Football Governance Bill [HL]

Committee stage
Wednesday 15th January 2025 Lords Chamber

Committee (7th Day)

Relevant document: 8th Report from the Delegated Powers Committee

18:20

Clause 60: The mediation stage

Amendment 295A

Moved by

[Lord Birt]

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 (CB)]

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 (Con)]

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 (LD)]

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 (Con)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (CB)]

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 (Con)]

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 (Con)]

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

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)]

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 (CB)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (CB)]

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 (Con)]

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 (Lab)]

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 (CB)]

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 (Lab)]

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 (LD)]

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 (Con)]

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 (Lab)]

Is the noble Lord familiar with the concept of solidarity?

[Lord Jackson of Peterborough (Con)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (CB)]

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

[Lord Markham (Con)]

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.

20:00

[Lord Jackson of Peterborough (Con)]

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 (Con)]

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 (Lab)]

The noble Lord is now making a distinction between solidarity and paternalism.

[Lord Markham (Con)]

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 (Lab)]

The noble Lord is obviously used to being a runner-up in these competitions.

[Lord Markham (Con)]

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 (Lab)]

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 (Con)]

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 (Lab)]

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 (Con)]

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

[Baroness Brady]

311: Clause 62, page 51, line 35, leave out “one year” and insert “three years”

[Baroness Brady (Con)]

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 (Lab)]

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

[Baroness Brady (Con)]

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 (Lab)]

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 (Con)]

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 (LD)]

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 (Con)]

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 (Lab)]

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 (Con)]

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

[Baroness Twycross]

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

[Baroness Brady]

322: Clause 84, page 68, line 15, at end insert—
“(ea) any decision made under sections 62 and 63;”

[Baroness Brady (Con)]

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 (Con)]

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 (Lab)]

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 (Con)]

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

[Lord Moynihan]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (LD)]

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 (Con)]

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 (Con)]

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 (Con)]

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 (Con)]

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 in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)]

With respect, I draw the noble Lord’s attention to the time.

[Lord Jackson of Peterborough (Con)]

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 (CB)]

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 (Non-Afl)]

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 (Lab)]

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 (Non-Afl)]

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 (CB)]

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 (CB)]

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 (CB)]

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 (Lab)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (Con)]

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 (Con)]

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 (Lab)]

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 (Con)]

It was the indicative figure given by the previous Secretary of State under our Government.

[Baroness Twycross (Lab)]

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 (Con)]

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 (CB)]

Does that not tell the Committee something about the lamentable quality of regulation that the FA currently provides?

[Lord Moynihan (Con)]

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

[Baroness Twycross]

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

[Lord Markham]

336: Clause 99, page 77, line 33, after “to” insert “subsections (1A), (1B) and”

[Lord Markham (Con)]

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 (CB)]

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 (Lab)]

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 (LD)]

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 (Con)]

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 (Con)]

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 (Lab)]

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 (CB)]

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 (Lab)]

I cannot respond to that point, so apologies for that.

[Lord Pannick (CB)]

Will the Minister write to me and put the letter in the Library?

[Baroness Blake of Leeds (Lab)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (Con)]

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 (LD)]

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 (Con)]

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 (CB)]

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 (Con)]

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

[Lord Markham]

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 (Con)]

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 (Lab)]

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 (LD)]

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 (Lab)]

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 (Con)]

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.

22:30

Amendment 341

Moved by

[Lord Goodman of Wycombe]

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 (Con)]

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 (Con)]

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 (Lab)]

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 (Lab)]

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 (LD)]

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 (Non-Afl)]

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 (CB)]

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 (Con)]

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 (Con)]

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 (Lab)]

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 (Con)]

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 (Con)]

It is late, so I am sure that all noble Lords will be pleased to know that I will keep my comments short.

[Noble Lords]

Hurrah!

23:15

[Lord Markham (Con)]

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 (Lab)]

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 (Con)]

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.