceiling of ambition. This is why a proposal for a funder preference model warrants serious consideration.

My amendment would require the regulator to select the Premier League’s proposal so long as it meets all the regulatory objectives: in other words, so long as it delivers, in full, against the issues identified by the regulator. A funder preference model does not mean that the Premier League gets its way; it simply means that, as the sole funder—the people whose property rights are being interfered with—its proposal for meeting the sustainability needs of the pyramid would be given preference if, and only if, it delivers all the regulator’s objectives.

This approach would mitigate the risk of an extreme proposal being selected but only if the Premier League continues to step up to the plate. Importantly for the Government and the industry, it would also reduce the likelihood of prolonged legal challenges. Crucially, with parachute payments now included in the Bill, a funder preference model could still oblige the Premier League to adopt the parachute system if the “state of the game” report identifies challenges, but it would do so without the intolerable risk of the near abolition or the destabilising consequences that would follow. In other words, it would enable a balanced calibration of the parachutes rather than creating threats to them.

Also important is my amendment to give the panel the ability to combine elements from both proposals, rather than necessarily be obliged to choose one proposal or the other in its entirety. The noble Lord, Lord Birt, compellingly demonstrated the case for a more sophisticated approach, alongside proper principles and criteria to guide the panel in its decision-making. My amendment is different in that the IFR would be far less involved in designing a solution itself but it would also allow for more tailored solutions that address the needs of both parties. This seems far preferable to forcing the regulator into a binary choice.

The Premier League and its clubs’ track record demonstrate that it already has incentives to balance its own needs with the needs of a thriving, well-funded pyramid. The Premier League is not perfect but it has consistently stepped up to find the right answer for the whole game to the tune of £1.6 billion of funding over three years. We invented solidarity payments; no one forced us to. We created a stadium infrastructure fund that has helped over 1,000 community clubs. No one made us do it. We designed community programmes that have reached over 2 million young people. No one mandated it. We said that we would stand behind the pyramid and not let any club go to the wall during Covid. None did, because we stepped up to the plate and gave funding to the clubs that needed it. No one made us do that either.

We recognise our responsibility as a leader and steward of our national game. From that vantage point of stewardship, it is obvious that the backstop as currently designed is not the right answer for English football. It seems obvious to noble Lords right across this Committee too. As has been pointed out, not even the EFL likes this crude model. The unfortunate reality is that this particular backstop model seems to have no support—zero. We therefore need to change course. The Government should reconsider, especially as UEFA has asked them to, and work with football to come up with a much better and a far less risky solution for the whole game.

Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab)
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My Lords, I will speak to Amendments 308, 309 and 318. Before I say something critical about the comments made by the noble Baroness, Lady Brady, I would love to congratulate her on securing the services of Graham Potter—a good example of how Brighton & Hove’s generosity of spirit has extended down the Premier League. I hope that West Ham can build on our measure of bringing on talent.

The heart of our amendments in this group is Amendment 309, which seeks to qualify the way the regulator performs in this regard. Essentially, it would ensure that the financial gaps between the divisions in the pyramid are closed. It seeks to ensure that there is adequate compensation for player development and academies, and to provide for the welfare of players. It seeks to incentivise clubs to be well run and provide training for volunteers. The fifth element of the amendment is that the independent football regulator should address issues identified by the relevant “state of the game” report.

We do not set out a formula in our amendments but we say that the financial gap between the leagues needs to be addressed. Of course, in doing so, the football regulator will have to have regard to its “state of the game” report. The noble Baroness, Lady Brady, has made much play on several occasions of the generosity of the Premier League. There is no doubt that the Premier League is generous, but when one looks more closely at the figures and statistics, there is a limit to that generosity. Currently, the distribution of money coming from the Premier League is that some 92% of the revenue that it generates goes back to the 20 Premier League clubs, plus the five that are beneficiaries of parachute payments. Therefore, 92% goes to 25 clubs. That seems somewhat excessive. It means that just 8% of the distributable revenues from the English game, which amount to some £3 billion, goes to the other 67 professional clubs, which receive just £245 million. That gap has grown over the years. That is why we think it is right that the independent football regulator should give that gap some careful scrutiny.

The then Conservative Government commented in their White Paper that the parachute payment system

“can distort competition in the Championship and encourage greater financial risk taking by clubs that are not in receipt of them”.

That was a big and bold statement. It is worth reflecting on some of the research that has been done on the impact of parachute payments. Back in 2017, Dr Rob Wilson from Sheffield Hallam University, looking at that period between 2006-07 and 2016-17, concluded that clubs receiving parachute payment were

“twice as likely to be promoted to the English Premier League”

and “considerably less likely” to be relegated. That is a considerable distortion of the way in way in which the leagues operate. For that reason too, we think that the financial gap issue should be looked at more closely.

Obviously, it is right that there are solidarity payments, but the majority of those payments are concentrated simply in the parachute payment system. I therefore hope that the first “state of the game” report gives some close attention to that. It is worth observing too that, before the formation of the Premier League, domestic broadcasting money was allocated according to an agreed formula, with 75% being paid to the top-flight clubs and 25% to the other three divisions. I do not say that that is the right formula or that the 92% figure I referred to earlier is the wrong formula, but it is clearly an issue that need to be addressed.

In the last seven seasons, those clubs that have had parachute payments have managed to get back into the Premier League. In each of those seasons, two of the three promoted clubs received parachute payments. Looking at the Championship this year, the top three clubs are still in receipt of parachute payments. There is definitely a serious case to be examined.

We have heard a lot about the strength of the Premier League, and there is no doubt that it is the finest league in the world. I thought the statistics from the noble Lord, Lord Birt, were fascinating. They underline the confidence in our Premier League that exists in the football world. We want the distribution mechanism, as it works through, to be fairer and more equitable, and address some of the issues within the game. That is why we brought forward our amendments.

I conclude by making this observation: it is clear that the big divide in the consideration of this Bill is over the parachute payments. It is clear that noble Lords on the Opposition Benches are very much opposed to including them within the remit of the IFR. On our side, we think it only right that they should be brought into scope, and that was one of the major changes made between the previous Government’s Bill and our Government’s Bill. That is right, because it tries to ensure that there is some greater equity in the legislation. The noble Lord, Lord Pannick, put his finger on the issues, as did my noble friend Lord Watson.

I hope the Minister will give some consideration to the criteria point that we have raised in Amendment 309, if not in the Bill then certainly ensuring that it is carefully taken into consideration when the IFR is finally set up.

19:30
Lord Birt Portrait Lord Birt (CB)
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To respond briefly to what the noble Lord just said, in my remarks I said that I think there is a case for looking at the weighting between solidarity payments and sustainability payments. That is exactly what I think the kind of measures that we discussed earlier would bring some clinical analysis to and come up with a considered answer.

Forgive me if I point out something else to the noble Lord. I am a lover of stats, and I have just looked up a stat, which is what proportion of Brighton’s revenues come from the Premier League. In the last year for which figures are published—so this will not be from this year—73% of the revenues of the noble Lord’s club came from the Premier League. He has to face the issue that if there were a material change in that, it would have an impact on the club and the Premier League and its appeal. This is about getting the right balance in all these things.

Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab)
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I agree that it is about getting the right balance—there is no disagreement between me and the noble Lord—and obviously I acknowledge the size of the support that Brighton & Hove Albion get. One should also put on record that our fans—I am a great fan, a season ticket holder and a 1901 Club member, for that matter—are incredibly grateful to Tony Bloom for the investment that he has put in. I do not entirely buy the argument that it is because of parachute payments. Back when Brighton were pressing for promotion in 2016-17, that was not foremost in anyone’s thinking, and I doubt whether it was foremost in Tony Bloom’s. But obviously we have to look at where the resource is spent, and that is why it is for the IFR to make that determination and to treat this issue with great care when it comes to a conclusion, based on the “state of the game” report.

Lord Goddard of Stockport Portrait Lord Goddard of Stockport (LD)
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My Lords, for the first hour of the debate today, I honestly thought I was in a different Committee. The thoughtful amendments from the noble Lord, Lord Birt, and the reasoning behind them were more favourably reflected on by the Minister than almost any other amendment I have heard over seven nights. The helpful intervention from the noble Lord, Lord Pannick, about some technical issues, and his offer—probably to be accepted—of redrafting for a further thing, emphasise that we are drawing to a place where I think we can begin to make progress. Even the noble Lord, Lord Markham, was concise in his comments on those amendments in the spirit of trying to move the evening on, while still making the political points that he needed to make.

I was going to comment on the speech by the noble Baroness, Lady Brady, but the points have been made by the noble Lord, Lord Bassam, far better than I could: the Premier League does not have all the right answers, and it is about the pyramid and the lower clubs. This afternoon I met disability groups, women’s groups and other people concerned about the economics of football, and their real concern is whether they will ever see the benefits of whatever happens with this regulator, so that it does not just stay between the Premier League and the Championship. It is fine to say that the Championship is now one of the six best leagues in the world—that is to be supported—but below that are League One, League Two and the National League teams. We need to keep all those thoughts in our minds as we move forward.

Personally, I have absolutely no problem with the Premier League. It is a fantastic thing and I pay my money to watch it if I can—I wish I could have switched the fixtures around from last night to tonight, so that I would not have had to endure City throwing away a two-goal lead at Brentford. I could have missed that, listening to the enjoyment in here, but that is just the way the fixtures are thrown up, unfortunately.

What I am trying to say, clumsily, is that the regulator needs to be given responsibility. We can influence that responsibility by way of amendments in this and the other place, but it is very important that the Minister understands where those amendments are coming from, and for what reasons. I do not think that anybody in this Chamber does not believe that football deserves the very best governance and the very best people running it to keep its status as our national game. It is our national game, from Liverpool at the top right down to Southend and clubs at the bottom. Our group on these Benches just wants to ensure that we keep that focus, because you can lose it in the argument of the to and fro of the money, the percentages and how it is not fair. The fairness is not the point. The point is the 92 football clubs, which should be at the forefront of all our minds.

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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My Lords, I did not intend to speak on this group of amendments but, as with all the best Committees, you are sometimes prompted to contribute by the ebb and flow of the debate.

Just to respond very briefly to the noble Lords, Lord Pannick and Lord Bassam, of course we all want to see the best possible legislation. This is a scrutiny and oversight House, and we want to make sure the Bill is improved as it goes between the two Houses of Parliament. But we also do not want to respond merely to anecdote, whether it is the financial difficulties of a small number of clubs or the issue of the super league evolving as it did in 2021. I have gone on record as saying that the Bill is suboptimal—and that is polite. I would have said the same under a Conservative Government, and it bears repetition tonight. It was terrible then, and it is even more terrible under this Government.

I want to try to explain to noble Lords why, specifically on the issue of whether Clauses 61 to 64 should stand part, some of us have a philosophical issue. At the moment, I believe that although it can be quite robust and in many ways brutal, there is a self-correcting mechanism for the way football clubs are operated. There is a predisposition not to take inordinate risk in the future of small community clubs supported by the local communities in towns and cities across the country.

What slightly worries me is the concept of moral hazard, as we have discussed before, which is obviously quite an arcane economic concept. Incidentally, with respect to the noble Lord, Lord Pannick, I do not see that it is necessarily axiomatic that the Premier League has some moral duty, as businesses and as private entities with shareholders, to necessarily be a pseudo-charitable outfit and to provide for those in other leagues. The noble Lord might want to elucidate why he feels that is the case. Whether we believe it is a good or practicable idea is another issue.

Lord Watson of Invergowrie Portrait Lord Watson of Invergowrie (Lab)
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Is the noble Lord familiar with the concept of solidarity?

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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Yes indeed, comrade.

I suppose the significant point I am making is that not enough credence has been given to the efforts, which were very well enunciated by my noble friend Lady Brady, of the Premier League through very difficult times, economic downturns and, of course, Covid. At the moment we have that self-correcting economic mechanism to prevent smaller clubs making calamitous economic decisions that may end up with them closing, going into administration, et cetera—although of course, as we have seen from the figures, a relatively small number of clubs have been in that position.

Conversely, we are being asked to formalise in primary legislation a situation where we are putting in the hands of the IFR, along with very significant enabling powers, including Henry VIII powers, the right to redistribute wealth. It may be a simplistic argument but, as my noble friend Lord Markham said, it would be an unprecedented situation for a regulator to redistribute capital between entities. In other words, there will be no internal mechanism or sanction to prevent inordinate amounts of risk being taken. It would be a market distortion and there would be no disincentive for those clubs to make those decisions, as there is now.

That is the philosophical underpinning of why we support these clauses not standing part of the Bill. It does not mean that we do not care about community football clubs. We are being asked to vote not on a perfect piece primary legislation but on the Bill with 100 clauses that is in front of us today. For that reason, I support my noble friend’s contention that Clause 61 and others should not stand part of the Bill.

Baroness Evans of Bowes Park Portrait Baroness Evans of Bowes Park (Con)
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My Lords, I have added my name to Amendments 302 and 304.

As I said in previous debates on the backstop, I have real concerns about the resolution process, and in particular the binding final offer arbitration model included. The Minister has repeatedly claimed, and said again today, that these powers are to be used only as a last resort, but we have heard from noble Lords across the House that this does not feel like the situation in which we find ourselves today. As has been identified by other noble Lords, the approach being legislated for in the Bill is unduly adversarial and pits two sides against one another rather than encouraging comprise and dialogue. As we have heard, the very existence of the proposed mechanism set out seems to have played a role in the breakdown of the latest round of financial negotiations, which is concerning and does not bode well for the future.

The Government would be unwise to dismiss and ignore this chilling effect, as the current backstop proposal threatens to undermine and damage relations across the football pyramid. The model just does not make sense. In any deal negotiation, if both sides are disappointed at the outcome reached, it is more likely that it has been fair and balances the two sides’ competing proposals. Yet, as we have heard, under the process set out in the Bill, rather than consider each proposal and determine the best approach—which may very well be a compromise between the two—the expert panel formed by the regulator must instead choose one of the proposals.

Amendment 304 gives the expert panel set up by the regulator to oversee the process the ability to combine elements of the proposals

“where it considers that this will result in an order which is most consistent with the principles in subsection (2)”.

This is a far more sensible approach. It does not mean that the regulator or its expert panel would be forcing a proposal on the two leagues involved. Rather, they can play a constructive role in facilitation and mediation to help achieve an outcome that both parties can agree with.

I really hope that the Minister will use the time between the end of Committee and the beginning of Report to discuss further some of the ideas that have been brought forward in this and, as I said in the previous debate, consult with the leagues and individual clubs again. A number of them have expressed concerns publicly about the process. I hope that she will think about tabling amendments that will be supported across the House at our next stage.

Baroness Twycross Portrait Baroness Twycross (Lab)
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My Lords, I thank noble Lords for their at times passionate discussion on this group of amendments. I agree with the noble Lord, Lord Goddard, that it has been a good debate. All noble Lords who have taken part clearly believe in getting the best governance for our national game, which should be at the heart of discussions.

Let me be clear that the Government’s preference is for an industry-led solution. While we acknowledge that there is an existing agreement in place, if a new updated agreement cannot be reached, an industry-designed proposal, facilitated by the regulator, is the next best option. The model adopted by this Government for a backstop was in the previous Government’s Bill.

One of the dividing lines in your Lordships’ House is clearly on the rights and wrongs of parachute payments and their inclusion or otherwise in the scope of the regulator. This was referred to by, among others, the noble Baroness, Lady Brady, the noble Lord, Lord Markham, and my noble friends Lord Watson of Invergowrie and Lord Bassam of Brighton. I hope that we can all agree, not least because of the debate on this, that parachute payments are a significant part of football’s financial landscape. They clearly play an important role in supporting the survival of relegated clubs and the Government are clear on that.

However, the regulator needs to be able to consider all relevant revenue sources as part of the backstop process, to arrive at an accurate picture of any proposal’s impact on financial sustainability and the potential for distortion of the parachute payments. This is not to say that they must be included. It is to allow the regulator to include them if, having gone through the process with, for example, the “state of the game” report, it has arrived at the view that they should be included in the process.

19:45
I will start with Amendments 302, 303 and 304, tabled by the noble Baroness, Lady Brady, and also spoken to by the noble Baroness, Lady Evans of Bowes Park. Amendment 302 attempts to make the regulator’s decision on criteria for choosing the final proposal discretionary, removing the requirement for the regulator to make a distribution order based on the more consistent final proposal. The regulator’s decision-making process, as outlined in the Bill, is intended to ensure that, where a distribution order must be issued, the regulator does not place an undue burden on the commercial interests of either specified competition organiser, and that the order issued is as consistent with the regulator’s objectives as possible: namely, to promote the financial soundness and resilience of football.
The intent of this drafting is to give the regulator a framework by which to make its decisions, should both proposals be consistent with the regulator’s objectives. Without this qualification, the regulator would be less clear on how to decide between proposals, which could lead to uncertain decision-making. When combined with Amendment 303, which appears to give preference to the distributing league in statute—preference that would introduce a type of bias to the backstop process, making the outcome somewhat predetermined—it is evident what the noble Baroness is seeking to achieve. These amendments attempt to address a perceived lack of regard for the inherent difference between the distributing and receiving parties in the backstop process.
The noble Baroness raised points about why the regulator would not give preference to the Premier League’s proposal since it is the league’s funds that are being distributed. In our view, a model of this type would undermine the fundamental reason for giving a backstop power and distributions to the regulator in the first place: namely, to introduce parity in a negotiation process between two parties where one has significantly more bargaining power than the other. The Premier League’s suggestion to include a preference for its proposal in statute would introduce a bias to the process, making it unfair, partial and predetermined. Such a proposition would undermine the reaching of an equitable and transparent decision. To ensure that the backstop functions in the way that affords the regulator impartiality, no party can be favoured in the model as it stands.
Amendment 304 is intended to allow the regulator to make a distribution order based on parts of submitted proposals rather than one proposal in its entirety. The current backstop process is designed to bring the two parties closer to compromise, as the binary choice between proposals incentivises them to submit complete, consistent and reasonable proposals. It is important to ensure that the regulator has a role only in facilitating the final proposal process and that the process is the least interventionist that it can be while remaining effective. This approach encourages future collaboration and prevents the leagues relying too heavily on the regulator in the future.
Amendments 308, 309 and 318 were tabled by my noble friends Lord Bassam of Brighton and Lady Taylor of Bolton. While we understand the intent behind Amendment 308, we are content that the current drafting in the Bill sufficiently captures the interests of regulated clubs by addressing the leagues that they are a part of. We would expect that, in the final proposal stage, the leagues would effectively represent the interests of their constituent clubs and consider any undue burden that would be placed on their commercial interests. The backstop process, including the final proposal stage, is ultimately about resolving distributions between the leagues and therefore it is the burden on the leagues as a whole that should be considered.
I turn now to Amendment 309. Again, I agree that the requirements my noble friend has suggested are important issues in the football industry. However, it is our position that these issues are not appropriate to be included as part of the backstop process in the Bill. It is not the purpose of the regulator to dictate how leagues should fund these issues—that is not its objective. As it stands, the Bill has been designed to allow the regulator to consider factors relevant to its objectives when reviewing final proposals. These amendments would add a large number of additional factors, fundamentally broadening the scope of the regulator’s remit.
On Amendment 318, we do not think it appropriate to impose these requirements on a new commercial agreement. Although I am sympathetic to the desire to ensure that any agreement made as part of the backstop process or otherwise is fit for purpose, the backstop process is a last-resort power to be utilised only if an independent commercial deal cannot be agreed. Allowing this amendment would fundamentally shift the design of the backstop, making it more interventionist and interfering with its design as a last-resort option.
I thank the noble Lord, Lord Markham, for tabling Amendment 310. It is absolutely right that the regulator’s general duties be considered at the final proposal stage of the backstop. I also agree that sporting competitiveness and financial investment in English football are key to continuing to preserve what is so great about the game in this country. That is why the current drafting already delivers the intent of this amendment.
Across the entire regulatory regime, the regulator is already required to have regard to the impact on investment, international competitiveness and sporting competition, as it is exercising one of its duties as outlined in the drafting of Clause 7(2). That would also apply to the decision of the expert panel. If we explicitly name the regulator’s general duties in Clause 62, we open up Clause 7(2) to confusion as to whether it applies to all the regulator’s duties, as intended, or to the duties only where it is explicitly referenced. The principles as drafted have been included to ensure that the regulator takes a balanced and proportionate approach when choosing a proposal and outlines additional considerations rather than restating underlying principles.
I turn now to the clause stand part notices tabled by the noble Lords, Lord Markham and Lord Parkinson of Whitley Bay, and spoken to by the noble Lord, Lord Jackson of Peterborough. On the point raised by the noble Lord, Lord Markham, that the regulator would always pick the EFL’s proposal, when selecting a final proposal the regulator has to consider whether it would place an undue burden on the commercial interests of either specified competition organiser.
Clause 61 is the final proposal stage. The backstop mechanism, although carefully designed to incentivise compromise, is still a regulatory intervention. It is important that the process can deliver the right outcomes. That is why, if the parties are unable to reach agreement, even after a period of mediation, then they will move to a “final proposal stage”. As the clause sets out, the regulator would first establish a committee of at least three experts from the regulator’s expert panel with the necessary skills, knowledge or experience. The committee would then invite the relevant leagues to submit a final proposal for the distribution of revenue along with supporting evidence.
As part of this, the committee would specify the issues relating to the distribution of revenue that need to be resolved and the requirement for supporting evidence. If parachute payments are deemed to be in scope and a relevant issue, they will need to be accounted for in the final proposals. Both parties will be incentivised to submit a reasonable proposal, because an unreasonable proposal runs a greater risk of not being chosen. To encourage the leagues to submit strong proposals, the committee can extend the deadline by seven days if the proposals are inadequate and do not meet the stated criteria. This increases the likelihood that a good outcome is achieved and gives the leagues the best opportunity possible to put forward a credible proposal.
Previously, noble Lords have questioned why the regulator cannot put forward its own proposal. We believe that would create a perverse incentive, encouraging the leagues to dig in to their opposing positions and rely on the regulator to design a solution. The current design helps prevent this by forcing the leagues to consider a reasonable solution that the regulator may realistically choose over an equally valid agreement proposed by the opposing league. This design also helps to reduce the cost and uncertainty often generated by traditional regulatory determination.
As we have discussed, the backstop has been designed to incentivise compromise between the parties, especially when submitting their final proposals. It is important that, alongside incentivising reasonable proposals, we also disincentivise inconsistent or incomplete proposals. That is why we have ensured that inconsistent or incomplete proposals run the risk of causing the regulator to terminate the process.
Clause 62 provides clear criteria for how the proposals will be judged, setting out the principles by which the expert panel must decide which final proposal is most consistent. These principles include advancing the regulator’s objectives, considering potential commercial burden on the leagues, and ensuring a transition period for relegated clubs if parachute payments are addressed. Furthermore, across the entire regulatory regime, the regulator will also have to have regard to the impact on investment, international competitiveness and sporting competition.
The principles have been included to ensure that the regulator takes a balanced and proportionate approach when choosing a proposal. It is important to consider not only the financial sustainability and resilience of the football pyramid as a whole but the independent commercial interests of each of the leagues. Once the panel has made its decision, it must make an order requiring the relevant leagues to distribute revenue in line with the chosen proposal. The backstop mechanism will be evidence-based and objective to ensure that the proposal with the largest quantum is not necessarily always the one chosen. The design strives to strike the fine balance between ensuring that the key issue of financial sustainability is addressed, while remaining an industry-led process, as the final proposal chosen will ultimately come from one of the leagues.
I understand concerns that the process may appear interventionist but, as I have laid out prior to this debate, the opportunity for the leagues to come to an independent agreement before this process is triggered is always a viable option and one that we would encourage. It is also important to ensure that we have safeguards built into the backstop process.
Clause 63 outlines one of the potential options should a distribution order no longer prove viable. Where the regulator and its independent panel of experts have had to choose a proposal at the final proposal stage, the regulator will issue an order requiring the leagues to distribute revenues in line with the chosen proposal. To provide clarity to the leagues, the order will need to specify when it comes into force and how long it is in force for. The clause also provides for exceptional circumstances and situations where the regulator needs to revoke the order—for instance, if there is a fundamental change to the broadcast market. It is important that this flexibility be provided for in the Bill to prevent a scenario where an unsuitable arrangement is left to stand.
Similarly, the clause also ensures that the regulator revokes an order if the parties reach a new, different agreement. This again demonstrates the Government’s commitment to prioritising and encouraging industry-led agreements wherever possible. Whenever the regulator revokes an order, it will need to notify the parties and set out the reasons for its decision, continuing the underlying commitment to transparency at every stage of this process. For the backstop process to be viable as a regulatory solution, it needs to be legally enforceable.
Clause 64 sets out that the regulator must keep the relevant leagues’ compliance under review as well as the need to take enforcement against the relevant leagues. While constructive engagement with clubs would be the regulator’s default first step, this clause references the regulator’s ability to take enforcement action, as outlined in Part 8, to ensure that a distribution order is upheld. This will ensure that a distribution agreement will be in place and functioning between the leagues, even in the worst case scenario. Furthermore, the clause clarifies that the regulator can make rules around how costs associated with the backstop are to be paid.
Finally, the clause also explicitly outlines the leagues’ ability, at any stage in the process before the distribution order is in place, to come to an alternative agreement. We think it important to reiterate that this is a last-resort power, to be used only in cases where football cannot come to an agreement itself.
I hope my responses have been helpful to noble Lords and I thank them again for a healthy discussion on an important part of the Bill. In closing, I hope that noble Lords will not press their amendments, for the reasons I have set out, and I beg to move that these clauses stand part of the Bill.
Lord Markham Portrait Lord Markham (Con)
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I thank all noble Lords, and I agree with the noble Lord, Lord Goddard, and the Minister that it was a good debate conducted in a good tone. I also thank the Minister for her helpful clarifying comments, particularly on Amendment 310 and the expert panel.

On the point raised by the noble Lord, Lord Pannick, I would like to make it clear that I think everyone agrees—I definitely do—that the Premier League should be paying over a share of its—

Lord Pannick Portrait Lord Pannick (CB)
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The noble Lord says “everyone”; he might like to have a conversation with the noble Lord, Lord Jackson.

Lord Markham Portrait Lord Markham (Con)
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I will allow my noble friend to speak for himself, but I do not think anyone is saying that the Premier League should not be paying some of its money over, most of all because the Premier League voluntarily believes that it should be paying large sums of its money over because it is critical for the health of the whole game.

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Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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I fear the noble Lord, Lord Pannick, has misconstrued my comments. Perhaps it would be apposite to clarify that I was merely pressing him on the intellectual rationale for the assertions he made. That is a completely different issue from whether I agree that, being community minded, the Premier League should indeed disburse its funds generously to lower leagues.

Lord Moynihan of Chelsea Portrait Lord Moynihan of Chelsea (Con)
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The noble Lord, Lord Watson, reminded us of solidarity. Does my noble friend agree that there is a great difference between legislative—which is to say coerced—solidarity, which some would call theft under the law, versus the voluntary and friendly solidarity that is already being shown by the Premier League? Does he agree that there is a fundamental difference between the two and that it is a subversion of the word to call it solidarity?

Lord Watson of Invergowrie Portrait Lord Watson of Invergowrie (Lab)
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The noble Lord is now making a distinction between solidarity and paternalism.

Lord Markham Portrait Lord Markham (Con)
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That is precisely the point of this debate. I think everyone agrees that the Premier League should be paying money over, no one more than the Premier League itself. The whole question is whether it needs a regulator to enforce a set number. As my noble friend Lady Brady said, the Premier League is more generous than other leagues. As my figures showed, the Premier League pays over 14%, which is almost three times the level that UEFA pays over in its version of solidarity payments. The real point of the debate is whether we really need a regulator to determine it.

We have had a good debate on parachute payments. The noble Lord, Lord Bassam, made a particular point about Brighton and how it did not need them. It is a little known fact that that a job I never got, although I was through to the final round, was being CEO of Brighton many moons ago, when it was a Championship team and was pressing for the Premier League. I recall very well a conversation with Tony Bloom when he was interviewing me for that job. I still think he is a brilliant chair, and I cannot argue against Paul Barber, the CEO; given how good he is, I cannot deny that he chose the right candidate.

Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab)
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The noble Lord is obviously used to being a runner-up in these competitions.

Lord Markham Portrait Lord Markham (Con)
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That hurts. Tony Bloom made clear to me that Brighton’s whole business plan depended on what he called “the yo-yo”. West Brom had just done it at the time: you get promoted and make some investment in new players. You then expect to go down and have the benefit of parachute payments to build more players up again, so you slowly get to the level, through the yo-yo, where you can be sustained.

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
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While the noble Lord is talking about parachute payments and the yo-yo, he used the figure of 14%. If you take out parachute payments, is the figure not an awful lot lower and actually near 4%?

Lord Markham Portrait Lord Markham (Con)
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I am sure that we can get the absolute reference from the statto—the noble Lord, Lord Birt, will probably calculate it and tell us by the end of the debate. I think the figure is about 9%, but we can check that.

The point I was trying to make is that Tony Bloom, the chair of Brighton, and Paul Barber, its CEO, whom I have spoken to during this process, would say that parachute payments were a very important part of their business planning in giving them the confidence to invest, which allowed Brighton to stay up and thrive in the Premier League. There is a very good argument for them being there.

As much as I would like the regulator not to get involved in redistribution payments, I accept that it is likely that those powers will be granted. If we really narrow it down, the debate on this group and the previous one is all about the negotiation mechanism. That is where I appreciate so much the work that the noble Lord, Lord Birt, has done on this, because it is not a political point. I do not think anyone in the outside world would get into the intricacies of and care more broadly about the negotiation mechanisms that we are talking about, but what we are talking about is, as the Minister said, a theory behind binary choices and what will happen in terms of gaming. It is an untried theory that has not been done anywhere else, and it has been put forward. I thought the Minister said that it had not been done by the commission.

Baroness Twycross Portrait Baroness Twycross (Lab)
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It has not been used by the Competition and Markets Authority yet, even though the previous Government gave it the powers to do so. It has been used successfully in other jurisdictions —for example, in Australia and Canada. I have other examples that may be in my speaking notes later in the evening, but I am happy to share them.

Lord Markham Portrait Lord Markham (Con)
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That would be very helpful, because the main point here, and what I hope we can achieve between now and Report, is that we know that there is a small group of economists at the DCMS who have put together this mechanism. There are noble Lords here who have been involved in media sports rights deals and these sorts of negotiations who can add real value to this. There is a real opportunity between now and Report to engage with those officials to really get into those negotiation mechanisms, because this is what we have narrowed it down to and that is what this debate has been useful for. I hope we can use that time productively.

Clause 61 agreed.
Clause 62: Distribution orders
Amendments 300 to 310 not moved.
Amendment 311
Moved by
311: Clause 62, page 51, line 35, leave out “one year” and insert “three years”
Baroness Brady Portrait Baroness Brady (Con)
- Hansard - - - Excerpts

My Lords, I shall speak also to Amendment 312. These amendments would ensure that any distribution order affecting parachute payments is introduced with a three-year, rather than one-year, transition period, and that an order would come into effect only from the start of a new football season.

Before I give the Committee my experience of why that is so important, having spent 32 years running Premier League and EFL clubs, I want to make the point that I think there is a total misunderstanding in the Committee about parachute payments. Parachute payments are not about helping clubs get promoted into the Premier League; they are about helping Championship clubs that are promoted into the Premier League to have the ability to invest to give them a chance to stay in the Premier League. You cannot invest to stay and be competitive in the Premier League if you do not know that there is some sort of safety net to help you in the event of relegation. My Amendments 311 and 312 are, in my view, essential to safeguarding the stability and sustainability of English football, particularly for those clubs that face the challenges of relegation.

As I have said before in the House, parachute payments are not a luxury or a reward for failure. They are an essential tool that encourages the competitiveness, investability and financial sustainability of English football. Without them, relegation would create a financial free-for-all and a cliff edge that could devastate clubs, their communities and the broader ecosystem. Without them, newly promoted clubs cannot invest in their squads to ensure that they have any chance of remaining in the Premier League.

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
- Hansard - - - Excerpts

Will the noble Baroness acknowledge that they distort competition in the Championship?

Baroness Brady Portrait Baroness Brady (Con)
- Hansard - - - Excerpts

I do not say that they do or do not. I am saying that, if they were not there, you would have to invent them. If a club is promoted from the Championship to the Premier League and cannot invest in its team to stay in that league, it is automatically almost certain to be relegated. If an established club, such as those mentioned earlier, is relegated, without the parachute payment it will be in financial trouble. Some 50% of all administrations come as a result of relegation; that is why parachute payments are fundamentally important. They are designed to manage the financial shock of relegation, where clubs could lose significant revenues, almost overnight, while their costs remain fixed.

For a recently promoted Premier League club, squad costs alone average £115 million a year, with most player contracts running for three to five years. Relegation means that clubs face an average shortfall of £165 million over three years, even with parachute payments included in that equation. It is important to recognise, therefore, that they do not help clubs avoid a painful transition but soften the blow to a degree. Without them, the financial impact would escalate from being very painful to being catastrophic.

Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab)
- Hansard - - - Excerpts

I remind the noble Baroness that parachute payments have not always been at the level they currently are. In 2010-11 parachute payments were something like £30 million; by 2020-21 they had escalated to £233 million, which is an eightfold increase. This was during a period in which player wages only doubled. The noble Baroness’s point about the need to ensure that there is no cliff edge around financial commitments to players is not entirely valid. Why did the parachute payments need to grow so rapidly and by so much during that period?

I do not argue against the principle of parachute payments; I recognise their importance and the need to soften the blow that is a product of relegation. But the noble Baroness must accept that they have a distorting impact on promotion bids by Championship clubs. Over the last seven seasons, 14 of the 21 clubs promoted were in receipt of parachute payments, where previously that was not the case.

Baroness Brady Portrait Baroness Brady (Con)
- Hansard - - - Excerpts

As the noble Lord pointed out, wages have increased. Newly promoted Premier League clubs have an average wage bill of £115 million and transfer fees have gone through the roof. That is why the costs are fixed. If a club is relegated, it cannot terminate its players’ contracts; they are honoured, as clubs are obliged to pay those contracts. The parachute payment helps soften that blow. Parachute payments put restructuring responsibly at the forefront of clubs’ minds. Relegated clubs have to sell players, but they also have to buy players, reduce their wage bill and recalibrate costs to adapt to life in the Championship. What these payments really do is help clubs avoid wholesale disinvestment, panicked fire sales or, worse, administration.

Parachute payments work. They do not distort competition; they enable it. That is why versions of parachutes are used all over Europe and throughout the EFL system. Clubs such as Brentford, Brighton, Nottingham Forest and Crystal Palace have all demonstrated that well-run, innovative clubs can rise through the Championship without parachutes and build competitive, successful teams in the Premier League. Parachute payments are a stabiliser for relegated clubs, not a barrier to promotion.

Without these payments, the competitive balance, investability and appeal of both the Premier League and the Championship would be put at risk. Investors in the Championship recognise that parachute payments provide the essential scaffolding for strategic investment. These payments enable clubs to build towards promotion with confidence, knowing that there is a safety net. Parachute payments create the conditions for clubs to invest in players, infrastructure and long-term strategic plans, with the assurance that one challenging season in the Premier League will not unravel their progress and render all that investment worthless.

20:15
Far from distorting or holding the Championship back, a combination of the dynamism of the Premier League, the competitiveness of our second tier and, yes, the system of parachutes is the foundation that keeps the Championship investable and dynamic, sustaining the aspiration and high-investment culture that is critical to the success of English football.
The inclusion of parachute payments in the backstop mechanism fundamentally changes the risk landscape. It is not just about amounts of money; the backstop enables systematic proposals that could radically alter the very financial architecture of the game.
The chair of the EFL has called parachute payments
“an evil that needs to be eradicated”.
He also said that the EFL’s goal is to halve the gap between the bottom of the Premier League and the top of the Championship:
“We abolish parachute payments to make the Championship competitive”.
The Bill as drafted enables precisely the extreme intervention that the EFL is advocating. As we have heard tonight, it creates a binary choice in the backstop process, with no ability for the regulator to find a middle ground or craft a balanced solution. That means that the future of parachute payments, and with it the stability of the football pyramid, will be subject to a high-stakes gamble every few years.
The proposed one-year transition period is wholly inadequate. Clubs operate on a multiyear planning cycle, particularly regarding player contracts and infrastructure payments. Abrupt changes would force relegated clubs into chaotic financial restructuring, undermining not only their stability but the very principles of sustainability that the Bill is meant to promote. One year barely provides enough time for a disorderly and destructive fire sale, and no club wants to be in that position. A three-year transition period, as proposed in this amendment, is the minimum necessary to ensure that clubs can adapt responsibly.
This is not just a matter of pragmatism; it is a matter of fairness. Parachute payments are a contractual right, negotiated in good faith as part of the Premier League’s model. To remove or fundamentally alter them without an adequate transition would chill investment across the pyramid.
Parachute payments are vital. They are not a distortion; they are a stabiliser. They are not a luxury; they are a necessity. As I said to the noble Baroness, if they did not exist, you would have to invent them. To give any newly promoted Championship side a chance to stay in the Premier League, parachute payments have to be there. To give any established Premier League club a chance to be financially viable on relegation, parachute payments have to stay there. The backstop as currently designed places them at serious risk.
A three-year transition period for any changes to parachute payments is not just reasonable but essential. I urge the Government to consider their approach and support these amendments. Football’s future really does depend on the Government listening, engaging and getting this right.
Lord Addington Portrait Lord Addington (LD)
- View Speech - Hansard - - - Excerpts

My Lords, when it comes to parachute payments and what they imply—that is, the survival of a fall—I cannot help but feel that if we made what clubs were falling on a little softer, it would improve their chances. We have a situation here of deciding whether to cushion the fall or let clubs float down. Some combination of the two might be appropriate. Let us remember that no situation will remain as it is now; we cannot guarantee that consumption patterns and the way football is viewed will not change over time, because they already have.

So, what I would say about the noble Baroness’s amendment is that maybe the timescale would be easier if it was longer. What is the Government’s thinking about stability to allow this survival to come out? We do not want people being destroyed by it—the noble Baroness is quite right. Equally, having the “cosy club” of those who have tried and failed and come back up again is not that desirable. How you have a civilised or better way of getting out of that situation is something that we want to look at here. I do not know whether there is a right answer here, but we need to look at the way this happens and how those clubs are going to survive and continue as clubs. When I looked at this Bill, I thought that was the most important bit. You have the Premiership which makes lots of money and the rest of it which apparently we want to keep. How you square that circle is what we are talking about here. The Government’s thinking on this is what I would like to extract from this discussion.

Lord Markham Portrait Lord Markham (Con)
- View Speech - Hansard - - - Excerpts

I will be brief because my noble friend Lady Brady made the points extremely well and we have debated parachute payments quite a bit already this evening. The only thing I would say is that they give clubs in the Premiership the incentive or the confidence to invest and in my understanding every European league now has some variation on that, because it is seen as a system that works. It is fundamental to the competitiveness of the Premier League. It underlies its whole audience appeal and broadcasters all round the world will make media sports rights payments to see such an exciting and competitive game.

It is known that we would prefer that parachute payments were not included but, if they are going to be included, the proposal to make a three-year safety net as opposed to a one-year safety net is very sensible. In the conversations that the Minister helpfully set up with her officials, I could tell that it was something they understood and were quite well disposed towards. The fact, as my noble friend Lady Brady, said, that contracts for players are for three years shows the importance of having that. So I hope that this is a sensible amendment that the Minister can speak to.

Baroness Twycross Portrait Baroness Twycross (Lab)
- View Speech - Hansard - - - Excerpts

I committed earlier this evening to come back to the noble Lord, Lord Hayward, on whether the shadow regulator would join the Chancellor’s meeting with regulators tomorrow. My understanding is that the Chancellor’s invite has gone only to regulators who are currently operational. Therefore, the shadow football regulator has not been invited to the specific meeting to which the noble Lord referred. I would add, however, that I have heard many good points made on growth during the Committee stage of the Bill and look forward to returning to further discussions around that point on Report.

In relation to the group under discussion, I thank the noble Baroness, Lady Brady, for bringing her concerns regarding the future financial sustainability of relegated clubs to my attention with this amendment. I note the clarity from the noble Lord, Lord Markham, in relation to the Opposition opposing parachute payments being included in the Bill. As I made clear in my response to the previous group, the Government agree—and I hope this gives the noble Baroness some reassurance—that parachute payments play an important role in supporting the survival of relegated clubs. This point was also made by my noble friend Lord Bassam of Brighton, even though he had a different perspective from the noble Baroness, Lady Brady.

I highlight first that in the Government’s view it is not inevitable that the backstop would address parachute payments. They will be addressed only if they have been identified as a relevant question for resolution, which will happen only if they are proven to have a substantial impact on the sustainability of the pyramid.

The noble Lord, Lord Addington, asked some pertinent questions, not least relating to the survival of clubs. If parachute payments are deemed relevant for consideration, the Bill currently specifies that they cannot be reduced within a year of the distribution order coming into effect. This point was made by the noble Baroness, Lady Brady. This amendment would extend this period to three years, triggered at the beginning, rather than the end, of a season.

While I genuinely understand the core concern behind this amendment, we must balance the desire to ensure that relegated clubs have as much time to adjust to changes as possible with the need to ensure a new, timely, satisfactory agreement. We would expect the leagues to maintain effective communication with clubs throughout the backstop process which, alongside the existing year-long transitionary period, will mean that clubs have ample time to adjust if parachute payments are deemed in scope. There will be no sudden reduction in payments without warning.

Before I finish, I again urge the leagues to come to an agreement on a new package of financial support under their own steam, which is in the long-term interests of the game. However, for the reasons I have set out, I regret that I cannot accept these amendments and hope the noble Baroness will not press them.

Baroness Brady Portrait Baroness Brady (Con)
- View Speech - Hansard - - - Excerpts

My Lords, I am grateful for the contributions made by noble Lords on this group. To the noble Lord, Lord Addington, I say that, in my experience, if you cut some of the ropes on a parachute it certainly does not provide for soft landing; it results in a crash. That is what I think I am trying to help avoid here.

I thank the Minister for her response and I am sorry that we do not yet seem to agree. I want to emphasise again that, while the Government seem to believe they have prevented parachutes from being abolished under this legislation, they have literally created a Bill that allows the regulator to choose between only two proposals. One of the proposals is going to come from the organisation that called parachute payments “an evil that needs to be eradicated”. The Bill specifically enables the kind of system that the Minister says the Government do not want to see, and that really is an intolerable risk to the Premier League clubs, newly promoted clubs and relegated clubs.

It may be helpful to stand back and remind the House that this Bill principally seeks to address financial sustainability across the game. Yet, the removal or severe restriction of parachute payments would undermine that very goal. Around 50% of football administrations follow a relegation event. Take away parachutes or alter them without proper transition periods and that number will, sadly, undoubtedly rise. For the Premier League clubs at the lower end of the table, a one-year transition period will fundamentally alter all their risk calculus. These clubs invest heavily in players, infrastructure and youth development, knowing that the current system provides some financial security in the event of relegation. Remove that security and I call tell you that the calculation changes. Risk taking diminishes, investment shrinks and competitiveness suffers. That is exactly the same for newly promoted clubs. It is impossible to invest in your squad if you do not have that safety net, if it is not successful for you.

I continue to believe that these amendments are a necessary safeguard. Of course, much greater changes to the backstop are required, but a transition is a vital element to examine. These amendments would provide the time and clarity needed for clubs to adapt responsibly, protect the legitimate expectations of all shareholders and preserve the stability of the football ecosystem.

I urge the Government to give these measures further consideration, please, as part of a fundamental reconsideration of the backstop, just as UEFA has explicitly called for, to ensure that this Bill really can achieve its intended purpose of promoting sustainability across the game. I will withdraw this amendment today, but I say respectfully to the Minister that I really hope that she reflects carefully on my amendments.

Amendment 311 withdrawn.
Amendments 312 to 315 not moved.
Clause 62 agreed.
Clause 63: Duration and revocation of distribution orders
Amendments 316 to 318 not moved.
Clause 63 agreed.
Clause 64: Review of distribution orders, payment of costs, etc
Amendment 319 not moved.
Amendment 320
Moved by
320: Clause 64, page 53, line 34, leave out “62(7)(b)” and insert “62(8)(b)”
Member's explanatory statement
This amendment corrects an erroneous cross-reference.
Amendment 320 agreed.
Clause 64, as amended, agreed.
20:30
Clauses 65 to 67 agreed.
Schedule 7 agreed.
Clause 68 agreed.
Schedule 8 agreed.
Clauses 69 to 75 agreed.
Schedule 9 agreed.
Clause 76: Warning notices
Amendment 321 not moved.
Clause 76 agreed.
Clauses 77 to 81 agreed.
Schedule 10 agreed.
Clauses 82 and 83 agreed.
Clause 84: Appeals to the Competition Appeal Tribunal
Amendment 322
Moved by
322: Clause 84, page 68, line 15, at end insert—
“(ea) any decision made under sections 62 and 63;”
Baroness Brady Portrait Baroness Brady (Con)
- Hansard - - - Excerpts

My Lords, Amendment 322 would enable scrutiny of backstop decisions through merits-based review by the Competition Appeal Tribunal. I will also speak to my consequential Amendments 324 to 326 and 333 to 335. Let me seek again to give noble Lords a picture of what I believe is at stake.

The Premier League represents a remarkable British success story, yet the Bill introduces a mechanism that could unravel three decades of innovative ecosystem building in a single regulatory decision. Every few years, a regulator will be forced to make a binary choice between two competing visions for English football. One vision, that of the Premier League, seeks to preserve the delicate balance that has made it the best and most compelling league in the world. The other, explicitly stated by the EFL, aims to fundamentally restructure football’s finances and systems, describing key stability measures as “evil” and seeking their “eradication”.

This is not some narrow funding dispute; what the Government may so far have failed to understand is that this is about the very architecture of English football. It could eliminate the financial scaffolding that enables newly promoted clubs to compete. It could destroy the stability mechanisms that give investors confidence to back ambitious Championship clubs. It could force smaller Premier League clubs to abandon investment and aspiration. This is why merit-based reviews matter profoundly.

Under the Bill, even the most extreme regulatory decision could be challenged only on narrow procedural grounds. Let us think about what this means: a panel could select a proposal that devastated relegated clubs, and those clubs would have no meaningful right of appeal even if that decision threatened their very existence. The Competition Appeal Tribunal would offer a better solution. It brings expertise in complex economic matters and an understanding of how regulatory decisions ripple through competitive markets. Its oversight would drive better decision-making, ensure genuine fairness and protect the investment that makes English football thrive.

This speaks to a broader principle: football is not a utility delivering water through pipes. It is a dynamic ecosystem where success depends on calibration of risk and reward, yet the Bill repeatedly treats football like a water company, relying on judicial review as the primary check on regulatory power—and we all know how well water regulation is going. This creates a fundamental mismatch.

We are asking a regulator to make complex commercial decisions that could reshape our national game, yet we deny affected parties any meaningful right to challenge those decisions on their merits. This occurs throughout the Bill on all sorts of matters relating to ownership, financial regulation, licensing and stadia. Almost nothing, including this multi-billion pound decision about the distribution of the Premier League’s own revenue, is subject to merits-based reviews. Let me say again: I do not oppose regulation. These amendments are a limited attempt to ensure that regulation can operate fairly and sustainably.

As I said earlier this evening, the Premier League has consistently demonstrated its commitment to the wider game through solidarity payments, infrastructure funds and community programmes that reach millions, to the tune of £1.6 billion every three years. During Covid, we ensured that no club went to the wall, but good stewardship is a two-way street, and this statutory regulator requires proper safeguards. Without merits-based review, we risk regulatory decisions that could inflict profound damage on the game we love. The backstop could become a weapon for levelling down, rather than building up, replacing aspiration with survival as the pinnacle of a club’s ambition.

English football is at an important juncture with this Bill. Get it wrong and we risk something precious: not just the Premier League’s global success but the entire pyramid’s vitality. This amendment provides one —and only one—essential protection against regulatory overreach. There are plenty more needed, but I urge the Government and other noble Lords to support it.

Lord Markham Portrait Lord Markham (Con)
- View Speech - Hansard - - - Excerpts

My Lords, Clause 84 details the provisions that may be brought before the Competition Appeal Tribunal. However, as drafted the Bill does not include any decisions made under Clauses 62 or 63 for appeals that may be heard before the tribunal. Given the implications of these two clauses, relating as they do to the distribution of revenue, it is wholly inadequate that the determinations made under them are not subject to an external appeals process. Therefore, my Amendment 323, and the amendments in this group tabled by my noble friend Lady Brady, ensure that any decisions made by the committee of the expert panel relating to distribution orders are reviewable under Clause 84.

I do not dispute that the Bill already provides for distribution orders under Clause 62, and for reviewable decisions under Clause 81. The latter clause states that reviewable decisions are any decisions listed in the table in Schedule 10, and Schedule 10 does include decisions made under Clause 62. However, this relates only to internal reviews. Schedule 10 also states that any internal review of distribution orders is to be carried out by a different committee of the expert panel. Therefore, although the composition of the deciding and reviewing committees must be different, the review will still be carried out by the same body.

Therefore, the Bill currently gives competition organisers the right to appeal only to a component of the regulator. This cannot be right. The imposition of a distribution order under Clause 62 is surely the measure that most affects competition; requiring one league to distribute its money to another league will impact its competition ability. Surely, then, any distribution decision should be reviewable by the Competition Appeal Tribunal.

Baroness Twycross Portrait Baroness Twycross (Lab)
- View Speech - Hansard - - - Excerpts

I thank the noble Baroness, Lady Brady, and the noble Lord, Lord Markham, for tabling these amendments. I recognise that the intent of the amendments in this group is to ensure that decisions related to the distribution backstop are appealable and subject to a merit standard of appeal, rather than being based on judicial review principles. I understand that this comes from a belief that a merit standard of appeal is necessarily preferable because it would allow the Competition Appeal Tribunal to opine on the merits of the case, rather than just on whether the correct procedure was followed, and thereby arguably offers better protections for affected parties. In this instance, I do not believe that this is the right process.

In truth, it means that a tribunal, which most likely has less technical expertise and background knowledge of the specific issues surrounding financial distribution in football than the regulator, will be able to substitute its own decision for that of the regulator’s. For example, if the regulator were to choose one of the two proposals as part of the backstop process, and make an order imposing that distribution arrangement, the Competition Appeal Tribunal could overrule this and choose the other proposal. Indeed, if we consider how this would most likely play out, the aggrieved competition organiser whose proposal is not selected would be very likely to lodge an appeal regardless.

These amendments would be tantamount to making the Competition Appeal Tribunal the ultimate deciding authority on the financial distribution arrangement in football. This would, in effect, mean cutting out the middleman and having the courts decide how much money should flow down the football pyramid. It is unclear to me why noble Lords, or indeed anyone, would think a court making this decision a better option, rather than the expert panel of the independent football regulator, or why this would necessarily lead to a more robust, more favourable or fairer outcome. It is simply the case that there are certain decisions better suited to certain standards of review.

We have engaged with legal experts and senior members of tribunals while developing the Bill. They agreed that the courts are not necessarily well placed to substitute the decisions of expert regulators on matters of technical regulatory judgment, and that a judicial review standard of appeal would be more appropriate for those types of decisions. This is also a common approach taken across other regulators. For example, the majority of decisions made by Ofcom are subject to appeal on judicial review standards.

By contrast, some of the possible enforcement decisions that the regulator can take under the Bill represent highly punitive actions. For these highly punitive, less technical and less market-specific enforcement decisions, a merits appeal is more appropriate. For example, we are of the view that courts are far better placed to opine on whether the severity of a punishment is appropriate to the infringement than on whether a certain distribution of revenue is better for the financial sustainability of English football. Ultimately, an appeals process should provide the appropriate opportunity to challenge whether a regulator is acting fairly and within its statutory remit. It should also be a focused and efficient process that does not excessively delay the final resolution of decisions or hinder the regulator in achieving its objectives.

While providing effective assurance of the regulator’s decision-making process and judgment, the appeals system should not unduly undermine the expert independent regulator. The Bill effectively balances these different considerations, including through the standard of appeal. The amendments tabled by the noble Baroness, Lady Brady, would also make every decision under Clauses 62 and 63 reviewable, subject to the statutory route of appeal to the Competition Appeal Tribunal. This includes minor and operational decisions such as the giving of notice or extending the period to submit proposals. For the same reasons I have already outlined—balancing fairness, efficiency and appropriate deference to the regulator—we do not believe this is necessary and it is not the approach we have taken in the Bill.

Amendment 326 would be contrary to Amendments 322, 324 and 325. The Competition Appeal Tribunal could not simultaneously review a decision on judicial review principles and on the merits. On Amendments 333, 334 and 335, as I have set out, we disagree with the intention to make every decision under Clauses 62 and 63 a reviewable decision on the merits. However, if that were the intention, additions to the consequential amendments of other Acts, or the Competition Appeal Tribunal rules, certainly would not be the way to do it. For these reasons, I cannot accept the amendments and I hope that noble Lords will not press them.

Baroness Brady Portrait Baroness Brady (Con)
- View Speech - Hansard - - - Excerpts

My Lords, I am grateful for the Minister’s response, although I confess that I remain far from reassured. The logic of the Government’s position appears to be that procedural correctness matters more than getting the right answer for English football. Consider what we are being asked to accept: a regulator with new, unprecedented powers to reshape our national game, yet its decisions can be challenged only if its ticks the wrong procedural boxes.

The Premier League drives investment throughout the pyramid. It enables clubs such as Brighton, Brentford and Nottingham Forest to climb through the lower leagues without parachutes and compete at the highest level because of the security they provide. It funds grass-roots facilities in every corner of Britain. It projects British soft power globally in a way that no other cultural export can match. Yet under this Bill a single regulatory decision could fundamentally alter the mechanisms that make all that possible.

The Minister suggests that a judicial review provides adequate protection, but what comfort is that to a relegated club facing financial ruin because a regulator chose to abolish parachute payments? What protection does it offer less well-established Premier League clubs forced to abandon investment because the regulator selected a proposal that makes relegation catastrophic?

20:45
The Government rightly celebrate British success stories and say that their number one priority is growth. The Premier League represents precisely what we should be prioritising: a fast-growing, iconic industry that showcases our ability to build world-beating enterprises that deliver commercial and social value. But successful industries require regulatory frameworks that protect against unintended consequences. Proper scrutiny through merit-based reviews is not a barrier to good regulation; it enables it. It drives better analysis, ensures fairness and protects the investment that makes our game thrive. Without it, we face regulatory decisions that could inflict profound damage on football’s delicate ecosystem.
I will withdraw this amendment, but I say respectfully to the Minister again that I hope she will reflect carefully on what is at stake here. I hope we can start to move on from mere rhetoric about protecting the Premier League and start listening to what the league and its clubs are telling the Government will help achieve that. I beg leave to withdraw the amendment.
Amendment 322 withdrawn.
Amendment 333 not moved.
Clause 84 agreed.
Clause 85: Proceedings before the Competition Appeal Tribunal
Amendments 324 to 326 not moved.
Clause 85 agreed.
Amendment 327
Moved by
327: After Clause 85, insert the following new Clause—
“Review: cost of complianceWithin six months of the day on which this Act is passed, the Secretary of State must lay before Parliament a review of the financial impact on regulated clubs of complying with the provisions in this Act.”
Lord Moynihan Portrait Lord Moynihan (Con)
- Hansard - - - Excerpts

My Lords, I am very pleased that the noble Lord, Lord Pannick, has just returned. He will be in an exceptionally good mood as his club has just gone 2-1 up with about a minute to spare before half-time. That will put him in a good mood to support my amendment.

Amendment 327 was tabled in the name of the noble Lord, Lord Maude, who is abroad on business and apologises for not being with us this evening. It is a straightforward, simple amendment, which I hope will have support from the noble Baroness, Lady Taylor. She and I have both been concerned about the potential financial impact of the Bill, particularly on clubs in the EFL. Pursuant to her earlier intervention, I am here not on the EFL side or the Premier League side but genuinely to look at the legislation and make sure that good legislation comes out of our deliberations.

One of the areas of particular concern is the cost. This is new; it is the first time it has happened not just in this country but anywhere in Europe for a sport. It is novel, and that word is used quite extensively in the Government’s impact assessment. It is important, therefore, to have an opportunity in Parliament to consider the costs of setting up the regulator and the initial costs of regulation. That is why Amendment 327 proposes:

“Within six months of the day on which this Act is passed, the Secretary of State must lay before Parliament a review of the financial impact on regulated clubs of complying with the provisions in this Act”.


That will give us an opportunity to consider whether it is massively inflated in comparison with the expectations set out in the impact assessment or if there are cost savings. I think the noble Baroness is about to intervene, so I am happy to give way.

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
- Hansard - - - Excerpts

I am about to intervene. The noble Lord is somewhat optimistic in thinking that everything can be revealed within six months. I will make a broader point, which we are not specifically discussing tonight. The role of Parliament in holding regulators to account is where many of these considerations could usefully come in.

Lord Moynihan Portrait Lord Moynihan (Con)
- Hansard - - - Excerpts

The noble Baroness makes an important point but, in the context of this, I think her first point was even more relevant. Perhaps at a later stage, more than six months would be appropriate; maybe a year would be appropriate. Either way, it is appropriate that Parliament has a look at the costs of implementation, not least because there will be views among parliamentarians about where that burden should fall, and whether it should fall on some of the EFL clubs that might find it difficult to afford those costs of following this legislation. It is interesting that the French regulator who covers professional football confirmed yesterday that he has five staff to do the job that we are looking to cover with this substantial regulation. He also has 18 volunteers from the leagues, including the French FA, who make up their boards and committees to do the work that we have been considering so far in Committee.

The reason for moving this amendment is the concern about the uncertainty of the additional costs to be imposed on all 116 clubs as a result of the financial regulations set out in this Bill. I am not going to go into the details of questioning each and every figure, because that would be inappropriate, but I think it is worth looking at areas of the impact assessment that lead me to worry about the potential increase in costs that this could result in, not least because there is no estimate of litigation costs involved with the regulator, and we have heard that there is quite a lot of potential litigation that could be flowing as a result of the role of the regulator.

Initially, these litigation costs in the Bill will be funded through fines and interest as a first recourse, and that is set out Clause 96; but the further costs to cover litigation would come via the levy—in other words, come via the clubs themselves, and not be a burden on the taxpayer. That could lead to perverse incentives when it comes to the advocacy-first proportionate enforcement model. The legal costs should not be underestimated when you bear in mind that in the last financial year the Premier League had some £40 million-worth of legal costs alone. We should add to that the potential for legal costs associated with what we have been discussing this evening. I hope they do not come to fruition, but it is perfectly possible that they might, with parachute payments and the backstop.

In the context of trying to establish a cost base for clubs and the government regulator, it is really important that we look in detail at the impact assessment. It addresses costs in three buckets: familiarisation costs of £400,000 to £1.2 million, covering the one-off costs to business occurring in the first year of the appraisal period; compliance costs, which potentially go up to £35.8 million over the 10-year appraisal, which are the ongoing costs to business following the first year of the appraisal period; and then the operational costs, which are significantly higher. While these operational costs will initially be funded by the Exchequer before an industry levy is introduced, the costs will subsequently be clawed back from all clubs.

The role of the regulator and the work required by clubs is based on the belief that professional football in this country is in crisis and requires government intervention to sort it out. The legislation addresses what it has set out to be perverse incentives and misaligned owner motivations which have resulted in excessive risk taking in pursuit of sporting success and promotion. Those are quotes and they are meat to any lawyer immediately before this Bill is even on the statute book. Ultimately, the Government argue that this has resulted in market failure, despite the Premier League being the most successful football league in the world and the Championship the sixth-richest in Europe. However, the Government have ignored that and believe, as is clearly set out in the impact assessment, that government intervention is necessary to correct market failure.

There are complete sections on the problems that the Government believe have led to this market failure. Briefly, in 1.2.1 on page 9, the Government believe there is a perverse incentive for clubs to overreach financially. I anticipate that will be challenged. Paragraph 1.2.2 states that inequitable distribution across the English football pyramid has exacerbated poor financial and operational management. Paragraph 1.2.3 states that unsustainable financial management exists, in the view of the Government. Paragraph 1.2.4 covers poor operational management where financial mismanagement has been exacerbated by poor-quality operational management and decision-making at clubs. That is quite a statement to address towards professional football clubs in this country.

Paragraph 1.2.5 states that clubs will need to spend more to

“take into account the interests of fans/communities”,

which currently they do not sufficiently consider. But the impact assessment does not set out how much this is, or make costs, or rectify any of the other broken aspects of professional football that I have outlined this evening. It argues that the existing regulations have “proved ineffective” and it states that the

“free market will not rectify the football industry’s problems”.

In paragraphs 1.3.2 and 1.3.5, it says that

“market failure has large spillover impacts on society”,

which it does not cost.

In paragraph 1.7.5, the FA is blamed, with the Government concluding that,

“given the inaction of the leagues and the FA, the preferred option is to establish a new statutory independent regulator rather than industry self regulation or a light touch intervention”.

That is somewhat at odds with what the Minister was saying, because she argued quite strongly that light-touch regulation was what was sought—but in the impact assessment it is made clear that the Government favours having an independent regulator rather than

“industry self regulation or a light touch intervention”.

If it is not to be light-touch intervention and it is to be heavy intervention, that will incur significant costs, and it is not clear at all what those costs will be.

This is important, because the Government are rejecting in this document light-touch intervention on the French model for comprehensive state-controlled regulation, which will cost all clubs substantial internal costs and legal costs, potentially with the cost of lawyers and outside advisers for sure, to comply with the tasks outlined in the Bill, since all clubs will need to be licensed and meet in detail all the requirements in this lengthy and comprehensive legislation. To believe that this can be done for £40 million a year under preferred option 4 over the coming 10 years is, to be quite honest, fanciful. It ignores the legal costs and the club operating and compliance costs for all 116 clubs, and it ignores potential litigation costs. It beggars belief to believe that the total central estimate for familiarisation to the clubs and leagues associated with option 4 is £800,000, or £7,000 a club on average. The compliance costs outlined in paragraph 211 are estimated at £100,000 per annum for Premier League clubs and £60,000 for all remaining clubs. I do not see for the life of me how that is possible.

However, at least the Government have added the rider that familiarisation compliance costs “may be underestimated” and that

“this is a novel and high profile area”.

It certainly is that. So, the Government suggest,

“clubs may pay more attention and buy in high-end specialist advice”.

But high-end specialist advice does not come for £7,000 a club per annum.

However, all this is predicated on the most important paragraph, paragraph 289, towards the conclusion of the impact assessment, which states:

“The Regulator will be legally prohibited from intervening in football (e.g. spend on players) or commercial (e.g. ticket price) activities, thus limiting the potential risk of deterring investment”.


We have spent dozens of hours looking into the fact that there will be detailed and intrusive activities by the regulator—understandably, to fulfil the legal requirements of this Bill. Far from not being interventionist in football, the regulator will in fact be legally required to intervene in the running of all aspects of the financing of football, including external factors such as season ticket prices and other ticket prices, in its overview of the finances of all clubs. There is nothing on the finances of the clubs in this legislation that is exempt from the consideration of the regulator, if he or she should wish to look at that in the context of fulfilling their functions under the legislation.

What it should say, as I say, is that the regulator is legally required to intervene in the running of all aspects of football—and, if that is the case, there is a whole different scenario for the costs involved for all clubs. I am not talking about just Premier League clubs or EFL clubs—I am talking about all clubs. That is why I would hope that there would be an opportunity to review the costs at six months—or it could be year—because this is the first time this has ever occurred in sport in this country. It is indeed the first time that it has ever occurred in football in the European Union, or indeed in any international body that I know of.

The statement that I have just made underpins the whole cost structure and sits uncomfortably with paragraph 298 of the impact assessment, which provides for the regulator to enter business premises in conjunction with an investigation or an actual or suspected breach of a club’s licence conditions in any form with its powers of search and seizure and the power to require specified persons to attend an interview. Given the likely cost of this intrusive legislation, I believe it is important to write into the Bill a review of the financial impact on regulated clubs of complying with its provisions, so that football fans can regularly review the true costs of government-led regulation. I beg to move.

21:00
Lord Addington Portrait Lord Addington (LD)
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My Lords, to follow up on the point from the noble Baroness, Lady Taylor, will the Minister tell us how the Government seek to enable Parliament, and indeed the Government, to look at how this is working when it comes in? There are provisions and, as the noble Baroness, Lady Taylor, sensibly put it, we are looking more at regulators, basically because of a failure of regulation—it has occurred in many fields. When you have a new regulator, you should review it. What is the process of review that the Government have in mind or going on? I hope that it is not a matter of waiting for failure.

Lord Hayward Portrait Lord Hayward (Con)
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My Lords, before I come on to the question of compliance costs specifically, I return to an answer the Minister gave me in response to a question I asked at the start of the debate this evening. It was on whether the shadow regulator would be present at the meeting with the Chancellor tomorrow. The response that the Minister gave—I hope I have it correct—was that the shadow regulator would not be present because the invitation was to existing regulators. I note that the Minister is nodding to that, so I presume that I have the phraseology broadly correct, and certainly the message correct. To be honest, I find that staggering. We have been told that the shadow regulator body— I was present at the meeting recently with the shadow regulator and his staff—should be up and running so that the regulator can take over a body that is already in full operation. We were told how many staff had already been recruited. We have been told persistently that this is light regulation.

I refer here to the fan-led review by Tracey Crouch. On page 15, paragraph 15 states that there are five important factors that should be pursued, including, in sub-paragraph (d),

“minimising burdens on clubs or an expensive system”.

Surely a shadow regulator that is going to hand over an up-and-running system and is going to operate a light-touch process of regulation should be invited to a meeting with the Chancellor to discuss precisely that issue. I am at a loss, as I think a number of people in this Chamber are, to understand why the shadow regulator has not been invited to that meeting. I am afraid that it indicates to me the attitude of the Government towards the role of the regulator in this process.

I now turn to the question of compliance costs. I do not intend to cover the issues that the noble Lord, Lord Moynihan, has covered so effectively, but I would like to cover a number of other issues. The noble Lord, Lord Moynihan, made reference to the fact that we were talking about all football clubs. The concentration throughout all our days in Committee has been overwhelmingly to do with the Premier League and the Championship. But when one is talking about the sorts of figures that the noble Lord, Lord Moynihan, was referring to—I have pursued persistently the honest assessment of what the actual cost is for a club, whatever it may be—the Minister has said persistently to me and others that the costs would be proportionate.

It is therefore relevant to remind this Committee what the turnovers of the small clubs are. I am quoting from Deloitte’s figures for the season 2022-23, which I understand are the last figures currently available. The average revenue for a club in League One is £9.8 million. The average figure for clubs in League Two is £5.5 million. Therefore, the categories of hoped-for costs identified in the analysis that the noble Lord, Lord Moynihan, gave earlier fall very heavily on a club.

I will cite a few examples. AFC Wimbledon’s revenue is £7.4 million, Crewe Alexandra’s £4.1 million and Northampton Town’s £5.1 million. I have looked for the figures for Stockport County, but I am sorry: I do not have them. I would give them if I could. If there are to be a series of compliance costs on top of all the other costs faced at the moment—not least national insurance contribution charges and the like—that will make a pretty big hole in the revenue of a club with a turnover of £5 million to £7 million.

The Minister has said that the burden would fall proportionately on the biggest clubs. In an earlier contribution, I said that when I was head of the British Beer & Pub Association I had the responsibility of steering the introduction of substantial changes in licensing legislation, which we did with the full agreement of government. The burdens do not fall proportionately on the biggest companies. They can employ a compliance officer or two but, in a small company or a small football club, you do not have a compliance officer so you have to turn to other people for advice. It therefore takes longer and costs more.

It is like anything in life. If you own a large number of flats as opposed to one home, and you take out insurance and are filling out a form, you know only too well that if you have done it once for one flat, it is just the same the next time. If you are dealing with one property, you do not know because you have never been confronted with the issues before and so you have to turn to other people for advice. The burden is not proportionate. There is a massive imbalance between big clubs with huge turnovers and the smaller clubs living completely hand to mouth.

I have quoted once already from the review. The point I want to raise was triggered by the presentation from the shadow regulator. When he was talking about staff, I believe he said that it had just recruited five people for IT systems. We are told, indicatively, that the regulator is likely to employ some 250 people—that is more than 10% of the total of DCMS’s staff, covering all the range of its departmental remit. Are five people needed for an IT system?

Then I actually looked at the review. There was reference earlier this evening to the question of clubs in terms of a few clubs. In fact, the review says:

“Many clubs are poorly run”.


It goes on to say of the regulator:

“The Review has … concluded that the new financial system should involve real time financial monitoring”.


That is what those IT employees are there to do. They are not there to operate the regulator, because you do not need that many for the day-to-day operations of a business of that size. It is about investigating the processes. When they go to a club and ask it to produce the information, it will say no, because it operates on a completely different system.

When I was first involved with boundary changes, we tried to get figures out of local authorities about the number of voters on an electoral roll. Noble Lords might imagine that the returning officers from different authorities would operate on identical systems. No: they were on four different computer systems. It took several years to get the accurate figures. This is precisely what will happen with the small clubs. They will be operating their own systems, when suddenly along will come the regulator to say that it wants the information, but that it wants it in its own computer system, not the clubs’. Sadly, the likes of Stockport County, Rochdale, or wherever it may happen to be, will be told that they must revise their IT system because they have to give the regulator the answers and the computer says no.

The compliance costs fall very heavily on the smaller organisations. They are not proportionate, and we should be honest about that.

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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I support the amendment that was so ably moved by my noble friend Lord Moynihan and added to by my noble friend Lord Hayward. The amendment is an easy win for the Government, because I cannot understand the rationale for any Administration not seeking to understand the ramifications of their own legislation in terms of the costs of a regulator and other associated costs within six months. Therefore, if the Minister is so minded, she might look more benignly and favourably on this amendment when we come to Report, because it makes sense.

The kernel of this amendment is a fundamental question. It is not a question of whether we trust the Government, because I think, in good faith, that the Minister no doubt truly and sincerely believes that her Administration will preside over a regulator with a light-touch regime. Unfortunately, for those of us who are more cynical, the history of regulators is that they expand. We go back to our old friend that I referenced some weeks ago, Parkinson’s law. It is not named in honour of my absent friend, who is sunning himself in the warmer climes of the West Indies as we labour in the salt mines of the upper House of our bicameral Parliament. No—not Stephen Parkinson, my noble friend Lord Parkinson of Whitley Bay, but Parkinson’s law enunciated in 1955, which is that the number of workers in public administration, bureaucracy and officialdom tends to grow irrespective of the amount of work to be done. That is a very important point.

I commend to noble Lords an excellent report by Policy Exchange, The Rise of the Regulators, which looks at the different philosophical underpinnings and reasons for regulators. It makes the point:

“Once in place, regulations create constituencies that benefit from their continued existence, perhaps because they shield them from competition, or help protect their market position. And those coalitions of interest are better placed and have stronger incentives to act in their own interest than the wider community is to act in theirs and”,


to

“secure an optimal group outcome”.

It notes that, in the 1970s, Professor George Stigler developed the concept that

“regulation is acquired by the industry and is designed and operated primarily for its benefit”.

We know that regulation is costly to British industry. The report says that the Federation of Small Businesses estimates

“the cost of regulation to the SME community in Britain to be £55 billion per year, or £10,080 per business; 88% of its member companies identified some aspect of the regulatory apparatus as a barrier to their operations”.

Furthermore,

“an imbalance of power or an insoluble divergence in interests requires the state to manage the relationship between individuals or groups of individuals by regulating behaviour. But the expanding regulatory bureaucracy is the policy instantiation of a more omnicompetent state—one which plays a larger role in the lives of citizens, and which therefore reduces the scope for freedom and personal initiative”.

21:15
The other point made in the report is that, despite what Ministers from both parties have said in government, the overwhelming majority of new pieces of regulation were not equipped with meaningful impact assessments, and
“at times it was unclear as to who was responsible for reviewing and assessing the impact of certain rules or requirements”.
The report prays in aid two examples: our old friend the Financial Conduct Authority and the Competition and Markets Authority—or, more specifically, the Financial Reporting Council. The Financial Conduct Authority has increased its staff headcount from 2,511 in 2014 to 5,438 in 2024—an 117% increase. The Financial Reporting Council has grown from 134 staff members to 477 in the same period—no less than a 256% increase.
So I do not think that it is crying wolf to point out the potential risk of investing too many powers via primary legislation in a new regulator. I know that the noble Lord, Lord Pannick, has said that this is an independent regulator, but it does not look like that. It does not look like light-touch regulation; it looks like government intervention in a healthy and thriving market, and has the potential to do significant long-term damage as a result of overreach and overregulation. A further report by the Centre for Policy Studies, The Future of Regulation, finds that the gross annual cost of regulation for all businesses over 10 years in the UK was £35 billion.
The Bill’s impact assessment estimates that the compliance costs will be between £18 million and £36 million, as my noble friend Lord Moynihan said. Interestingly, it also says:
“Compliance costs may be underestimated”.
Well, there is a thing. The impact assessment also says that the extra compliance requirements may be
“modest provided the Regulator is well-designed and avoids duplication”.
Perhaps we can get more information from the new shadow football regulator’s chief communications officer. That job was advertised a couple of months ago—a snip at between £49,839 and £55,531 for a fixed-term contract—so spin-doctors will also be included in the new regime. To be serious, the impact assessment also states that levy costs have not been included as a cost to business for the purposes of determining estimates for the cost to clubs. Obviously, they will cost clubs because the levy to fund the regulator will be imposed directly on them.
As my noble friend Lord Hayward rightly said, we know that many smaller clubs will be hit much harder. Premier League clubs with large existing compliance and legal teams will be able to absorb the extra staffing requirements and the new costs of compliance. But those clubs in League Two or the National League, which have only a few full-time employees, will likely have to engage external support, such as by hiring lawyers or regulatory consultants.
Baroness Evans of Bowes Park Portrait Baroness Evans of Bowes Park (Con)
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My noble friend makes a good point, and I am sure he has seen the comments by Mark Ives, the general manager of the National League, who said that it is worried that the Bill will be onerous. Some National League clubs work with two or three people and some volunteers. As he rightly says, these are the clubs most worried about the cost of compliance. I know that the Minister has talked about proportionate regulation but, for all of us, and as Mark Ives rightly pointed out, this is a serious concern for those clubs in the National League, the very ones that we want to protect and support.

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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As usual, my noble friend makes a sensible and accurate point. There is a big difference between a club such as Arsenal, which has several hundred full-time employees, and a club such as Ebbsfleet, which I think has five. The problem is that one will have a gap between pulling down the Premier League clubs by damaging investment and pulling up other leagues, which are going to aspire to the best in terms of professional support but will not have the resources so to do. That is the difficulty that the Bill imposes on those clubs.

It will be a big question as to whether the clubs in the smaller leagues will be able to afford the new compliance, risk and legal officers who will be, of necessity, required to comply with the responsibilities outlined in the Bill. The Minister has repeated time and again that the aim of the Bill is to improve the financial sustainability of football clubs. Yet, the Government’s solution is to slap these clubs with more costs. The shadow regulator should have been invited to the meeting because if the strategic objective of the Government is to drive growth, this is the wrong way of doing it. I am mindful of the time.

Baroness Blake of Leeds Portrait Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
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With respect, I draw the noble Lord’s attention to the time.

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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I know we have had a busy and eventful seven weeks and we are almost there, if the noble Baroness will allow me just to finish. The Employment Rights Bill is coming down the line, which will be an extra cost to businesses of perhaps up to £5 billion a year. These are all issues that the Government have not taken into account. It is absolutely right and proper for us to make the reasonable request for the Government to look at the impact in the real world of these compliance costs, and I hope that the Minister is able to come forward with better news when we get to Report.

Lord Pannick Portrait Lord Pannick (CB)
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My Lords, the noble Lord, Lord Moynihan, and other noble Lords have made a powerful presentation of concern, which I understand, about the financial costs of regulation. It is a short point. It really is. The question is whether the amendment is a sensible way in which to address this matter. I suggest that if there is to be a review of the financial impact on regulated clubs of complying with the provisions of the Act, the best people to conduct that review are the clubs themselves and the leagues to which they belong. They can collate the material, assess the costs and provide a report to the Government, which they can publish. Everybody will be able to debate it. It is all transparent. There is absolutely no need, so far as I can see, to have a specific provision in the Bill that addresses this matter.

Baroness Fox of Buckley Portrait Baroness Fox of Buckley (Non-Afl)
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My Lords, there stands a contribution that does not know how tedious, time-consuming and expensive it is to write reports. Now we are putting on the same people, whom we have just said are going to be drowning in bureaucracy, another report for which they have to compile all the information and write. That was my view.

Although that is a simple point, it should be in the Bill because it is an underestimated threat of the Bill. I have no doubt that the Minister and the Government do not intend—

Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab)
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I made this point at an earlier part of our considerations. Put simply, all these clubs are limited companies and are regulated effectively through an audit process, so all of the financial information that will be required will be accumulated as a process and a product of their annual audit. I do not see that as excessive.

Baroness Fox of Buckley Portrait Baroness Fox of Buckley (Non-Afl)
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I will carry on and make my point and we will see whether we can agree. I am concerned about it being excessive, but if it is not, this proposed new clause will prove the noble Lord right and me wrong, and that would be fine.

I wanted to start with the way that fans have really gone along with the Bill because they see it as something that will save smaller clubs and keep them from going under. Everybody knows about Bury and other clubs such as Chester City, Hereford United and Halifax Town. One of the most compelling things about the need for the regulator and the Bill is this notion that we will be able to save unsustainable, smaller clubs from going under. That is what gives it its moral force. People can rail against the big bad Premier League in some ways, and I understand that the Premier League, with its fans in the Chamber, is all we have talked about. I am glad that in this amendment we have started to talk about those smaller, poorer clubs, because I am worried that they will suffer as a consequence of the Bill. The noble Lord, Lord Hayward, explained that very well, and I just want to just tease that out a little more.

It is not just about operational costs in terms of compliance in a direct financial way. It is also the amount of energy and time that is going to be taken to comply by these very poorly staffed clubs, which have, say, two full-time members of staff plus volunteers. We know that time is money. I remind your Lordships of the speeches that we heard earlier on in Committee. The noble Lord, Lord Moynihan, made an excellent one about what it takes to write a corporate governance plan. I try to illustrate what it means to comply with equality, diversity and inclusion policies—forget any ideological disagreement on that. It costs time and money. By the way, to fulfil the EDI plans, you have to send all your staff on training. For example, the Civil Service at the moment spends 1 million days of Civil Service time on its civil servants going on EDI training. That is an indirect cost. The paperwork needed to keep this regulator happy—by the way, under the terrifying threat that you could lose your licence if there is non-compliance—really needs to be taken into consideration. It is not just money; it saps creativity and life out of the club, which in a way is a slightly different cost.

Recently, David Riley, who has moved from his role as legal director at the Competition and Markets Authority to become head of legal at the IFR, posted the following, rather boastfully, on LinkedIn:

“The first job is to recruit a team of lawyers to work within the shadow regulator as the legislation progresses. These lawyers will play a central role in shaping the IFR legal function, and working with others to help the IFR prepare to deliver on its statutory objectives”.


I read that out to a group of football fans, who said, “Oh my God, that sounds terrifying! Imagine if you’re running a small football club”. If you are a smaller, cash-strapped club hearing this, it is immediately about lawyers policing your work. You have no in-house experience to cope, so you think you had better bring in experts, consultants and third-party bodies. Again, that can lead to eye-watering costs, let alone your independence being undermined. I am concerned about that.

I will quickly take a step back, because sometimes we can get trapped in the specifics of football and all the passions and emotions associated with the game. I remind the Committee that one reason why so many of us are worried about this Bill is because of examples of other regulators created by legislation leading to damaging unintended consequences.

In terms of proportionality, a few weeks ago the tech journalist and academic John Naughton wrote an article in the Guardian bemoaning the terrible toll that the Online Safety Act and its heavy-handed regulator Ofcom were having on smaller, community-driven online forums, even though the Act’s stated aim was to target big tech and harms. I never really agreed with the censorious assault on big tech anyway but, as I argued with the noble Lord, Lord Parkinson, when he was on the other side and taking the Bill through the House—just to show that I am not sectarian—there is always a danger that compliance costs associated with any regulator, in that instance with the Online Safety Act, will make it untenable for smaller platforms to bear the brunt of the law. As John Naughton explains, that is what is happening as we speak, leading to the potential closure of forums with benign purposes—his examples were those discussing cycling and cancer care.

21:30
So I am warning us that this has happened before. Other legislators have said, “No, we’re aiming at the big guys, think big tech or the Premier League”. Again, I do not agree with targeting them or demonising them but, on the other hand, the danger is that this stifles the wrong targets. John Naughton referred to breaking a butterfly upon a wheel. I fear a similar fate, however unintended, for small and lower-league football teams. So, at the very least, let us have a checking mechanism. That is all that this amendment is suggesting. If I am wrong—brilliant. If I am right, it gives the Government the opportunity to set things right.
I want to finish with a match update. In a rare display of solidarity, Arsenal and Spurs fans have joined forces to call for Hamas to release Emily Damari, a Spurs fan held hostage in Gaza for 467 days. Please God she will be released and coming home in today’s deal, but I want to remind us that football fans are grand. It is very moving and amazing what they do. Although it is not the main point, in the end those fans will not thank us if we do not think of the unintended consequences of a well-intentioned piece of legislation and regulation.
Lord Birt Portrait Lord Birt (CB)
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My Lords, I started the evening feeling extremely cheerful, but I do not feel as cheerful now as I did earlier. As so often in the past, the analysis by the noble Lord, Lord Moynihan, was very pungent.

Unlike many who have spoken, I am a strong believer in regulation. I do not think that there is anybody else in this Chamber who spent many decades, the whole of their career, in the way I did. We are talking about how successful British football is. I worked in another world-beating part of Britain, its broadcasting system, plainly over many decades simply the best in the world and a regulatory achievement of all Governments over the best part of a century. So I am a very strong believer in regulation. My doubt is whether the scale of regulation that is imposed in this Bill is remotely appropriate. I worked in a world of highly effective but light-touch regulation and I am sorry to say that this whole dialogue illuminates the fact that we are in danger of creating a system which is overcomplex and bureaucratic and will stifle a highly energetic and brilliantly successful part of the British economy.

We need something that is highly effective but much more light-touch than this sounds at the moment. Yes, cost is important, and all those who emphasise the impact on small clubs are quite right to do so, but beyond cost is the impact that over-stifling regulation could have on the system as a whole. We have debated real issues this evening. We debated the quantum of flow down the leagues. The noble Baroness, Lady Brady, made an impassioned and very compelling speech about parachute payments. The noble Lord, Lord Bassam, rightly emphasises solidarity. These are testing issues that need resolution. Of course, the quality of governance is much easier. It is about the world of compliance and financial prudence, which is a very important part of the Bill and can be done with a relatively light touch.

We have to get it down to something simpler and more effective. I come back to what I said earlier: the “state of the game” report should be analytically powerful and help to balance. I used the word “balance” earlier and balance is the right approach here on all these complex trade-offs. The last thing we need is binary: we do not need two proposals on the table and you choose one rather than the other on the toss of a coin. That is the quite wrong way to resolve the kinds of issues that have come up during the course of the evening. It is about getting the right people in the room, with the right kind of support, bound to come up with a solution.

So the Government need to think a bit harder about proportionate regulation. I say that not as somebody who is opposed to regulation but as somebody who strongly believes in it and has benefited from it through the whole of his career.

Lord Pannick Portrait Lord Pannick (CB)
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The noble Lord makes a thoughtful and instructive speech. Is he saying from his BBC and other broadcasting experience that light-touch regulation can be achieved by legislative provisions, or is it a matter of attitude? What is it?

Lord Birt Portrait Lord Birt (CB)
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It is a matter of creating the right institutions. In the golden days of ITV and Channel 4, it was the IBA—a relatively small but highly effective organisation. The noble Lord does not want a long speech from me about what it achieved as an organisation, but it was extraordinary. Obviously, the BBC has had 100 years as the most successful broadcaster in the whole world. The light-touch governance through BBC governors was powerful and impactful and it worked.

I am not suggesting that you just import those models, but we need something that is not stifling and bureaucratic, in a dynamic environment where people can get round the table and sort out these issues.

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
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My Lords, I just want to pick up on some of the points made. It is right that we need a proportionate system and we have to be careful in what we do. But we cannot afford to be complacent about the state of British football today. Yes, the Premier League is doing very well at the moment, but we have to acknowledge the difficulties of many other clubs and the serious need for some change in the way in which many football clubs are run.

A report published on Monday this week from Professor Nick Lord and lecturer Peter Duncan in the department of criminology at the University of Manchester shows some of the dangers that Premier League clubs could face if we do not get the right financial structure, and how certain clubs could be, because of the complexity of their ownership, vulnerable to their funds being used for illicit purposes. I mention that because we do need regulation and we cannot be complacent and pretend that all is well even in the Premier League.

Lord Markham Portrait Lord Markham (Con)
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I rise to speak to Amendment 329 in my name and that of my noble friend Lord Parkinson. I will speak very briefly, because Amendment 327, on costs, was spoken to extensively.

I think we all accept the need for a regulator. The points about broadcasting made by the noble Lord, Lord Birt, were points I am very familiar with as a former director of ITV and were very well made. On proportionality, we have talked a lot about Premier League clubs, but I would argue that when you have National League clubs who have two, three or four members of staff and an impact assessment that says they will need one member of staff for compliance on this, that tells me that we have the balance wrong. We are saying that a third of their staff need to be in compliance.

I would like to answer the point made by the noble Lord, Lord Bassam, who said that clubs should already have all this information because they are doing an audit. An audit is backward-looking over the year that has happened. What the regulator is asking clubs to do here is to write a three-year business plan, which is forward-looking.

Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab)
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The regulator is also encouraging clubs to put things right and offer remedies in their reports that have to be fair and proportionate.

Lord Markham Portrait Lord Markham (Con)
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I can bore on this issue, as a former FTSE chief financial officer. An audit is backward-looking, and you have to have a going concern statement, which is the forward 12 months. It is nothing like the business plan requirements that the regulator is asking clubs to provide for three years going forward. There is no doubt that that will require clubs to employ consultants, accountants—you name it—so it will be a significant burden on them, and this is exactly the point we should be considering. When you think about it, if you are talking about one member of staff per national—

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
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The noble Lord is almost suggesting that clubs of whatever size should not have a business plan. One of the things we want to encourage and develop is sustainability. There has been complacency among many clubs at different levels, such that they have not made proper forward-looking plans. I do not think it is a burden on them to do so at the appropriate level and proportionately, as we were saying earlier, but it would help the sustainability of all football clubs if they were to look forward in that way.

Lord Markham Portrait Lord Markham (Con)
- Hansard - - - Excerpts

Speaking as a fully signed-up member of the anorak club, I completely understand the point about business plans, which I have always done in businesses I am involved in. I am talking about the reality of football clubs. There is no way I am going to argue that having a business plan is not sensible, but at the same time, suddenly putting business plan requirements on a club with a turnover of a couple of million and two or three members of staff is an expensive exercise. That is the context in which I am making this point, and it is why I think Amendment 327 is sensible. It would make sure that everything is set out, so that we go into this with our eyes fully open to the burdens and what we are expecting clubs to do.

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
- Hansard - - - Excerpts

My noble friend is making a powerful case. Will there not be a displacement activity element to this, in that all the money and resources you are deploying on compliance you are not, for instance, concentrating on women’s and girls’ football or new football academies and other outreach programmes? Because you have this heavy-handed encumbrance of compliance, you are not going to be able to deliver the initiatives in grass-roots football that you would otherwise deliver, particularly in the lower leagues.

Lord Markham Portrait Lord Markham (Con)
- Hansard - - - Excerpts

Obviously it would be for clubs to decide where they will resource that from, but it will come out of the resources they have. If it is one person for National League clubs—the impact assessment assumes that it will be five people for Premier League clubs—and you put that all together, you are talking about a staff of at least 500 involved in all these compliance activities. It was also said that the regulator will have some 250 members of staff. So, you will have 700 to 800 people working in the compliance domain, and that has to come out of the pot that is football today. That is a very relevant issue. I agree on the needs of the regulator, and I agree that business plans are always a good thing, but there is a certain proportionality here that we need to be mindful of.

I am mindful of the time, so I will move on to Amendment 329, in my name and that of my noble friend Lord Parkinson. It is consequential to an earlier amendment we tabled, Amendment 19, which sought to put the leagues under scope in the Bill. This amendment would simply ensure that the regulations that may be made by the Secretary of State to amend the competitions under scope would be subject to the affirmative procedure.

21:45
Many noble Lords will recall that, on the second day of Committee, on 2 December, the Minister said that the Government would not accept Amendment 19 because it would
“significantly undermine the regulator’s ability to react to changes in the structure of the football pyramid in a timely manner”.—[Official Report, 2/12/24; col. 1015.]
Proposed new subsection (3A) of that amendment, alongside Amendment 329, negate the argument made by the Minister. They would both allow the Secretary of State to make regulations in the same manner as the current drafting of the Bill, allowing the regulator to react to changes in the structure of the football pyramid in a timely manner.
We have visited this issue already, so I will not dwell on it any longer. I hope that this amendment gives the Minister the ability to rethink her arguments from earlier in Committee.
Baroness Twycross Portrait Baroness Twycross (Lab)
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I thank the noble Lord, Lord Moynihan, for opening the debate on this group and moving the amendment in the name of the noble Lord, Lord Maude of Horsham; and the noble Lord, Lord Markham, for speaking to the amendment in the name of the noble Lord, Lord Parkinson of Whitley Bay, which he signed. I have to say that, at points during the debate, I wished that I was in the Caribbean, but I will endeavour to respond.

The Government recognise the intent behind Amendment 327, in the name of the noble Lord, Lord Maude. I thank the noble Lord, Lord Pannick, for cutting to the chase on what has been a longer debate on two amendments than I anticipated. They raise reasonable concerns that need to be addressed, but we have debated these concerns at some length previously. However, the exchange on what light-touch regulation might mean was useful.

It is vital that the regulator be transparent about the burden that its regulatory activities may have on clubs, so that it can be held accountable. From the start, we have been very clear that we wish to establish a regulator for football that will take a proportionate approach across all its regulatory activities. My noble friend Lady Taylor spoke about proportionate regulation. I thank her for highlighting the research that she shared with me earlier this week. She made many points better than I could.

We do not wish to bring into being a regulator that will impose unnecessary, onerous and burdensome requirements on clubs, and neither did the previous Government. That is in no one’s interest. Noble Lords have spoken of concerns about smaller clubs in particular. I am concerned that this debate may lead to some of those clubs being unduly alarmed. If clubs have raised concerns with noble Lords, please encourage them to contact the department, where we are very happy to discuss in more detail any concerns that they may have.

The noble Lord, Lord Addington, asked how the Government see scrutiny playing out in practice. We already expect that the impact of the regulator on the market, including on regulated clubs and the leagues, will be reviewed in the regulator’s “state of the game” report and its annual report. The Secretary of State and Parliament will be able to scrutinise these reports. This ongoing accountability is more appropriate than a one-time review by the Secretary of State, six months after the Act is passed, not least because, as was highlighted during the debate, six months would be an unfairly short window in which to appraise the impacts of a brand new, novel regulatory regime.

The noble Lord, Lord Moynihan, made a number of points and cited the impact assessment. The costs in the impact assessment have been estimated using evidence gathered through industry engagement and from existing regulators, ONS datasets and other sources of information. The impact assessment has been prepared in the same way as all government assessments, in line with principles in the Green Book. It received a green rating from the Regulatory Policy Committee.

Ultimately, the costs in the impact assessment are indicative. It will be for the regulator to finalise its operating budget, which will be subject to scrutiny from Parliament and government to ensure it represents value for money. The estimated costs have been informed by approaches taken by similar regulators and reflect the complexity of the activities required to oversee a new legislative and regulatory regime.

The noble Lord, Lord Hayward, cited a headcount of 250 staff for the regulator, which is not one that we recognise. Indeed, it is well above the level that we would expect. I will have to pick that up with the noble Lord afterwards to establish how that figure was arrived at.

Lord Hayward Portrait Lord Hayward (Con)
- Hansard - - - Excerpts

It was the indicative figure given by the previous Secretary of State under our Government.

Baroness Twycross Portrait Baroness Twycross (Lab)
- Hansard - - - Excerpts

That is a helpful clarification. The figure remains one that I do not recognise. I will go away and cross-reference with officials why I have now been told that it is not one that we recognise and is above the level we expect. I know I have committed to come back to noble Lords with a number of costs, and we can clarify that at the same point before Report.

I understand that Amendment 329 in the name of the noble Lord, Lord Parkinson, is a natural consequence of the noble Lord’s Amendment 19 in relation to the specified competitions, and it certainly would have made more sense to debate it then. Nevertheless, as we discussed at length previously, we understand the desire to have upfront clarity in the Bill as to which competitions will initially be in scope of the regulator’s regime.

However, as I explained during our previous debates on this issue, the Government believe the approach taken to defining the scope of the regime in the Bill is the right one. It delivers the effect intended, closing any loopholes that would allow avoidance of the regime, while also allowing for agility to respond to any potential changes in the structure of the football pyramid.

On the merits of Amendment 329, we completely agree that the Secretary of State’s power to define the competitions in scope and to amend this scope in the future should be subject to the affirmative parliamentary procedure. This will ensure that Parliament can scrutinise this important decision properly. That is why the Bill as currently drafted achieves this already in Clause 91(3)(a)(i). However, as we cannot accept the noble Lord’s Amendment 19, which was withdrawn, we cannot accept this consequential Amendment 329 either.

For the reasons I have set out, I hope the noble Lords will not press the amendments.

Lord Moynihan Portrait Lord Moynihan (Con)
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I am very grateful to noble Lords who have participated in this debate. I think it has been one of the best debates we have had in Committee. I particularly highlight the contribution made by the noble Lord, Lord Birt, which is very relevant to the amendment. There is a huge difference in costs between light-touch regulation that is effective and appropriate and what he has identified in the 125 pages of this overcomplex and bureaucratic legislation —let alone the secondary legislation that will flow from it. If it becomes overcomplex and bureaucratic, it becomes expensive.

To get that balance right, which was an important point made by the noble Baroness, Lady Taylor, we need regulation. But football is regulated. The FA is the core regulator of both professional and amateur football in England. It has been absolutely absent from this debate. It has said nothing, to the detriment of its reputation as the national governing body of football in England. It is very sad that it has had nothing to say and no opinion. It is there to protect the autonomy of football and really should have come to the table and provided us with its thoughts. Indeed, I know that some noble Lords have written to the FA to ask it for a briefing on the Bill, and the FA’s response has been that it does not have a view on the Bill. We have no briefing. That is exceptionally sad.

Lord Pannick Portrait Lord Pannick (CB)
- Hansard - - - Excerpts

Does that not tell the Committee something about the lamentable quality of regulation that the FA currently provides?

Lord Moynihan Portrait Lord Moynihan (Con)
- Hansard - - - Excerpts

Without a shadow of a doubt. My criticism is of the FA and its inability to be the core regulator for a professional sport. Indeed, in an earlier intervention this evening, the noble Lord, Lord Pannick, alluded to the fact that we need this Bill because we need a regulator to oversee solutions that would occur. I would have intervened on him, if I had not been eagerly awaiting the ministerial response, to point out that the FA should have been first and foremost in that role. It is sad and regrettable that it has not been.

I will briefly touch on other points that have been made. Of course, for the senior clubs in the Premier League this will be a burden, but less of a burden proportionate to the clubs that the noble Lord, Lord Bassam, and I are worried about in terms of cost. UEFA compliance is onerous, for example, and much of the compliance that UEFA imposes on clubs will need to be replicated. Clubs will need to look at it carefully to see whether there is overlap. My principal concern has been one shared with the noble Lord, Lord Bassam, at an earlier stage in this Committee: how much is this going to cost?

The amendment purely looks to try to resolve that question. There is an argument that it would not need to come before Parliament but can simply be published by the regulator, drawing on information from clubs. Indeed, the regulator will have to do that, but given the huge scope in potential cost that ranges from light-touch regulation to invasive regulation, along with the length of the Bill and the associated costs, it is appropriate that Parliament reviews that. Whether that is after six months or longer—as the noble Baroness, Lady Taylor, said—either way it is important. It is a one-off opportunity. After that, we will have the regulator reporting and the relevant reports coming towards Parliament.

The Minister, who has worked exceptionally hard and could not have been more helpful to Members of the Committee at all stages, said, having been handed a note from her Box—that has not been too frequent, which is to her credit as throughout this Committee she has relied very little on the Box for additional information—that the impact assessment has been based on similar regulators. There is no similar regulator in the world of sport, let alone the world of football. It is simply not possible to do that. The impact assessment is the reason I am so worried about the costs. It says:

“The proposed intervention is a bespoke, sophisticated and evidenced-based regulatory framework”.


The noble Lord, Lord Pannick, will recognise that phrase. That is exactly the quality of advocacy I would expect from him on any occasion—bespoke, sophisticated and evidence-based—but I might suggest that it does not come particularly lightly on the purse.

As a result, the costs associated with having that regulatory regime might be very considerable, especially when the very same paragraph states that the regulator, in the view of the Government,

“will be legally prohibited from intervening in football … or commercial … activities, thus limiting the potential risk of deterring investment”.

That is exactly the opposite of what the Bill sets out to achieve. Therefore, if these figures are based on that statement, they are erroneous and illusionary. They are fanciful pipe dreams. We really need an opportunity, therefore, to review the costs of regulation for all clubs six months after the Bill has been enacted. It would be very helpful to Parliament to see what those costs are at that stage and to reflect on them. For the time being, at least, I beg leave to withdraw.

Amendment 327 withdrawn.
Amendment 328 not moved.
Clauses 86 to 90 agreed.
Clause 91: Regulations
Amendment 329 not moved.
Amendment 330
Moved by
330: Clause 91, page 74, line 1, leave out “56(2)(a)(ii)” and insert “56(2)(b)”
Member’s explanatory statement
This amendment corrects an erroneous cross-reference.
Amendment 330 agreed.
Clause 91, as amended, agreed.
Clause 92: Minor definitions etc
Amendments 331 and 332 not moved.
Clause 92 agreed.
Clause 93 agreed.
Schedule 11 agreed.
Clauses 94 to 97 agreed.
Schedule 12: Minor and consequential amendments
Amendments 333 to 335 not moved.
Schedule 12 agreed.
Clause 98 agreed.
22:00
Clause 99: Commencement
Amendment 336
Moved by
336: Clause 99, page 77, line 33, after “to” insert “subsections (1A), (1B) and”
Lord Markham Portrait Lord Markham (Con)
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My Lords, I rise to move Amendment 336 and speak to my further amendments in this group. Those amendments are all taken together: indeed, Amendments 336, 338 and 339 are consequential to Amendment 337. Amendment 337 seeks that the Secretary of State must consult UEFA on the provisions and impacts of the Bill and confirm to Parliament that they have done so.

We will all recall that the issue of UEFA’s views on this Bill has cropped up on many occasions throughout Committee. That is not because we are chasing false leads but because there are very serious concerns, raised most notably by my noble friend Lady Brady, about whether UEFA is content with the Bill as it stands. The ramifications of its discontent, notably the disqualification of English teams and clubs from European competitions such as the Euros, are severe. I am sure that the Minister, or indeed the Prime Minister, would not want that on their conscience.

Of course, we do not fully know whether UEFA is discontented or in fact perfectly happy, because the Government still have not published the letter from UEFA to the Secretary of State. Indeed, the Minister has still not responded to the letter sent to her by my noble friend Lady Brady on this issue. While aspects of UEFA’s letter have been seen by news outlets—Sky and the Times have reported on some of its contents—the full views of UEFA have still not been made public. The only sources that noble Lords, and indeed the public, have been able to see to understand UEFA’s opinions are those we have seen in the news stories. This is highly concerning. From those news outlets, we know that the Minister’s comments that UEFA is happy with the Bill do not show the whole picture. Sky news reported in September last year that the letter from UEFA to the Secretary of State said there should be

“no government interference in the running of football”.

As I said earlier, it is disappointing that I am only able to quote that one line, which I found in the Sky news report.

What this demonstrates is that UEFA appears to still have concerns with this version of the Bill. The Government have indicated that their removal of the foreign and trade policy provisions has placated UEFA and that UEFA has no concerns at all about the financial regulations included in the Bill. I would like to be reassured that this is the case, but, alas, I have not heard anything that indicates this. That is why our Amendment 337 is so important. It would explicitly require the Secretary of State to consult UEFA on the provisions of the Bill and confirm that it does not have concerns before the Bill can come into effect. This will have to be confirmed to Parliament so that we are fully satisfied that there is no risk of our clubs being disqualified from the Euros or the Champions League.

Lord Pannick Portrait Lord Pannick (CB)
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I support the noble Lord, Lord Markham, on this. I find it quite extraordinary that the governing body of European football has written a letter to the Government relating to this legislation and yet we are not able as a Committee to see it and form a view. It is not my understanding that UEFA has specifically asked that the letter remain confidential. Indeed, it would be a very surprising attitude for the governing body of European football to take. We have discussed this on a previous Committee day, but I did not think we received a very satisfactory response. Could the Minister tell us whether UEFA has asked for its letter to remain confidential and, if not, why we cannot see it?

Lord Watson of Invergowrie Portrait Lord Watson of Invergowrie (Lab)
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My Lords, with all due respect to the noble Lords, Lord Pannick and Lord Markham, is it not rather disingenuous to suggest that UEFA might have some concerns with this legislation but is not willing to make them public? UEFA is not known for being shy and slow in coming forward when it is concerned about any aspect of football in any of its member countries, so I think we can be fairly certain that, if it had serious concerns—or indeed, any concerns—it would have made them public and we would know about them.

Lord Addington Portrait Lord Addington (LD)
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My Lords, I find myself agreeing with both the noble Lords, Lord Watson and Lord Pannick. It would be good if we could know what has been said and, if there is no big objection, we could move on. It was suggested that we had to comply with UEFA’s rulings in our own law. That is patently absurd. But, if there is no problem, let us know about it. We have not been told that English clubs will be banned if this goes ahead, so presumably it is not that big a deal. Surely, finding out about it now would be sensible.

Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Con)
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My Lords, I support the noble Lord, Lord Markham, and express my concern about the non-appearance of this letter. We have been debating whether there is a letter or what the letter says. We have been speculating on what it might or might not say for several weeks and several sessions of this Committee.

I have carefully read the Written Answer that the noble Baroness gave my noble friend Lord Moynihan on 8 January. She does not, interestingly, pray in aid any Cabinet Office guidance or recommendations on the release of so-called private correspondence that forms a part of government policy formation. She just says that

“it would not be appropriate to publish private correspondence with any stakeholders in the Library of the House”.

If it were an individual divulging personal information in the course of their letter to a Minister or a government department, that would be a separate issue. Noble Lords will be aware that, for instance, freedom of information is quite circumscribed as to what can be released in terms of impinging on someone’s privacy, or if it would interfere with an ongoing judicial case. This is not the case. This is not a private letter; this is a letter from a corporate representative body. It may not be a government body or a non-departmental agency in the UK, but it is a representative body of some standing with a rulebook which governs the practice of football in our country.

On that basis, at the very least it is incumbent on the Government to produce that letter. If we have overegged the pudding and, in respect of the backstop, UEFA has no qualms or serious misgivings about this legislation as a whole, and particularly the backstop, I for one am happy to be disabused of my cynicism. In the meantime, we, the media, noble Lords and others in the other place when this goes there will be suspicious unless that letter is produced.

So I respectfully implore the Minister to think again and place that letter in the Library of both Houses so that we can inform a proper debate on specific issues that are germane to this Bill: in other words, the attitude of an important and prestigious organisation such as UEFA.

Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, an exceptionally important point was made about UEFA not being shy in coming forward. Indeed, we know that, as a result of UEFA representations, the Bill in its original form was changed. If it had such an influence, it is not unreasonable to ask to see a copy of the letter, which is clearly far beyond private correspondence. It is of public interest.

I return to the question that I put on 19 December, when I asked whether it was the Government’s intention

“to seek assurances from UEFA that the introduction of backstop powers to the proposed Football Regulator does not impact on the autonomy and independence of football’s governance as required by UEFA.”

The response was interesting:

“As set out during the House of Lords Committee Stage debate on 18 December, UEFA raised no concerns about the backstop in its most recent meetings with DCMS and the Minister for Sport”.


It does not refer to the letter. Therefore, can the Minister kindly confirm to the Committee this evening that there was no reference to the backstop in the UEFA correspondence? This was of such significance that, in its first introduction into the Committee proceedings, the Minister’s response to the Committee was that publishing the debate around the letter would worry the facts. That was the position. It was not the letter: it was the debate we were having around the letter.

I have just one very simple question, and then I will be much relieved if the answer is as I assume it will be, in the light of the answer given by the noble Baroness, Lady Twycross: that

“UEFA raised no concerns about the backstop in its most recent meetings with DCMS and the Minister of Sport.”

Can the Minister confirm that it did not raise the backstop in the correspondence it had with the DCMS, or raise any concerns referring to the backstop?

Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
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My Lords, I will start by responding to the amendments put down in the name of the noble Lord, Lord Markham, in this group, and I would like to thank him accordingly. We have not spent a great deal of time talking about some of the implications of the amendments, so I would just like to draw attention to those. The reason we will not be supporting Amendment 336 and the others in this group is that the changes put forward would severely hinder the setting up of the regulator and its ability to achieve its objectives as soon as possible after Royal Assent.

I emphasise again that my noble friend the Minister has stated that the Government have worked closely with and consulted with UEFA, FIFA and the FA throughout the development of this Bill and will continue to work with them as it progresses through Parliament, as indeed will the regulator once it is legally established, including through the FA’s observer role on the regulator’s board. This will ensure that no powers or potential actions taken by the regulator would be in breach of its own rules.

All I can say tonight is that we have debated this issue extensively on a number of occasions, and as my noble friend the Minister has set out previously, we are working with the relevant authorities to give noble Lords the reassurance they seek on the specific concerns regarding UEFA and FIFA statutes, ahead of Report. My response to the repeated requests about the letter has to be, again, that it is private correspondence and the Government do not share private correspondence with international organisations.

Lord Pannick Portrait Lord Pannick (CB)
- Hansard - - - Excerpts

The noble Baroness asserts that it is private. Have the Government asked UEFA whether it has any objection to sharing this letter with the rest of us?

Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
- Hansard - - - Excerpts

I cannot respond to that point, so apologies for that.

Lord Pannick Portrait Lord Pannick (CB)
- Hansard - - - Excerpts

Will the Minister write to me and put the letter in the Library?

Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
- Hansard - - - Excerpts

I shall certainly take away the noble Lord’s comments, and I repeat the response that I have had from the department in terms of the letter we have received.

Lord Moynihan Portrait Lord Moynihan (Con)
- Hansard - - - Excerpts

I am very grateful to the noble Baroness, Lady Blake. She knows that I admire her greatly, not least as a fellow Leeds supporter. The question is very simple. Would the Government be prepared to write to UEFA to ask its permission for the letter to be published?

22:15
Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
- Hansard - - - Excerpts

All I can say, again, is that I shall certainly take that point back. I will not answer that point at the Dispatch Box tonight, but the views have been made very clearly by Members in the Chamber.

I shall move on to the other amendments. If the Secretary of State does not have the flexibility required to determine what the regulator’s powers are when they are commenced, this could lead to delays, confusion and inefficiency through the process of set-up.

The noble Lord, Lord Markham, has referred quite a few times to unintended consequences, which is something the amendments in his name could well lead to. As we all know, the commencement of legislation is a crucial and in many ways delicate process, and it will require careful co-ordination between the department and the regulator to ensure that the provisions are switched on at all times. With those changes, the regulator would likely not be able to make any progress at all with the set-up. Similarly, the delays that this change would cause would be likely to have an impact on areas such as the “state of the game” report, a necessary and vital report that the regulator will need to carry out as soon as possible.

Furthermore, we would have all the regulator’s staff on taxpayers’ money at this point, given that the levy would not yet be up and running, so they would be unable to work. That would mean that a longer period would have to be funded by the taxpayer, until it was recouped. I am sure that the noble Lord agrees that that would not be good use of money. For the reasons I have laid out, I am unable to accept the noble Lord’s amendments, and I hope that he can withdraw his lead amendment.

Lord Markham Portrait Lord Markham (Con)
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I thank noble Lords for their contributions, and I thank the Minister. I think there was a shared view, bar the Minister, that there is an opportunity here to clear this up. It has been going on all the way through, and I must admit that, the more ducking and diving, obfuscation and avoidance there is, the more suspicious I become. We have a new reason today: for the first time, we are told that it is going to hamper the speed of setting up the regulator. The last time I looked, having a meeting with someone takes half a day or a day. It is going to cost a lot more to set it up. I am afraid that that just does not add up. Why do we not ask now? We do not need to wait until Royal Assent—why do we not show them what we are going to go through on Report? The Bill has not even gone through the Commons yet, so we could do this in parallel and it would not need to delay anything. I am sorry, but that does not really wash as a reason. That brings me back to the point that the only reason not to come clean about it all is that there is something they are trying to hide.

The other new reason is that the letter is private. The question rightly asked by the noble Lord, Lord Pannick, is whether we have asked UEFA whether it is private and whether it is willing to provide that letter. I feel sorry for the noble Baroness at this point, because maybe it was felt that this was one of the quieter parts of the Bill to take over from her fellow Minister. That was a bit of a hospital pass. But they do not even want to say whether they are willing to ask UEFA whether the letter is private. It is very clear: we can find out by asking whether UEFA does not want it to be published—that is a very quick question—or are the Government trying to stop it being published?

Lord Moynihan Portrait Lord Moynihan (Con)
- Hansard - - - Excerpts

I just make the point that the only reason we are pushing this so strongly is that if the regulation set by UEFA for European league and other competitions is at odds with what we are considering in this Committee with regard to the regulation that we are looking to put on the statute book, we will have a very real problem. We have the potential for English clubs not being able to participate in European competitions. That is why this is so important.

Lord Goddard of Stockport Portrait Lord Goddard of Stockport (LD)
- Hansard - - - Excerpts

Just to reply to that, let us be straight: is the noble Lord seriously alleging that the Government are holding back information that could exclude English football clubs from playing in Europe and the World Cup?

Lord Markham Portrait Lord Markham (Con)
- View Speech - Hansard - - - Excerpts

I just think that this is very easy; it could be cleared up a minute. If there is nothing to hide and no concerns, just release the letter. Then we can say, “That’s fine; there are no concerns. Fantastic”. No one will be happier than all of us. What has been clear through all the Committee days is that we are all here, up to whatever hour at night, because we care about football. We are all football fans here; we have all declared our interests and our various season tickets because we care about football. That is why we are going on about this.

Lord Pannick Portrait Lord Pannick (CB)
- Hansard - - - Excerpts

I just make it clear that I am not making any conspiracy allegations of any sort; I am simply and purely concerned, as I would be in other contexts, about basic transparency. There is a letter from a very important regulatory body in Europe and we are not allowed to see it. It is obviously relevant to the Bill that we, as the upper House, are discussing. Transparency demands, in my respectful submission, that we be allowed to see it—unless UEFA will not allow that.

Lord Markham Portrait Lord Markham (Con)
- Hansard - - - Excerpts

I thank the noble Lord. I think that the points are clear. We are clearly not going to get the resolution now. I think it will carry on as a running sore until the Government, I hope, put all our minds at rest. All the time that they do not, and all the time that they obfuscate, we will continue to be concerned because we know that, if UEFA is not happy, the consequences are, as my noble friend pointed out, pretty dire in terms of our clubs’ involvement in European competitions. I will withdraw my amendment at this stage, but I am sure that this will come back over and again.

Amendment 336 withdrawn.
Amendments 337 to 339 not moved.
Amendment 340
Moved by
340: Clause 99, page 78, line 13, at end insert—
“(2A) The Secretary of State may only make regulations for Part 3 to come into effect at the end of a relevant football season.”Member’s explanatory statement
This amendment ensures the operating licensing regime does not come into effect during a football season.
Lord Markham Portrait Lord Markham (Con)
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My Lords, I hope that this will be very simple and quick. All we are trying to do here is prevent the possibility of mid-season disruptions brought about by the implementation of the licensing regime. Clause 99 states that Part 3 will come into force on a day that the Secretary of State may by regulations appoint. The licensing regime therefore could be implemented at any date; there is no specification of when this should come into force. We want to ensure that, when the licensing regime is implemented, there should be as little disruption as possible.

The intention of this amendment, therefore, is to ensure that the Secretary of State cannot apply the licensing regime in the middle of a season. My concern is that the licensing requirements in Part 3 could be quite extensive. The information that clubs will have to provide to the regulator to obtain their licence is not only vast but, at this stage, quite unknown. Of course, the regulator will start to work on publishing its rules and requirements for the licensing regime, although we do not know when because the Bill does not include a timeline for the regulator to do so. However, I would hazard a guess that clubs will have to compile a large volume of information and documentation.

We know the requirements that are in the Bill at this stage. Clubs will have to submit a financial plan, a corporate governance statement, an annual declaration, and a personnel statement. They will have to ensure that they have the appropriate financial and non-financial resources, and meet the fan engagement threshold. If a club cannot comply with these requirements and therefore cannot obtain a licence—I am thinking of the smallest clubs in the National League, with just a few employees—then that club would have to cease operating teams in specific competitions.

If the regulations to implement the licences came in the middle of a season then a club could find itself in the position of having to drop out of the league half way through. The disruption that this could cause would obviously be enormous—not to mention the financial ramifications of such an event. By stating that the Secretary of State may implement operating licences only at the end of a football season, the potential for the disruption I have outlined would be significantly reduced. This safeguard is therefore required to ensure that the licensing regime, when it comes into force, causes less disruption than could otherwise be the case.

Lord Watson of Invergowrie Portrait Lord Watson of Invergowrie (Lab)
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The noble Lord may be surprised and not too pleased to hear that I support this amendment. It makes sense not to have in-season changes. This message needs to be got through to some Premier League clubs, including West Ham—I invite the noble Baroness, Lady Brady, to reply. Some clubs change their ticketing arrangements in the middle of a season, shutting out some fans—particularly children and seniors—from getting cut-priced tickets. This is apparently in pursuit of greater income. Manchester United are the main culprits. I understand that a group of fans from various clubs has come together to protest at these changes. It is wrong for this to happen in season, which is why it would be sensible for the Bill to incorporate an amendment similar to the one that the noble Lord, Lord Markham, has just moved.

Lord Addington Portrait Lord Addington (LD)
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My Lords, I basically agree. There is a break at the end of the season. Most organised team sports change their rules and regulations in that break if they are going to do so. It might not need to be in the Bill, but it might be a Pepper v Hart type case; I say that timorously in view of the company I am keeping. If the Government can give us some indication that they will make major changes in the off-season, when players are exhausted and structural changes can be made—that is basically what it is for—then I would be happy because it is quite a sensible principle.

Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
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My Lords, I thank the noble Lord, Lord Markham, for tabling the amendment and other noble Lords for their comments. I will go through the reasons why we will not support the amendment. We understand that its intention is to avoid any burdens or disruptions for clubs that might be associated with mid-season licensing. This includes the risk, albeit remote, that licenses are refused mid-season.

However, the amendment would mean that the entirety of Part 3 could not be commenced until the off-season. For example, it could affect the ability of clubs to prepare and submit their applications early. If the regulator became operational mid-season, it could mean waiting for as long as eight or nine months before it could even begin to license clubs. We do not think this is right. Clubs should be able to prepare and, if they so wish, submit their applications early to avoid the regulator having to deal with a rush of 116 applications in the relatively short window between seasons.

Ultimately, if the Secretary of State does not have the flexibility required to determine when the regulator’s powers commence, it could lead to delays, confusion and inefficiency throughout the set-up process. We are, of course, prepared to continue the fruitful conversations we have already have and I look forward to more of them. Although I recognise the amendment’s helpful intent, I am unable to accept it. I hope that the noble Lord will withdraw it.

Lord Markham Portrait Lord Markham (Con)
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I thank the noble Lords, Lord Watson and Lord Addington, for their support. I was hoping that the noble Baroness would say that this is just a very sensible, practical solution. I hope that the Ministers feel able to reflect on it at this stage, because it is a very practical step to make sure we can implement this correctly and not impact clubs mid-season. I am happy to withdraw at this stage.

Amendment 340 withdrawn.
Clause 99 agreed.
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Amendment 341
Moved by
341: After Clause 99, insert the following new Clause—
“Duration and review(1) This Act expires at the end of the period of five years beginning with the day on which section 5 comes into force (“the initial period”), subject to the provisions of this section and section (Renewal and dissolution provisions).(2) The Secretary of State must establish an independent review panel (“the Panel”) no later than 15 months before the end of the initial period.(3) The Panel must—(a) carry out a review of—(i) the effectiveness of this Act, (ii) whether the IFR has remained within its statutory purposes, and(iii) whether the objectives of the Act could be achieved through less interventionist means,(b) prepare a report of the review, and(c) lay a copy of the report before Parliament, no later than 12 months before the end of the initial period.(4) The Panel must consist of—(a) at least one person with expertise in competition law,(b) at least one person with expertise in regulatory policy,(c) at least one person with expertise in football administration, and(d) at least one person with expertise in business regulation.(5) Where there is a change in the person holding the office of Secretary of State after the establishment of the Panel but before the report is laid before Parliament—(a) the new Secretary of State may by written notice dissolve the existing Panel,(b) where the Panel is dissolved under paragraph (a), the new Secretary of State must—(i) establish a new Panel within 28 days,(ii) ensure the new Panel meets the requirements of subsection (4), and(iii) extend the period for the laying of the report by up to three months if necessary to allow the new Panel to complete its work,(c) the new Panel may—(i) consider any work undertaken by the previous Panel,(ii) adopt any findings of the previous Panel that it considers appropriate, or(iii) conduct an entirely new review.(6) The new Secretary of State may only exercise the power under subsection (5) once in relation to the review required by subsection (3).(7) The report under subsection (3) must include—(a) an assessment of whether the IFR has—(i) achieved its objectives under section 6,(ii) remained within the scope of its original purposes as set out in section 1,(iii) avoided expanding its regulatory reach beyond its core functions,(iv) maintained proportionate intervention in the football industry,(b) an assessment of—(i) the regulatory burden imposed by the Act,(ii) the costs of compliance for regulated entities,(iii) whether the objectives could be achieved through less intrusive means,(c) an analysis of any instance where the IFR has—(i) exceeded its statutory powers,(ii) created additional regulatory requirements beyond those explicitly authorised by the Act,(iii) expanded its interpretation of its objectives beyond their original scope,(d) a specific assessment of whether market conditions still justify statutory regulation, and(e) a recommendation as to whether the Act should be—(i) allowed to expire,(ii) renewed for a further period with specific restrictions, or(iii) renewed without modification.”
Lord Goodman of Wycombe Portrait Lord Goodman of Wycombe (Con)
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My Lords, Amendments 341 and 342 have sunset provisions. I declare my interest as set out in the register as a senior fellow at Policy Exchange. I am mindful, of course, that this is the final debate on amendments this evening on this very substantial Bill of 100 clauses and 12 schedules, and we are near the end of seven sessions in Committee. I note what my noble friend Lord Moynihan said at the very start of these proceedings: it is rare for a Bill to have 340 amendments tabled even before it has commenced. I make the point in the presence of the Government Chief Whip that many of those amendments were tabled by the other side.

In that spirit of agreement, we can all agree that this is a very significant Bill. I am going to try to further that spirit and seek some consensus as I discuss these sunset provisions. We will see how I get on, mindful that in Committee it is unusual to push amendments to the vote but very usual to try to explore issues.

I begin by restating another view on which we surely all agree: as my noble friend Lady Brady has said many times, football is its own ecosystem with its own rules, governing bodies, leagues and codes of practice, into which the Government are about to appoint—as the previous Conservative Government wished to create before them—a new state-licensed regulator, without a licence from which teams in the pyramid will be unable to play in specified competitions. It is an arrangement of great interest to UEFA and FIFA; I will put it no higher than that at this point, following some of the debates we have had this evening.

I hope that it is also a statement of the obvious and not at all controversial to point out that regulators are in themselves controversial. On this side of the House, we tend to hear—as I have heard from my noble friends, and I am of course much of the same mind—that regulators are subject to mission creep and lobby capture. My noble friend Lord Jackson said earlier this evening that they are subject to Parkinson’s law.

I am not going to repeat those arguments because they have been exhausted at length, but I hope noble Lords will forgive me if I pray in aid someone who has recently made them quite forcefully. I am quoting from a BBC report. This person said that

“the regulators, the blockers and bureaucrats”

are part of “an alliance of naysayers”, which means that

“we can’t get things done in our country”.

The person who intervened in this way was of course no one less than the Prime Minister. I follow my noble friend Lord Hayward, who pointed out that it is disappointing to hear that the shadow regulator will not be included in the meeting with the Chancellor tomorrow. None the less, I was encouraged by what the Minister said about growth in her responses to an earlier debate. She will of course be aware that many of my noble friends have moved amendments seeking to put a growth objective in the Bill.

Regulators are also controversial, not only because in the view of some people they do too much and in the view of others they do too little. It is a frequent theme of noble Lords and of people in the other place that regulators do things in the wrong way. I defy any Member of this House to look at reports of committees of this House or the Public Accounts Committee into Ofwat, Ofgem, Ofcom and all these other regulators and assert that those committees are never critical of what those regulators do—they are often very critical indeed.

Consider the range and depth of the issues that the new regulator will be asked to consider. I will list 10 points that fans may possibly say after the regulator has come into existence and has bedded down for a while. Is it possible to imagine and believe that fans would say the following?

First, my club says it cannot buy the players it wants, or may have to sell players, because of the financial constraints the regulator has put in place.

Secondly, my club claims it cannot afford the levy and will have to sell players or raise ticket prices.

Thirdly, my club says it cannot afford the interest on unpaid levies and, again, it will have to sell players or raise ticket prices.

Fourthly—this is a theme that has come up a lot in these debates—the regulator will not let my club spend to get promoted as so many clubs have before.

Fifthly, the regulator has taken my club’s parachute payments into account in its calculations, but not the parachute payments of our local derby rivals. If that circumstance arises, I cannot imagine that it will go down very well.

Sixthly, my club, which plays in the Football League, says it is not getting enough money from the Premier League.

Seventhly, my club, which is a Premier League club, says it is now being forced to distribute too much down the pyramid and this is financially unsustainable.

Eighthly, the regulator is doing far too much on DEI. Alternatively—do you know what?—the regulator is doing far too little on DEI; it should enforce these provisions more rigidly.

Ninthly, the regulator should push my club much harder on ticket price consultation.

Tenthly, and most obviously, the regulator is not consulting sufficiently on any of these provisions.

Those are just 10 points; I could go on, but I will not. I have not even mentioned the words “significant influence”, which have been such a feature of these debates. There is a whole series of questions that fans might raise.

The regulator might sometimes be right and might sometimes be wrong, but one of the questions that we have to ask—it has been circulated in today’s debate and was referred to by the noble Baroness, Lady Taylor of Bolton, and the noble Lord, Lord Addington, on his Front Bench—is about parliamentary scrutiny. How will the regulator sufficiently be scrutinised? How can he be held to account by Parliament? The question is especially pertinent because we do not know what the remit of the regulator will look like in a few years.

In these debates, it has been suggested that the remit of the regulator should be increased and widened to include: the two top leagues in women’s football, National Leagues North and South, bodies that negotiate TV rights, player welfare, fan safety, net zero, climate change, modern slavery—we had a very interesting debate about that—DEI more broadly, and corporate governance and practice. I put it to noble Lords that it is not impossible that, in the other place, the remit of the regulator may be extended—or it may be extended soon in future years—which makes these scrutiny concerns even more pressing.

Let us ask ourselves what scrutiny Parliament will be able to undertake on the regulator. There will be an annual report. There will be the “state of the game” report, which we have debated at considerable length. I suppose that the DCMS Committee in another place can haul the regulator in. None the less, there is what has been described as a “lacuna in scrutiny” in relation to regulators. That is a direct quote from a report called Who Watches the Watchdogs?, which the noble Baroness, Lady Taylor, will recognise because it was produced by her Industry and Regulators Select Committee, which weighed the merits and demerits of setting up a new structure.

I mentioned Policy Exchange earlier because of the report alluded to by my noble friend Lord Jackson, The Rise of the Regulators, written by my colleagues James Vitali and Zachary Marsh. It focuses on what it calls the “democratic deficit”. Although finding an answer to this problem of the democratic deficit is a bit beyond my pay grade, I put it to the Committee that the sunset clause that I am proposing would have the effect, as well as being a sunset clause, of increasing scrutiny in a way that would be helpful. The amendment proposes an independent panel that would, within 15 months of the regulator being established, review how the regulator is getting on. This independent panel would contain at least one person with experience of competition law, at least one person with experience in regulatory policy, at least one person with expertise in football administration and at least one person with expertise in business regulation. The panel would review the regulator and ask whether the regulator had acted, within the scope of the original provisions, proportionately and reasonably in relation to cases of compliance and the regulatory burden, and would examine whether its objectives could be achieved by less intrusive means. The panel would then recommend whether the regulator expires, works further for a period with restrictions, or simply goes ahead as it is doing when the panel meets, without any further restrictions.

I make no apology for pressing the merits of sunset clauses. It would be a good thing for all new regulations to be subject to them. I have to confess to the Committee that it is very unlikely that the panel I am suggesting would recommend that the regulator expire. I will tell you why. It is because the panel would be selected by the Secretary of State, who I am addressing through the person of the Minister on the Front Bench. It is most unlikely that the Secretary of State would appoint a panel that would abolish the regulator. Frankly, this is not a perfect provision, but I am seeking consensus and trying to find a proposal that the Government might not consider automatically repugnant.

One should note, in relation to this new panel and any recommendation that it would make, that Parliament would take the final decision. If the panel decided in its view that the regulator should continue, Parliament would have a say in the final decision. If the panel recommended that the regulator be scrapped altogether, it could not do that without the consent of Parliament. There is an extra layer of parliamentary scrutiny. I am grateful to the Minister for writing to Peers on this side of the House about a sunset clause last year. However, I say very briefly that her arguments against it were somewhat misconceived, because they were basically predicated on arguing that, for some reason, the leagues would have reason for acting in bad faith and frustrating the regulator.

I reject that for a number of reasons, not least because it would be the independent panel, with members appointed by the Secretary of State, that would make the final decision. If the panel thought that the clubs or the leagues were being unreasonable, it would side with the regulator, not the leagues. It is perhaps also worth pointing out in parentheses that the clubs, the leagues and so on are going to be under considerable legal obligation as a result of this Bill and would not want to chance their arm lightly.

The Minister also argues in her letter that the sunset clause would incentivise the regulator to look for short-term solutions to long-term problems. Again, I find that hard to see, because the panel making the judgment would want to find the solutions that were best for football. If the regulator were suddenly making short-term decisions at the expense of long-term ones, I should expect the panel to be very critical of that.

Finally, before I take my seat, I say that this is Committee and these are probing amendments. There is a good case for a sunset clause, but it may be that other Members of the House will have other ideas of how parliamentary scrutiny might be strengthened other than by a clause. If they have those ideas, it would be useful to hear them. With that thought in mind, I beg to move.

Lord Norton of Louth Portrait Lord Norton of Louth (Con)
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My Lords, I must begin by correcting my noble friend earlier who said we are all football fans. I have no interest in football, but I do have an interest in the legislative process.

In 2004, the Constitution Committee of your Lordships’ House published its report on Parliament and the Legislative Process. I was chair of the committee and indeed the drafter of the report. We recommended changes to the legislative process, including the introduction of post-legislative review. We proposed that Acts be reviewed within three years of their commencement or six years following enactment, whichever was the sooner. In 2008, the Government accepted the case for post-legislative review, committing to Acts being reviewed by departments three to five years after enactment.

22:45
Successive Governments have remained committed to post-legislative review. On 12 August last year, the noble Baroness, Lady Twycross, in answer to a Written Question of mine, confirmed:
“It continues to be Government policy that all bills that have reached Royal Assent are eligible for post-legislative scrutiny three to five years after enactment”.
The principle of post-legislative review is thus conceded and this Bill, once enacted, will qualify for review three to five years after enactment.
The problem is that not all departments are rigorous in undertaking post-legislative scrutiny. I have previously put down a series of questions, the answers to which revealed that some departments are more assiduous than others in completing and publishing such reviews. The two clauses that are before us, taken together, in effect ensure that this measure will be subject to post-legislative review. I support the principle. I hold no brief for the specific provisions of the two clauses, although the five-year period seems entirely appropriate.
The Minister may argue that it is not appropriate to put the provision for post-legislative scrutiny in the Bill, given that it will be eligible for review in any event three to five years after reaching the statute book. There are two points to be made on that. First, as I have indicated, a review is not guaranteed. These clauses ensure that there is such a review. Secondly, there are precedents for embodying such a provision in statute, particularly in respect of contentious legislation. One obvious and relatively recent instance is the Fixed-term Parliaments Act. The Act was amended in this House to provide for a committee to carry out a review of the operation of the Act, and to do so no earlier than 1 June 2020 and no later than 30 November 2020. The provision was not as detailed as these proposed clauses and the committee was a parliamentary committee, the Act stipulating that a majority of the members would be Members of the House of Commons.
The reason why the Government accepted the amendment was principally to ensure the passage of the Bill and to avoid the House making more stringent sunsetting provisions. The Minister may wish to bear in mind that accepting these clauses or committing to some amendment to provide for post-legislative review may make the task of getting the measure on to the statute book a little easier.
Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
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My Lords, I am afraid that, although the hour is late, I cannot resist saying a few words about the suggestion that we should have a sunset clause. I am somewhat surprised that the noble Lord, Lord Goodman, has presented what is a very bureaucratic way of going about getting some accountability here, and I fear that the sunset clause would be an incentive for non-co-operation. The noble Lord, Lord Markham, said earlier that he thought that some people might wait until the regulator was in place before they did certain things. If we had the sunset clause, it would be an incentive for those who did not want this kind of regulation to drag their feet and not co-operate. So that is not a good way forward.

I was also interested in some of the comments on the commencement amendments, which would also bring about a delay. I note that the suggestion is that after, I think, three years and nine months we should have this kind of review that was being suggested. I noted the noble Baroness, Lady Brady, saying earlier that there should be a transition period of three years, so we would be judging it on nine months if all the opposition amendments on this were carried, and that is not really satisfactory.

The simple fact is that football needs the Bill, fans need the Bill and we need to get on with it as quickly as possible. We need to give the regulator the powers that he or she needs to carry out the work that needs doing. We talk about football being a pyramid, and it is. The Premier League needs the whole of that pyramid. I could quote certain players who have been on loan at Bolton Wanderers and who now are doing very well at Liverpool, such as Conor Bradley—I am sorry that my noble friend from Everton is looking at me askance. The English national team needs football to be healthy at all levels. If we do not have proper involvement and proper facilities at all levels it will suffer as well. We have talked about the FA not taking its responsibilities seriously in terms of football governance, but there is a dimension here about the English national football team. We have to make some headway and get some things moving as quickly as we can.

The noble Lord, Lord Goodman, also mentioned accountability. What the noble Lord, Lord Norton, said about post-legislative scrutiny was also interesting. I chaired the modernisation committee in the other House in 1997. One of its recommendations was that there should be more post-legislative scrutiny. Both pre-legislative and post-legislative scrutiny give power to Parliament to get things right and to monitor exactly what it is doing. I am all in favour of that, but it does not need to be in the Bill.

What we do need is a proper drumbeat of accountability of all regulators to Parliament. The noble Lord, Lord Goodman, mentioned the report that the committee I chaired published, Who Watches the Watchdogs? One of the things we said in that report is that it would be to the advantage of everyone—industries, regulators, Government Ministers and consumers—if there was a proper drumbeat of regulation. A third of all regulators have never been called before Parliament. Another third has been called only when there is a crisis. That is not proper accountability. We need Parliament to take its responsibilities seriously and ensure that all regulators, including new ones, are held accountable by Parliament. That is a valid point, but we do not need new amendments. We need new action on the part of Parliament.

We need this Bill; the Premier League needs this Bill. I mentioned the research from the University of Manchester. Ironically, in the long term, this Bill might help to protect all clubs, including those in the Premier League. I hope we can make progress. It should be Parliament that holds regulators to account, not extra dimensions such as have been suggested.

Lord Hannett of Everton Portrait Lord Hannett of Everton (Lab)
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My Lords, I will refer to the comment by the noble Lord, Lord Norton, about not everybody being interested in football. As a long-suffering Evertonian, sometimes that is not a bad place to be, especially having seen Everton’s results tonight —but there you go; there is another day. I say to the noble Baroness, Lady Brady, regarding David Moyes, who has now returned to his spiritual home, that I hope some of his success at West Ham will rub off on Everton.

I have listened on a number of occasions to this debate and to some of the contributions and the experience that has been expressed. However, I am with my noble friend Lady Taylor—this is a time to move on and to enact the Bill, because this is what football fans want. As a football fan—a season ticket holder at Everton—I was delighted that support for the Bill was in the manifestos of all the main parties. From some of the contributions, you could sometimes be confused that that was the case. As football fans say, this is an important Bill. Noble Lords have on occasions appeared to forget how we arrived at this position. The fan-led review was based not on hot air but on the genuine concerns of football fans. The fans and the future sustainability of our beloved national game must always be at the heart of the House of Lords.

Noble Lords’ amendments—there have been too many to comment on individually, so this is a general observation—would in effect ensure, even before the independent football regulator gets off the ground, that those who oppose it would be seen to be working to ensure its demise. We know there are people who hold strong views about regulation, but there are occasions for regulation and this is one of them.

It could be said that this is another way, on top of the attempts through other means, to kill the Bill—to kill the regulator by the back door. That is not what fans want. I speak to fans from many different clubs who have been waiting for the Bill to pass.

In conclusion, I thank the Ministers for the way they have had handled this debate over many weeks, not only with stamina but with attention to detail. That is extremely uplifting.

Lord Addington Portrait Lord Addington (LD)
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My Lords, I too do not think that these amendments are necessary. I agree with the principles the noble Lord, Lord Norton, laid out—I think the whole Committee agrees with them—but we do not need the amendments. The Minister can correct me if I am wrong but we have the “state of the game” reports, which are built in to look at the structure and success of this. We have a better vehicle for looking at what goes on than we have ever had before. If we decide to get rid of it, do we go back to what we had? Do we go back to having all those small clubs saying, “Nobody’s checking that we’re selling our ground for a nice development of flats”—the first thing raised with me 30 years ago about what is wrong with certain types of people who buy football clubs. That sort of decision is not new.

We have a successful Premier League—all power to it—but we have to look at the other divisions and the rest of football. We have the opportunity to do that and I hope we carry on. When the Minister replies, we should hear what the Government would do if the “state of the game” report suddenly said that we have got it wrong somewhere. I hope we will hear that and that we will carry on, because the underlying problem that brought this Bill forward was one event that actually, oddly, preserved the Premier League. If we go forward with this, we need a series of reviews—I have already raised this. Who Watches the Watchdogs? and all the reports concern themes in Parliament, as does post-legislative review. If we can bring this in and we have a vehicle for delivering it, this Act might actually something of a beacon for how we can achieve it.

Baroness Fox of Buckley Portrait Baroness Fox of Buckley (Non-Afl)
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My Lords, I challenge the approach of the noble Lord, Lord Hannett, to this by saying that I support the amendment. I object to the way this is posed as a fans’ piece of legislation, that the fans want it, and that anyone who does not support or has any reservations about the Bill is not thinking about the fans.

The Bill is based on Tracey Crouch’s original fan-led review but there is a danger of a sleight of hand. I know it sounds populist—and I am keen on populism—to say that this is all about the fans. Actually, it was based on 20,000 online responses, so it is not necessarily all fans. There are fans across the leagues at all different levels who are finding out the detail of the legislation and some of them are quite shocked. The fact that the media are beginning to pick up on it is quite important.

I would like fans to have a proper opportunity to have a debate as the law is understood and rolled out, so that they can take things into consideration. I am not trying to insult fans. I am not trying to say they do not know what they are voting for. That kind of paternalism annoys me. But I sat through about half of this Committee, maybe less, for hours and hours, as others have and, despite some snipes about filibustering, I have found the contributions to be brilliantly well informed. There have been lots of layers of debate and lots of nuance from all the contributors. I say that because I thought I knew what was coming up in the Bill but I have had some genuine shocks about its political consequences.

23:00
I think we have to be honest and say, “If only this Bill were just about fan engagement”. But there are huge swathes more to it, with the consequence that, when fans find out, they will genuinely be, like, “What? I thought this was about rogue owners or club heritage or what have you”. Think of the rows we have had this evening. Well, not rows but, you know, the mystery of the UEFA letter. When you tell people that, they do not understand why there is such a lack of transparency. I still do not know whether senior members of foreign Governments have to go through the ownership test, because we have had contradictory answers. There are all sorts of issues that we have raised that are genuinely, honestly and in good faith about the potential unintended consequences of this Bill.
To finish, I also object to those who are implying that this amendment is trying to scupper the Bill. One supporter of the Bill complained:
“The problem with a sunset clause is that it undermines the regulator before it has even begun. It needs to have teeth and authority”.
I would say that the regulator already has a fair amount of teeth and authority. I think it is important that we do not allow this idea that we are not allowed to hold in check a regulator, parliamentary or otherwise, to make sure that it is accountable. Otherwise, we end up outsourcing the authority and the teeth to an unelected regulator without being able to hold anyone to account for what is about to happen.
So the Government should seriously think about accepting this notion of a sunset clause in good faith because if, in fact, all the things that many of us, not just Conservatives, are worried about are wrong, that is fine. But if we are right that this could destroy football as we know it, that is quite a big deal and the fans will never forgive you, no matter how often you say you have only done it for the fans. So for the fans, I think the Government should go for the sunset clause. It is not going to destroy their Bill, as has been explained, but it would be much more democratic and accountable.
Lord Pannick Portrait Lord Pannick (CB)
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My Lords, I hope that before Report the Government will carefully consider how best to ensure post-legislative scrutiny of the Bill. That is the issue being raised here. There are many ways of achieving it and I would welcome the Government thinking about it and discussing with noble Lords who have been expressing concerns how it is to be achieved.

I also hope that, before Report, the Government will give very careful thought to the comments made by the noble Lord, Lord Birt, earlier about the ways in which the Bill can be amended or implemented to ensure proportionate, light-touch regulation, which I think many of us around the Committee are concerned to achieve. It is a difficult thing to achieve, but it needs to be to be achieved and, if it can be achieved, I think that will alleviate many of the concerns that have been expressed in Committee.

Lord Hannan of Kingsclere Portrait Lord Hannan of Kingsclere (Con)
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My Lords, I support my noble friend Lord Goodman’s amendments and the principle of a sunset clause.

“The delegation of particular tasks to separate bodies, while a regular feature, is yet only the first step in the process by which a democracy … relinquishes its powers”.


So wrote FA Hayek in chapter five of his magnum opus The Road to Serfdom in 1944. Think of how much truer it is today than it was then. By one account, we have had a new quango every week since the election, and it is a one-way system. They are never undone, and they are not undone because of the dynamic that, once an organisation like that exists and is in place, its primary purpose becomes the defence of its own existence and its own budget. That is why we have sunset clauses at all. It is the only way in which, realistically, you can put in a hedge in case the calculation on which you passed legislation or created a quango turns out to be false.

In this case, it may or it may not. The noble Baroness, Lady Taylor of Bolton, tells us that the legislation is terrifically popular and that the fans are demanding it and want immediate action; the noble Lord, Lord Hannett of Everton, says that it has been polled and everyone is in favour of it. That may be—I do not know, as I am not any kind of expert—and I am perfectly happy to accept the possibility. Equally, we should be cognisant of the figures that the noble Baroness, Lady Fox, cited: 20,000 people of the 2 billion who watch Premier League games is one in 100,000—someone will tell me if my maths is off. It may be that that is a self-selecting and unrepresentative sample.

It is certainly the case, as any pollster will tell you, that people are very bad predictors of how they will feel in a hypothetical situation. If people are asked for an opinion now, and polled in the abstract on whether they think there should be some regulation of football, they might think that it would be a way of preventing rogue owners driving clubs into bankruptcy and so it seems a good idea. But what happens if, two or three years from now, the regulator does what almost every other regulator in this country’s history has done and expands its remit well beyond the powers laid down and discussed in your Lordships’ House? What if fans are then looking at a regulator that is doing things that were never envisaged? There are regulators laying down rules on net zero and gender quotas—and we have already had demands for clubs to monitor the diversity of their season ticket holders and so on. Fans will realise that, hang on, this is not what they signed up for. What then will be the mechanism and check on this legislation?

The only way of doing that is to have some kind of automatic lapsing; in other words, to allow this House and the other House to come back and say either that the legislation is working, so it should be renewed, or that it is not working, so it should be allowed to lapse. This should not be a controversial proposal. I do not doubt for a second the sincerity of noble Lords on all sides who have argued that this is a popular and necessary Bill. If it is, they should have the courage of their convictions. If it is, there will be no question—for all the reasons that my noble friend set out at the beginning—but that the regulator should remain in operation or that the Minister will keep it that way.

We must allow for the possibility that we may have got this wrong. It costs very little and would satisfy all sides. It is something that ought to be able to command consent in this Committee and beyond. I hope that the Minister will give it serious consideration.

Baroness Brady Portrait Baroness Brady (Con)
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My Lords, before I speak to the amendments in this group, I want to address the accusation from the noble Lord, Lord Watson, that West Ham United has put its season ticket prices up mid-season. That is categorically untrue. We have the cheapest adult season ticket in the league, at £345. Since we moved into the London stadium, we have sold 35,000 season tickets for £99 to juniors. We have two “kids for a quid” games every year in the Premier League at the club. We are more than doing our bit.

Lord Watson of Invergowrie Portrait Lord Watson of Invergowrie (Lab)
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If I have got that wrong, I unequivocally apologise to the noble Baroness. I was reading an article about football supporters, including of West Ham, who were protesting about changes to season tickets. Maybe it is not within this season but next season, but there were fairly significant changes being put forward, and the argument was that children were not being given cheaper prices, which will stop them becoming regular fans at football matches. If what I said was wrong, I apologise.

Baroness Brady Portrait Baroness Brady (Con)
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I accept the noble Lord’s apology.

The hour is late, but as we debate this idea of a sunset clause, we should pause and reflect on what is truly at stake. We are all here during extra time because all of us—bar one, I think—love football. It is a cultural touchstone, an economic powerhouse and a source of immense national pride. At its best, football connects communities, inspires individuals and projects the best of Britain to the world.

The Premier League is only one part of English football. I operated in the EFL system for many years and know that it is hugely important to our pyramid, as is the National League. But the Premier League is special for our country: with its global reach, this fizzing, vibrant competition has an extraordinary ability to draw interest, investment and innovation into the game. It not only powers the football pyramid but supports £8 billion in gross value added to the economy, contributes over £4 billion annually to the Exchequer and supports more than 90,000 jobs. The Premier League’s influence extends far beyond the pitch, creating an affinity for the UK and showcasing our ability to create a product that the world wants to watch.

We all know the background and the well-made case for some sort of regulatory intervention, but with this particular Bill we are now at a crossroads. I am passionate about this and live it every day, so I can see the risks very clearly. But I also know that this is a well-intentioned piece of legislation with aims that we can all support. The reason we have been so forensic and questioning during Committee is that it genuinely has the potential to inadvertently damage the structures that have made English football the envy of the world. We are not imagining these deficiencies in the Bill, or the risks that could play out. This is why I am interested in the idea of assessing whether this legislation and the IFR have achieved their goals or inadvertently harmed the game we all love.

The Government have rightly made economic growth their overriding priority. In a time of global economic turbulence and domestic fiscal and productivity challenges, it is vital that we protect and nurture the UK’s most successful industries. Football is clearly one of these: a global export that not only generates revenue but enhances Britain’s soft power and investor appetite for the UK on the world stage. It is against this backdrop that I must express surprise at the puzzling reluctance so far of the Government to listen to the concerns we have been expressing.

At a time when the Prime Minister has asked all regulators to focus on growth—and has also apparently asked Ministers to cancel all anti-growth measures—here we are, about to create a regulator that has no growth duties or objectives. We even read in the newspapers that the Chancellor has told regulators this week that they need to go further and faster in stripping back unnecessary rules and creating an environment where companies can take risks.

But this new regulator will be principally charged with risk reduction and, effectively, a new form of taxation on specifically one part of football, the Premier League. This is a mandate that seems inherently restrictive, redistributive and therefore anti-growth. The signal this will send to global investors could be troubling. If we overreach in regulating one of the UK’s greatest success stories, what might that say about our ability to protect and nurture other industries?

Poorly executed regulation would not just chill investment in football; it would ripple out into broader perceptions of the UK as a place to do business. A sunset clause is an interesting idea. It is clearly important that we do not undermine the regulator from the get-go. We all want this to work. But it is important that an appropriate review and accountability mechanism is found, so that a future Government can assess whether this Bill is delivering the sustainability it promises or whether it is in fact creating regulatory uncertainty and systematic risk, and damaging investment—in which case, we would want to see urgent remedial action.

As I have said this evening, the Premier League and its clubs are not opposed to change. What we do ask, though, is for change to be thoughtful, measured and informed by the realities of what makes football so successful. This Bill has the potential to do some good, but it also carries significant risks that, I say to the Minister, deserve to be engaged with seriously and constructively.

Today, the Premier League is competing not only with domestic leagues but international competitions, other global events and new forms of entertainment in what is a rapidly changing media industry. The UK has created something so special in the Premier League. We should not stifle our ability to adapt in order to deal with these new threats. We should not be complacent when it would be so easy to be knocked off course. We should not gamble that the Premier League is now an unstoppable juggernaut, immune to even the unintended consequences of its own Government’s actions. Empires rise, but they also fall.

It has been said that the Premier League has become the goose that is laying English football’s golden egg. I would encourage all noble Lords to think about it that way, rather than as a cow to be milked or a magic money tree to be shaken. Above all, we should look after it. We should nurture it. Dare I say that perhaps we should even think about how we can help it, not hurt it? We should work together to ensures that it continues to be so successful. To do so, it is obvious that we need some sensible changes to this Bill, and I sincerely hope we can achieve them together as we move towards Report.

Lord Markham Portrait Lord Markham (Con)
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It is late, so I am sure that all noble Lords will be pleased to know that I will keep my comments short.

None Portrait Noble Lords
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Hurrah!

23:15
Lord Markham Portrait Lord Markham (Con)
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There we go—the biggest cheer of the night.

As this is the last debate of what has been an extensive process, I echo some earlier comments by thanking the Minister for all her time and involvement over all these days in Committee. I thank all noble Lords for what has been an extensive number of days’ debate. I hope that we may have one new convert as a fan, but maybe not. The debate has been so extensive over those days—as mentioned, there have been 380 amendments—and there is such extensive expertise around the Chamber. So many key points have been raised and there is an understanding that the consequences of getting this wrong are pretty extreme.

There seems to be consensus, as mentioned by the noble Lord, Lord Pannick, that there needs to be some sort of review and some mechanism for that. I must admit that I do not think that is the “state of the game” report, because that is written by the regulator. It is extremely unlikely that the regulator would say in that report, “In all of this, the regulator is pretty rubbish and should be reviewed”. That is probably an unlikely outcome from the “state of the game” report. This post-legislative review needs to be conducted by someone who is not at the regulator, because otherwise it would be marking its own homework.

I thank my noble friend Lord Goodman for raising this. A sunset is one very good way of looking at it, but we have had other suggestions as well. I ask the Minister to spend the time between now and Report thinking about how we are to get some sort of post-legislative review, to make sure that we get this all right. Lastly, I also ask the Minister to spend the time that we have to reflect on all the views expressed over the many hours and days of debate on this. I look forward to discussing her thoughts on them when we have the meeting in February.

Baroness Twycross Portrait Baroness Twycross (Lab)
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I am grateful to all noble Lords for staying the course to debate this group. I am not going to use any footballing metaphors, because I think we have exhausted them during the Committee and clearly this is the final group. I want to stress that I am really happy to continue to meet noble Lords before Report to make sure that we can talk through concerns that they have raised ahead of the next stage in the progress of the legislation through your Lordships’ House.

I thank the noble Lord, Lord Goodman of Wycombe, for tabling these amendments, which have allowed a debate about what kind of scrutiny we might need for a new regulator of this type. I am also grateful to the noble Lord, Lord Norton of Louth, for waiting so late to contribute, particularly given his complete lack of interest in football. There is a real value in hearing from people who are interested in regulation and what makes good legislation when we look at something where there is a risk that noble Lords—or anyone looking at the legislation—might approach it from the perspective of themselves as a fan, rather than what we need to have, which is good legislation, a good regulator and effective regulation.

I am also grateful to my noble friend Lady Taylor of Bolton for her contribution. Her expertise has been recognised by other noble Lords as well. I am keen to reflect on these contributions and the points raised by the noble Lords, Lord Pannick and Lord Addington, ahead of Report. I will take the points about scrutiny and accountability away for further consideration. I will go through a number of points—unfortunately, I am going to keep noble Lords a little longer—but I want to reflect properly on the points that have been raised.

Going back to the amendments tabled by the noble Lord, Lord Goodman, unfortunately, while we completely agree that the efficacy of the regulator should be monitored and evaluated—and I am happy to discuss this point further with the noble Lord—I cannot stress enough how strongly we disagree with the use of a sunset clause in this context. I agree with my noble friend Lady Taylor that these amendments would create a perverse incentive for the regulated industry to deliberately act in bad faith from the outset in the hope that the regulator fails to achieve its objectives and is therefore scrapped. We do not want, through the design of the legislation, to encourage or risk encouraging any non-compliance or vexatious behaviour by clubs and competition organisers who might be setting out with the intention of frustrating the regulator. We want to create the right conditions so that clubs act in a sustainable way, and we feel that the approach adopted is the right one.

On the other points raised by the noble Lord, Lord Goodman, surely, we want a regime that creates incentives for clubs to comply and improve sustainability. Under the amendment, the panel would make the decision, but there would still be an incentive for industry to show that the regime is not working. I also had concerns about the noble Lord saying that this would not be a problem because the Secretary of State would appoint the panel. If the Secretary of State can appoint a panel, knowing that it is not going to act against what the Secretary of State might have already decided, that is not a good panel. Therefore, with respect, I cannot agree with the noble Lord’s comments.

Giving the regulator a deadline of five years would also create the incentive for it to become more interventionist. Knowing it will be judged on whether it was meeting its objectives within a fixed period, the regulator could feel compelled to pursue more severe short-term solutions; this would be an undesirable unintended consequence. In addition to introducing these perverse incentives on both sides, a sunset clause would create inherent uncertainty in the market, as default expiry of the legislation in five years’ time, unless regulations are made to the contrary, would leave the industry and investors unclear on what basis they should plan for the future. We do not want to leave the Government or Parliament open to persistent lobbying to trigger the sunset clause.

The noble Lord, Lord Goodman, raised the important issue of accountability. This is already built in through the “state of the game” report and the annual report. However, I do recognise the point made by the noble Lord, Lord Markham, that these are produced by the regulator, albeit that the “state of the game” report will be based on data from the industry. While I understand the noble Lord’s concerns, the Government believe that the current measures already ensure sufficient scrutiny of the regulator and that it can be held to account if necessary—for example, through the DCMS’s role as sponsor and the requirement for an annual report to be laid before Parliament.

Parliament’s Select Committees can also conduct inquiries into any aspect of the work of the regulator once it is established and take evidence on such matters. The Government believe, given the aforementioned risks associated with the sunset clause, that it would not be an effective way to ensure accountability. For the reasons I have set out, I hope the noble Lord will withdraw his amendment.

Lord Goodman of Wycombe Portrait Lord Goodman of Wycombe (Con)
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My Lords, I am very grateful to all those who have spoken in this appropriately sober debate, especially to my noble—and non-footballing—friend Lord Norton for coming in and sharing his expertise with us. I suppose it is scarcely surprising that those noble Lords who are sceptical of state regulation favour the sunset clause, and those who are supportive of it are not. The Minister did not fully answer the argument I put to her. I find it hard to see why a panel appointed by her, which could be trusted to be fair-minded rather than biased one way or the other, would deliberately frustrate the regulator if that panel of experts thought the regulator was right. But these are matters to which we may be able to return on Report.

In the interim, I will simply make two points. First, it is very encouraging to see that there is agreement throughout the Committee that there needs to be more effective post-legislative scrutiny. This point was made briefly but very forcefully by the noble Lord, Lord Pannick. My challenge to the noble Baroness, Lady Taylor, is this: if noble Lords do not like the sunset clause as a means of post-legislative scrutiny, let us come up with something else specific, rather than simply issue the general wish that things can somehow be made better.

Finally, a noble Lord said, “Fans want this”. Once again, I say that something like 33 million people watch football. Some of them will be unaware that this is coming down the tracks. I predict that many fans will find themselves in the position of the noble Lord, Lord Birt. I suspect that he has sat through more of this Committee than I have—and I have sat through a great deal of it—very quietly assessing what is going on. He is pro the principle of independent regulation, as licensed by the state, whereas I and many of my noble friends are either sceptical or opposed. But he has recognised, as we have dug more deeply into the weeds of this matter, that it is problematic.

I am sure we will return to these problems on Report. In the meantime, I beg leave to withdraw my amendment.

Amendment 341 withdrawn.
Amendment 342 not moved.
Clause 100 agreed.
House resumed.
Bill reported with amendments.

Renters’ Rights Bill

Wednesday 15th January 2025

(3 days, 8 hours ago)

Lords Chamber
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First Reading
23:27
The Bill was brought from the Commons, read a first time and ordered to be printed.
House adjourned at 11.27 pm.