Football Governance Bill [ Lords ] (Ninth sitting)
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 17th June 2025
(1 day, 16 hours ago)
Public Bill CommitteesFootball Governance Bill [HL] 2024-26 View all Football Governance Bill [HL] 2024-26 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 17 June 2025 - (17 Jun 2025)
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
Mr French
It is a pleasure to serve under you again, Sir Jeremy, and I welcome back everyone else in Committee.
The clause sets out further details on the circumstances in which the specified competition organisers can apply to trigger the resolution process. The Government have moved on the mechanism within the backstop, which is welcomed by the leagues, but the amendments tabled in my name seek to correct some gaps in the clause. Amendment 130 would allow the relevant leagues to set a different period other than five years for the resolution process to be triggered. Amendments 128 and 129 would also allow the relevant parties to set the appropriate period for triggering the backstop.
The clause matters, not just because of what it allows, but because of what it delays. In particular, it creates a cooling-off period, a requirement that certain preconditions be met before the regulator can become involved in live disputes between football’s governing bodies and competitions. Of the conditions listed in the clause, condition 4 is especially significant. As the Bill stands, condition 4 is met only if the relevant distribution agreement between competitions—for example, between the Premier League and the English Football League—has been in force for at least five years.
We understand why the five-year test was included: the intention is to prevent the Government’s regulator from being dragged into every routine renegotiation, and to ensure that the resolution process is only triggered in relation to long-standing agreements that may have become outdated or contentious. Five years, however, is a long time in football. Broadcasting cycles, financial realities and competitive conditions can change quickly.
In that time, for example, a team such as Luton Town went from playing in League Two in the 2017-18 season, to competing in the Premier League in the 2022-23 season. Granted, the team have now fallen down the pyramid to League One again, but that helps prove that, even with parachute payments being handed out from the Premier League and potentially now being included in the resolution process, that does not stop a club from failing on the pitch or in the boardroom.
I therefore tabled amendments 128 to 130, which would allow the “applicable period” under condition 4 to be shorter than five years when two conditions are met: first, when the specified competition organisers have agreed a different period, either in the distribution agreement itself or separately; and, secondly, when both organisers have notified the regulator of that agreed period. In that case, the “applicable period” for the purpose of condition 4 becomes whatever period the organisers have agreed—rather than being fixed at five years by statute.
These are flexibility amendments, which an industry with businesses will benefit from, rather than having the inflexibility of fixing a date in statute. The Government argued that our earlier amendment to cap the pay of their new regulator was inflexible and too firmly rooted in the present day, so it would be unfortunate if the Minister were to oppose the amendment for exactly the opposite reasons. None of us would want that.
The amendment allows football’s governing bodies—the Premier League, the EFL, and others—to determine their own timelines for when they believe the regulator should be able to step in, if negotiations breakdown. It does not force earlier intervention; it simply allows the option where both parties agree. That is a consensual, common-sense reform that respects the autonomy of football’s existing institutions, while giving them the tools to resolve disputes more efficiently when necessary. It makes the clause more responsive, less rigid and more capable of reflecting the fast-moving dynamics of football finance and league relationships.
Will the Minister confirm why the Government chose to fix the five-year period in primary legislation, rather than allowing the competitions to define the appropriate timeline for regulatory intervention themselves? Does she agree that, if both parties are asking for an earlier resolution window, it is counterproductive for the legislation to prevent it? It would cause delays to the redistribution of money from one specified competition to another, which would entirely undermine the point of the regulator. If we do not pass the amendment, we risk locking football into a situation where, no matter how bad a deal becomes or how outdated a distribution agreement appears, the regulator’s hands are tied for another half a decade. They say that a week is a long time in politics, and the same is true for football. In half a decade’s time there could be—and I hope there is—a new Government, and Charlton could have returned to the Premier League and may even be in the Champion’s League final—I will try to keep it realistic; the sun must be getting to me.
As drafted, the Bill allows prolonged stalemates, growing financial resentment between divisions, and a continued lack of reform, even when both sides might privately want the regulator’s help to resolve matters. That is especially important given the recurring tensions between the certain specified competition organisers on financial redistribution, among other things. If both sides were willing to allow the Government’s regulator to assist earlier, we should facilitate that, not block it.
Regulation, especially in this context, should be a last resort, and football must be given the space to sort out its own affairs where possible. The amendment reflects that principle. It does not force the regulator into a situation early; it simply allows football competitions to agree that if things go wrong, the regulator can be invited in sooner rather than later. That is not interference but empowered self-governance, which is what we should be striving for when—as the fan-led review ultimately sought to do—we return the governance of English football back to the FA. The amendment gives clubs and competition organisers more ownership of the process, not less.
Does the Minister recognise that the amendment would incentivise early engagement and constructive negotiation, rather than prolonging the stalemates that have now become common place? Clause 57 is an important procedural gateway, but the current wording of condition 4 imposes a rigid five-year rule that may prevent the regulator from acting, even in cases where both sides want its help. The amendment would introduce flexibility and consent into the process. It ensures that the trigger point for resolution reflects the needs of the game, not an arbitrary statutory timescale set many seasons before it may actually be needed.
The amendment is limited, reasonable, and entirely in keeping with the Government’s desire for a targeted, proportionate, and respectful form of regulation. I hope that the Minister will accept the amendment based on the position she has taken on earlier amendments to the Bill.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stephanie Peacock)
It is a pleasure to serve under your chairmanship, Sir Jeremy. I will use the opportunity presented by amendment 130 to talk to another of this Government’s changes to strengthen the Bill. The Opposition amendments would amend clause 57, which sets out how and under what conditions a league can apply to the regulator to trigger the backstop.
We will discuss clause 57 in more detail in the next group, but in brief, one of the conditions for triggering the backstop is that there has been no new distributions agreement between the leagues for at least five years. The amendments seek to reintroduce drafting from the previous version of the Bill that allowed leagues to reach an agreement to extend that five-year period. The Government removed that drafting when we introduced the Bill, because in our judgment five years is an appropriate period.
Our strong preference, of course, is for football to reach an agreement without any regulatory involvement. We have done everything in our power to push for an agreement and continue to urge everyone to find a solution that works for all of football. The five-year period in the Bill has been chosen to ensure the regulator can only intervene in cases where a sufficient agreement has not been reached for a significant period of time. We believe that this is the correct amount of time.
That is not to say, however, that the backstop will be triggered every five years. This is not the only threshold that has to be met to trigger the process. It is a two-stage test. The regulator must also see a tangible risk to its ability to deliver its objectives before the process can be triggered. If the leagues agreed a good deal for a period longer than five years, while a league could still apply to trigger the backstop, the threshold of jeopardising the regulator’s objectives would not be met and the backstop would not be triggered.
There is an inherent imbalance of negotiating power between the distributing leagues and the recipient league. Allowing industry to contract out of the backstop completely could inhibit agreements that appropriately finance the football pyramid while preventing involvement from the regulator. That would badly damage the regulator’s ability to protect and promote the sustainability of English football and leave it unable to address what is currently a clear issue in the industry. For the reasons I have set out, I hope the hon. Member for Old Bexley and Sidcup will withdraw the amendment.
Question put, That the amendment be made.
Stephanie Peacock
Clause 57 sets out a basic set of conditions that must be met for a league to be allowed to apply to the regulator and request that the backstop be triggered. The regulator cannot unilaterally trigger the backstop process; it must receive an application from one of the leagues under clause 57. This clause sets out that a regulated league can apply to trigger the process if there are unresolved issues between it and another league in relation to the distribution of relevant revenue. We discussed the definition of relevant revenue when we debated clause 56.
For a league to apply to trigger the backstop, at least one of the four conditions outlined in clause 57 must be met. Those four conditions are as follows: no distribution agreement is in place between the relevant leagues; there has been a material reduction in the amount of relevant revenue received by a relevant league since the last distribution agreement was reached; there has been a material change in circumstances in relation to the relevant revenue received by one or both relevant leagues since the last distribution agreement was reached; and at least five years have passed since the last distribution agreement between the relevant leagues came into force.
Each of the conditions is designed to mitigate a specific risk to the sustainability of the pyramid. Those are a complete absence of any distribution deal; a reduction in distributed revenue; a significant change in the circumstances surrounding distributions; and an old deal no longer fit for purpose but unable to be refreshed because the industry cannot agree. The conditions set an appropriate framework for when a league can apply to trigger the process. They help to avoid vexatious applications or fishing expeditions when a perfectly good, up-to-date industry deal is already in place. That is why clause 57 should stand part of the Bill.
Clause 58 specifies procedural steps and requirements. The applicant league has to comply with those for its application to trigger the backstop to be valid. Before making an application, the league must first notify the other relevant league and the regulator of its intention. That prevents either league from being blindsided by the process being triggered. The notice must list the issues in dispute, explain why one of the relevant conditions in clause 57 is met, and invite representations from the other specified competition organiser. That act, in and of itself, may help to trigger useful discussion between the leagues, as clearly outlining the issues preventing an agreement from moving forward will bring the leagues closer to compromise. After the other relevant league has had a chance to make any representations, the applicant league may apply to the regulator to trigger the process. It must include the other league’s representations with its application. That ensures that the regulator has the information that it needs from both leagues, so that it can make a considered decision on whether to trigger the backstop. The exchange of representations is also an early opportunity for the leagues to come to an agreement themselves, before the process is triggered. Ultimately, this clause is about creating transparency and promoting dialogue, which sets the tone for the rest of the backstop process.
Clauses 57 and 58 together outline the requirements that must be met for a league to apply to trigger the backstop process. The requirements in clauses 57 and 58 are just the first hurdle that a league has to clear in order for the regulator to consider its application. In order to actually trigger the backstop the regulator then has to assess whether the application meets certain legal tests set out in clause 59, which we will discuss further in a later group. I beg to move that clauses 57 and 58 stand part of the Bill.
Question put and agreed to.
Clause 57, as amended, accordingly ordered to stand part of the Bill.
Clause 58
Applications under section 57: procedural and other requirements
Amendments made: 30, in clause 58, page 48, line 7, at end insert—
“(za) set out details of the question or questions for resolution mentioned in section 57(1) to which it is intended the application will relate,”
This amendment provides that a notification under clause 59(1)(a) must set out details of the question or questions for resolution to which it is intended the application will relate.
Amendment 31, in clause 58, page 48, line 8, leave out “the application relates” and insert “that question relates or those questions relate”.
This amendment provides that a notification under clause 59(1)(a) must specify the qualifying football season or season to which the question or questions for resolution relate.
Amendment 32, in clause 58, page 48, line 12, leave out paragraph (c)
This amendment is consequential on Amendment 30.
Amendment 33, in clause 58, page 48, line 22, at end insert—
“(za) set out details of the question or questions for resolution mentioned in section 57(1) to which the application relates,”
This amendment provides that an application under clause 57 must set out details of the question or questions for resolution to which the application relates.
Amendment 34, in clause 58, page 48, line 23, leave out “the application relates” and insert “that question relates or those questions relate”.
This amendment provides that the application under clause 57 must specify the qualifying football season or season to which the question or questions for resolution relate.
Amendment 35, in clause 58, page 48, line 27, leave out paragraph (c)—(Stephanie Peacock.)
This amendment is consequential on Amendment 33.
Clause 58, as amended, accordingly ordered to stand part of the Bill.
Clause 59
Decisions by the IFR on applications under section 57
Amendments made: 36, in clause 59, page 48, line 33, leave out “the qualifying football season or seasons” and insert “one or more of the questions for resolution”.
This amendment provides that the IFR must decide whether the resolution process should be triggered in relation to one or more of the questions for resolution to which the application under clause 57 relates.
Amendment 37, in clause 59, page 48, line 33, after “relates” insert “(or a modified version of one or more of those questions)”.
This amendment provides that the IFR may decide that the resolution process should be triggered in relation to a modified version of one or more of the questions for resolution set out in the application under clause 57.
Amendment 38, in clause 59, page 48, line 36, leave out “qualifying football season” and insert “question or questions for resolution”.
This amendment provides that the IFR must be satisfied that the conditions in clause 59(2) are met before deciding to trigger the process in relation to a question or questions for resolution.
Amendment 39, in clause 59, page 48, line 38, leave out “that season” and insert “each season to which the question relates or the questions relate”.
This amendment is consequential on Amendment 38.
Amendment 40, in clause 59, page 48, line 41, after “triggered” insert “in relation to the question or questions for resolution”. —(Stephanie Peacock.)
This amendment is consequential on Amendment 38.
Mr Clive Betts (Sheffield South East) (Lab)
I beg to move amendment 93, in clause 59, page 49, line 1, after “(c)” insert
“has exercised any of the IFR’s other functions under this Act in order to resolve the question or questions for resolution and such question or questions remain unresolved, or”.
It is a pleasure to be here with you in the Chair, Sir Jeremy. I will pass this over to the Minister. This is just an attempt to slightly clarify and strengthen the role of the regulator and the point of intervention. It would be helpful to see how this fits in with the way that the Minister has reconfigured the clause with her amendments.
Stephanie Peacock
I thank my hon. Friend for his amendment. We will discuss clause 59 in more detail in the next group. It sets out the tests that must be met for the regulator to justify accepting a league application so that it can then trigger the backstop. The amendment adds to clause 59 to give the regulator an additional basis on which to justify triggering. It could accept an application to trigger the backstop if it has tried and failed to resolve the disputed distribution issues using its other regulatory functions. I want to reassure my hon. Friend that the amendment is not necessary. Clause 59 already allows the regulator to accept an application to trigger if it considers that its other functions would not be able to resolve the disputed issues in a reasonable timeframe. That appropriately covers the scenario set out in my hon. Friend’s amendment.
If the regulator has already tried and failed to resolve a distribution issue using its other functions, that would be a reasonable basis for it to conclude that its other functions were not up to task. The existing test in clause 59 could then be met and an application trigger at the backstop could be accepted. It is important to clarify once again that the regulator would not be triggering the process itself. This is simply a clarification regarding a situation in which an application was submitted and the regulator had tried and failed to resolve the issue outlined previously using its other powers. In this situation the regulator would still have the discretion as to whether or not it triggered the process based on whether the application met the other high threshold. I hope this provides some reassurance. We will discuss this a little further in the next group.
Mr Betts
We are off to a good start this morning. I am 100% convinced that the Bill already does what I was seeking it to do. I hope we are 100% convinced on the other issues that we debate later on. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 41, in clause 59, page 49, line 4, after “triggered” insert “in relation to one or more of the questions for resolution”.
This amendment is consequential on Amendment 38.
Amendment 42, in clause 59, page 49, line 10, at end insert—
“(4A) Where the IFR is minded that the resolution process should be triggered, the IFR must consult the Football Association on the question or questions for resolution in relation to which it is minded to trigger the process.”
This amendment requires the IFR to consult the Football Association on the question or questions for resolution in relation to which it is minded to trigger the process.
Amendment 43, in clause 59, page 49, line 15, at end insert—
“(zi) the question or questions for resolution in relation to which the IFR is triggering the resolution process,”
This amendment provides that the notice under clause 59(5) must set out the question or questions for resolution in relation to which the IFR is triggering the resolution process.
Amendment 44, in clause 59, page 49, line 16, leave out “the resolution process relates” and insert “that question relates or those questions relate”.
This amendment provides that the notice under clause 59(5) must set out the qualifying football season or seasons to which the question or questions for resolution relate.
Amendment 45, in clause 59, page 49, line 18, leave out sub-paragraph (ii)
This amendment is consequential on Amendment 43.
Amendment 46, in clause 59, page 49, line 18, at end insert—
“(iia) how the IFR has taken account of any representations, copies of which accompanied the application under section 57 by virtue of section 58(5)(d), in setting out that question or those questions, and”
This amendment requires the IFR to set out in a notice under clause 59(5)(b) how it has taken account of any representations when setting out the question or questions in relation to which it is triggering the resolution process.
Amendment 47, in clause 59, page 49, line 20, leave out “the question or questions for resolution” and insert “that question or those questions”
This amendment is consequential on Amendment 43.
Amendment 48, in clause 59, page 49, line 21, at end insert—
“(5A) Where any of the questions for resolution set out in the notice differ from those to which the application made under section 57 relates, the notice must set out the extent of, and reasons for, those differences.”—(Stephanie Peacock.)
This amendment requires the IFR to set out the extent of, and reasons for, any differences between the question or questions for resolution set out in a notice under clause 59(5)(b)(ii) and the question or questions for resolution set out in an application under clause 57.
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
As we discussed on clauses 57 and 58, the backstop can be triggered only in response to an application by a league. Clause 59 sets out how the regulator will assess an application to trigger, how it will decide whether to trigger at all and how it will determine exactly which issues need to be resolved under the backstop. The backstop has been carefully designed to deliver the right outcomes with minimal regulatory involvement. As part of this, it has been designed to be used as a last resort. That is why this clause introduces high statutory thresholds that must be met in order for the backstop to be triggered.
In particular, the clause sets out that the regulator must have reasonable grounds to suspect that its ability to advance at least one of its objectives would be jeopardised if the backstop were not triggered. The regulator must also consider whether other regulatory tools could be utilised to resolve the issues instead. The regulator must be satisfied that at least one of the conditions in clause 57—which we have already discussed —is met.
Mr French
I will be brief. I echo some of the Minister’s comments. His Majesty’s official Opposition welcome any efforts to ensure that the backstop process is triggered only as a last resort and we will carefully monitor how that works in future.
Question put and agreed to.
Clause 59, as amended, accordingly ordered to stand part of the Bill.
Clause 60
The mediation stage
Amendments made: 49, in clause 60, page 50, line 4, after “resolution” insert
“set out in a notice under section 59(5)(b)(zi)”.
This amendment clarifies that the question or questions for resolution subject to the mediation process are those set out in a notice under clause 59(5)(b)(zi).
Amendment 50, in clause 60, page 50, line 6, leave out
“the question or questions for resolution”
and insert
“that question or those questions”.
This amendment is consequential on Amendment 49.
Amendment 51, in clause 60, page 50, line 15, after “resolution” insert
“set out in a notice under section 59(5)(b)(zi)”.—(Stephanie Peacock.)
This amendment clarifies that the question or questions for resolution subject to the mediation process are those set out in a notice under clause 59(5)(b)(zi).
Question proposed, That the clause, as amended, stand part of the Bill.
Stephanie Peacock
Once the backstop is triggered, clause 60 requires the leagues to enter mandatory mediation as a first stage. As we have made clear, the Government’s strong preference is for a football-led solution to the financial distribution issues. I welcome the shadow Minister’s comments along those lines.
A mediation stage gives the relevant leagues an opportunity to reach an agreement with minimal intervention from the regulator. The stage is designed to facilitate meaningful negotiation and compromise between the parties. To this end, it encourages the leagues to appoint a mutually agreed mediator, but if they cannot, it ensures the regulator will appoint someone with the appropriate skills and experience.
The leagues can end the mediation process for multiple reasons. Most notably, the mediation—and the process as a whole—will end if an agreement is reached. However, the mediator can also end the process if it is not producing meaningful, good faith negotiations. The process can also end if it reaches the 28-day deadline. If the leagues are engaging in meaningful discussion but the deadline is reached, the mediator can extend the process by up to another 28 days.
We believe that process is flexible enough to encourage negotiation but concrete enough to ensure the backstop remains an effective regulatory intervention. I commend the clause to the Committee.
Question put and agreed to.
Clause 60, as amended, accordingly ordered to stand part of the Bill.
Clause 61
Final proposal stage
Mr Betts
I beg to move amendment 3, in clause 61, page 50, line 40, leave out
“require any final proposal to be accompanied by supporting evidence”
and insert
“require any final proposal to—
(i) be accompanied by supporting evidence;
(ii) be consistent with the resolution of any relevant issues identified in the Regulator's most recently published State of the Game report;
(iii) give effect to the views of any relevant specified competition organiser which has not been invited pursuant to clause 61(4)(c) to submit to the committee a final proposal; and
(iv) advance the Regulator's objectives in section 6, consistent with its general duties and Regulatory principles in sections 7 and 8.”
This amendment would set additional requirements to accompany any final proposal for the resolution process.
This is quite an important issue, because it concerns the principle and basis on which the regulator comes to a decision. My amendment simply sets out certain things that the regulator must have regard to and take into account when making that decision.
First, there should be supporting evidence—that seems straightforward. Secondly, and importantly, we ought to keep anchoring what the regulator does back to the essence of this proposed legislation and the regulator’s purpose. Clause 6 very clearly sets out the regulator’s objectives of promoting the financial soundness of regulated clubs and the financial resilience of English football, and I think we can all agree that that is what the regulator should be doing and seeking to achieve.
Surely, therefore, when we are talking about the detail of how the regulator reaches a final decision on the backstop, we ought to be absolutely clear that it must have foremost in its mind those initial objectives. Otherwise, what is the point of the regulator and its objectives? Why are we in this Committee if not to address the financial soundness of clubs and English football as a whole?
My amendment mentions considering the views of others who may not be formal parts of the backstop mediation process. It provides that the regulator would not have to listen to them, but could
“give effect to the views”
of the Football Supporters’ Association, the Professional Footballers’ Association or others who may have views. Those groups would not determine what the regulator decides to do, but surely the regulator has to take account of their views.
I hope that the Minister gives serious consideration to at least making sure that, when reaching that final and absolutely crucial decision on financial distribution, the regulator’s aim should be to deal with the problems of the financial soundness of clubs and the overall financial soundness and wellbeing of English football.
Stephanie Peacock
I thank my hon. Friend for his amendment. Although we are still keen for an industry deal on distributions, part of getting it right is ensuring that the regulator is best placed to act if needed. As the Government amendments that we are due to debate in the next two groups show, we have reflected on many of the same points. We think it is right that any distribution order shows how it aligns with the findings of the state of the game report and with the regulator’s objectives and duties, including the duty to have regard to its regulatory principles.
That is why Government new clauses 3 and 4, which amend the final stages of the backstop, already address these issues. We will discuss the new clauses in more detail shortly, but they clearly require that the regulator sets out any relevant findings from the state of the game report and that any league proposals include evidence about how they address those findings. They will also require that any order the regulator makes addresses the state of the game findings, and they highlight the importance of the regulator’s objectives and its general duties, including the regulatory principles.
I also make clear again that, after we set out the competitions in scope of the regime, the regulator’s objectives, namely to protect and promote the heritage and financial resilience and soundness of English football, will apply to the top five divisions of English men’s football. When creating a distributions order between any two leagues, the regulator must have due regard for the wider impact the order may have on all the clubs and leagues it regulates. The regulator must make an evidence-based decision that takes into account all relevant considerations, and its final decision must advance its objectives.
It is also important to clarify that, while the order will be limited in scope to the questions set out when the process is triggered, it will not be without context. Given the important role a satisfactory distributions order will play in the future of the entire sport, the regulator will need to come to a solution that works for all of football.
For those reasons, I cannot accept my hon. Friend’s amendment, but I hope that his concerns will be appropriately addressed by the Government amendments that we will debate shortly.
Mr Betts
I am pleased to see that the Minister actually read my amendment and formulated her new clauses accordingly. What she says is reassuring. As she just said, there is no point in the regulator doing a state of the game report unless it has regard to it when coming to a view about financial distribution. That is absolutely clear from what the Minister has said, and that is what the regulator must do. On the basis of those assurances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
Over the course of engagement on the Bill, specifically in the other place, we have heard concerns about the risk posed by the binary choice distribution mechanism outlined in the Bill. While I have always acknowledged the merits of the previous binary mechanism in the Bill, specifically the powerful incentive it created for the leagues to come to an industry-led solution, we want to provide the industry and its investors with the certainty they need. Although the previous model had significant strengths, the uncertainty it introduced into the process made it higher risk than other options.
We want to get this policy right and we will always be open to sensible, well-made points on the design of the regime. I thank Lords Birt, Pannick, Thomas and Burns for their thoughtful scrutiny of this part of the Bill in the other place and for their comprehensive suggestions. Their engagement has been invaluable in the continued development of this policy.
In the light of that work, we are making targeted changes to the backstop mechanism, primarily through the replacement of clauses 61 and 62 with Government new clauses 3 and 4. The new clauses will move the mechanism from a binary choice mechanism to a staged regulator determination. In our new model, the regulator can impose its own solution, drawing on the leagues’ proposals, the state of the game report and other evidence in order to best deliver the regulator’s objectives. This ensures a more collaborative, data-driven solution.
New clause 3 sets out what happens if there are still unresolved questions between the leagues when mediation ends. It requires the regulator to invite proposals from the leagues and sets a framework and timeframes for the regulator and leagues to collaborate towards a solution. The Government’s strong preference is for the industry to come to an independent solution, so the proposal stage is designed to incentivise that. The regulator will have to outline clearly the expected scope of the proposals, set by the questions for resolution that we have discussed previously. It must also set out any relevant findings from the state of the game report. That will ensure that proposals remain focused on addressing the most pressing issues facing the game.
League proposals must be shared both with the regulator and between the disputing leagues themselves. That will allow for a more fruitful negotiation, as the leagues will be more informed about each other’s position on core issues. Leagues will also be able to submit revised proposals, ensuring both sides have the best chance possible to outline their position to the regulator, and allowing the regulator the opportunity to request additional relevant information.
That structure will ensure the regulator is in the position to make the best and most evidence-based decision possible while driving the leagues closer together, encouraging them to come to their own agreement. For those reasons, I hope hon. Members will support the new clause.
Mr French
I will not repeat the comments the Minister has made, but we also believe that this new mechanism is an improvement on the previous one, in line with feedback from the other place and from the leagues. The new clause would allow modified proposals to be submitted to the football regulator and for more of a negotiated settlement rather than a binary one. The only question we have at this stage, because we will have to see how this works in practice, is about the criteria the regulator would be looking to apply when selecting one party’s proposals over another. What does the Minister envisage that will look like?
Stephanie Peacock
I am grateful to the shadow Minister for his general support for this change. He is absolutely right to acknowledge that it comes from the other place, but also from working with various stakeholders, in particular the leagues, which have welcomed it.
The regulator must follow its objectives and duties at all times and criteria that simply restate those obligations are unnecessary. We did consider more specific criteria but did not want to be overly prescriptive, so I draw the attention of hon. Members back to the regulatory principles in the Bill and the state of the game report.
Question put and negatived.
Clause 61 accordingly disagreed to.
Clause 62
Distribution orders
Lincoln Jopp (Spelthorne) (Con)
It is a pleasure to serve under your chairmanship Sir Jeremy. I remind the Committee of my entry in the Register of Members’ Financial Interests. Unlike the hon. Member for Rushcliffe, I chose my tie with purpose this morning, to celebrate both the fact that this might be the last day of the Bill Committee and also events in Atlanta last night.
What we have seen is the thin end of the wedge. I am alive to the arguments about the disparity that parachute payments create in the overall economy of football. However, this Bill is undoubtedly the thin end of the wedge. It will come as no surprise to Members that I am a Conservative, and therefore I think the best form of regulator is competition. We all just ought to watch, because if the regulator has parachute payments within its purview, what is next? It will be agents’ fees, TV rights carve-ups, finishing position bonuses and cut prize money. Seeking to run football as some sort of socialist command economy will come unstuck. I put on record my concern that that is exactly what the Bill seeks to do.
Stephanie Peacock
The amendments deal with the final stage of the backstop mechanism. I will respond to the shadow Minister, and then I will respond to the wider debate, including to my hon. Friend the Member for Sheffield South East.
The final stage of the backstop mechanism is when, if the leagues have not been able to agree a complete deal themselves, the regulator will make an order to resolve whatever issues remain. That stage is set out in clause 62, and Members have tabled amendments relating to their concerns about the existing clause 62. The Government have tabled new clause 4, which would entirely replace clause 62, so the shadow Minister need no longer be troubled by many of the concerns he has set out. He was particularly bothered by clause 62(1)(c), but that will be taken out in its entirety. Our new clause 4 addresses many of the concerns reflected in hon. Members’ amendments, and I hope I can satisfy the Committee that new clause 4 is a positive change to the final stage of the backstop.
We should remember that by this stage of the backstop process the regulator will have assessed an application and representations from the leagues, set out the scope of the backstop by defining the questions of resolution, and highlighted the relevant findings in the state of the game report. The leagues will have been through mediation to resolve those questions. They will have been asked to exchange proposals to solve any questions outstanding after mediation, giving them another opportunity for compromise and negotiation.
New clause 4 sets out how the regulator will create a distribution order as a last resort if, after all those stages, the leagues cannot strike a deal. The regulator will first have 60 days to create a provisional order. We expect that during that period it will engage with the leagues as necessary to keep the process as collaborative as possible. Even at that stage, the regulator can continue to encourage an industry deal. Unlike the binary “winner takes all” model in clause 62, new clause 4 allows the regulator to design its order based on the evidence and drawing on any league proposals submitted.
The order the regulator designs must adhere to clear principles: it must not place an undue burden on league commercial interests; it must observe a delay before any reduction in parachute payments—I will address that in a moment; it must have regard to any duly submitted league proposals; and it must explain how it addresses relevant state of the game findings. The regulator’s objectives and general duties are paramount.
The leagues will then be able to submit representations on the provisional order. That feedback will help the regulator to shape an order that works for industry. The regulator will consider the representations and finalise all that into a full distributions order. That order will take into account any relevant issues raised by the state of the game report, the evidence that the regulator has gathered throughout the process, the engagement it has had with the leagues and any proposals they have submitted. The regulator will be best placed to design a solution that addresses the problems it identifies and delivers on its objectives.
If the backstop reaches that point, it is because the industry has failed to strike a deal, but we still want the solution to be as industry-led as possible. The regulator will be required to have due regard to the league proposals submitted. It can choose to directly lift aspects of the proposals into its order, but it is not required to adopt a league proposal wholesale. That is a slightly more flexible system that moves away from the inherent risk of a “winner takes all” model, and allows the regulator to carefully design a solution.
The model also allows for more evidence-based and data-driven decisions. It gives the regulator enough discretion to ensure that any order is as effective as possible in addressing the core financial issues facing the game. We are confident that the regulator, keeping in mind its objectives to promote sustainability and its duties to avoid adverse effects on growth and sporting competitiveness, can come to a balanced solution.
I thank everyone who has engaged meaningfully with this part of the Bill throughout its passage to help us to reach this version of the model. I am confident that the new approach is the right one. In light of that, I hope that Members will support the addition of new clause 4 and the consequential Government amendments in this group.
On the non-Government amendments, I will first address those tabled by the hon. Member for Old Bexley and Sidcup, and then those tabled by my hon. Friend the Member for Sheffield South East. Opposition amendment 125 addresses the regulator’s ability to terminate the distribution process if it does not receive a viable proposal from either league, but Government new clause 4 already gives the regulator discretion to deal with that scenario. As I have said, under new clause 4, the regulator need not accept either league’s proposal wholesale. It can design its own solution, drawing on the league proposals as appropriate. We think that greatly increases the chances that the process will reach a satisfactory conclusion, and ensures that football will not go without a distribution deal. On that basis, I ask for the amendment to be withdrawn.
Lincoln Jopp
The Minister said that just because the Bill enables the regulator to consider parachute payments, that does not mean that it will. The Minister is in the unique position of being the person who is going to appoint the football regulator, because the Secretary of State has stood down from that decision. Will the Minister ask the person selected to be the regulator whether they would like to exercise the power—whether “can” will mean “will”?
Stephanie Peacock
I will discuss that in more detail in a moment, but I gently say to the hon. Member that it will not be a personal decision by the regulator; as we have discussed, the regulator will make a decision based on the findings of the state of the game report and will be guided by the regulatory principles. I do not want to get drawn into speculating whether they will or will not do that. We need the state of the game report to be done quickly, so that if the backstop is triggered, the regulator can consider the findings in the whole and make an informed decision.
On amendment 4, as the Government amendments show, the regulator will issue a notice that sets out the relevant findings of the state of the game report, which will need to be addressed by a distribution order, and the order must explain how it addresses those findings. We are absolutely aligned on the intention behind amendment 5. This exact change—to ensure that the regulator need not adopt league proposals wholesale but can instead design its own solution—is core to new clause 4.
Amendment 141, tabled by my hon. Friend the Member for Sheffield South East, seeks to shorten the transition period for parachute payments. While a timely distribution order is a priority, we must ensure that there are adequate protections for relegated clubs, to prevent a cliff edge. That is why the Bill guarantees that there can be no reduction at all in parachute payments, for an absolute minimum of one year from the end of the first season to which a distribution order applies. Shortening that period would give relegated clubs less time to plan financially, putting them at greater risk of financial trouble. That is, after all, the issue we are seeking to address through the legislation. I know that may not be the answer that my hon. Friend wants, but for those reasons I hope he will withdraw his amendments.
Mr Betts
I am still not quite sure how—given that all clubs now know that a regulator will be appointed, that the leagues and clubs know that financial distribution is at the heart of the Bill, and that a club can be promoted during the two-year period—any club can start preparing for that situation. At the beginning of that period, the club would not know whether it was going to get parachute payments, because it could be promoted and relegated in that period. I do not think the idea holds that two years gives certainty to clubs.
I am really worried about the idea of signalling, at this stage, that there will potentially be no change in financial distribution until the end of this Parliament. I do not know how far the Minister has thought that through, but if we want to encourage the Premier League and the EFL to sit down and reach an agreement—if that is the preferred way forward, and I think it is—surely the idea that the process can be extended by not reaching an agreement until beyond the next election is an incentive for the Premier League to do nothing. It is waiting for the pressure to come off, and the way to relieve it is simply to do nothing and hope that it goes away after the election.
Clearly, that pressure will go away if the Conservative party wins the election and implement a Bill with parachute payments not included in the regulator’s remit. That is what will happen. We were all elected to achieve change, and the change that most fans want to see is the addressing of the fundamental disparity within the English game that produces a cliff edge and all the problems in the Championship. We know how those problems need to be addressed: with the regulator’s powers in this excellent Bill. Why sit for two years after the regulator makes a decision and do nothing, when to give a year is fine?
The Minister has heard comments and concerns from hon. Friends today—Committee members who obviously have a great deal of interest in football in general and in their clubs in particular. Will she agree, as the hon. Member for Cheltenham asked, to take the matter away and give it further consideration? I do not want to push the Minister here and now on the words in my amendment, but I do want her to give an understanding that she recognises that there is a problem that needs to be addressed to satisfy her colleagues.
Stephanie Peacock
I assure my hon. Friend that I have thought about it carefully—that was a fair challenge. Indeed, when in opposition, I tabled an amendment to the previous Government’s Bill. I think we have very much strengthened the legislation by ensuring that parachute payments are in scope. We thought it odd to have a Bill on the financial sustainability of football without including them. That is why this Government have strengthened the Bill.
I completely acknowledge the strength of feeling on the matter. I say again that the regulator can consider it, but that does not necessarily mean that it will. It will need the evidence in the state of the game report. I appreciate and completely understand why hon. Members have shared examples from their own clubs, and are speculating on the impact of parachute payments, but that is not my role today. It is up to the state of the game report and the independent regulator to come to that decision, if the backstop is triggered.
Mr Betts
Would the Minister not therefore give the regulator a discretionary power to decide when it should be implemented, after either one year or two years? We will have a regulator who will be on top of the job and will have seen all the issues and evidence, in detail that we cannot see in Committee. Will the Minister consider giving flexibility and discretionary powers to the regulator?
Stephanie Peacock
No, I am afraid I am not in a position to do that. It is a one-year period from the end of the first season to where the order applies. We think that is a balance. It is obviously a challenging issue, with strong feelings, but formulating this part of the Bill is about striking a balance. We believe we have the right one, but I acknowledge my hon. Friend’s concerns.
Mr French
Given the previous debate, the Minister will be pleased that I am willing to withdraw amendment 125, so she gets a win out of that one. I listened carefully to her comments on removing that subsection (1)(c), and, in the light of that and in a spirit of goodwill, I will withdraw the amendment.
It would be helpful if the Minister would explain what checks and balances there will be surrounding the football regulator’s final determination. The legislation will leave it entirely up to the football regulator how best to determine the questions of resolution, with the only guardrail seemingly being that the distribution order should not place an undue burden on the commercial interests of any specified competition organiser, and the distribution order should not result in a lower amount of relegation revenue being distributed to a club during the relevant period than would have been distributed to the club during that period had the order not been made. It would also be helpful if the Minister could outline whether either of the parties would be offered the right of appeal, following a distribution order from the regulator.
Stephanie Peacock
We will come to about appeals and challenges shortly, so we might be able to explore that in further detail. I have a detailed breakdown of the process; in the interests of time, I will not read it out, but I will send a copy to the hon. Gentleman, because I think it will answer his question.
The Chair
We now come to the decisions on amendments 141 and 5. Does the hon. Member for Sheffield South East wish to pursue either of them?
Mr Betts
I am disappointed by the Minister’s response. She has generally been very helpful in trying to acknowledge concerns when they have been raised, and in agreeing to have a look at them. I will not press my amendments to a vote at this stage, but I will bring them back on Report.
The Minister is entirely reasonable and open-minded on these matters, and has engaged in discussion on all sorts of things, but I worry that a handful of clubs in the Premier League are determining what happens with distribution orders, which is disappointing. I will return to this issue in due course, because I do not think the Minister’s approach on this clause has been how she has approached the rest of the Bill. I am disappointed, but I will not press my amendments to a vote.
Clause 62 disagreed to.
Clause 63
Duration and revocation of distribution orders
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
It is important to build safeguards into the backstop process, and clause 63 outlines what happens if circumstances arise in which a distribution order made under clause 62 is no longer viable or necessary. To provide clarity to the leagues, any distribution order will need to specify when it comes into force and how long it is in force. In ordinary circumstances, an order will remain in force until the specified period ends, but clause 63 allows the regulator to revoke an order in exceptional circumstances. The regulator might choose to do that if there was an unexpected change to the broadcast market that meant an order was no longer fit for purpose. It is important that the Bill provides that flexibility to prevent a scenario in which an unsuitable arrangement is left to stand.
Similarly, the clause ensures that the regulator will revoke an order if a league subsequently strikes a distribution deal covering the same seasons as the order. That 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 the process. I urge that the clause stand part of the Bill.
Mr French
I have only a brief question for the Minister in the light of her comments: how frequently does she envisage distribution orders being reviewed by the regulator, and is there a risk that clubs or competitions may face financial instability due to short-term changes to distribution orders?
Stephanie Peacock
Not very often, is the short answer to the hon. Gentleman’s question, and it might be helpful if I give a brief example. If there was a very significant reduction in broadcast revenues, complying with an order might actually threaten the sustainability of clubs in the distributing league. It is not a measure we expect to be used frequently.
Question put and agreed to.
Clause 63 ordered to stand part of the Bill.
Clause 64
Review of distribution orders, payment of costs, etc
Amendment made: 54, in clause 64, page 54, line 18, leave out “62(8)(b)” and insert “(Distribution orders)(10)(b)”. —(Stephanie Peacock.)
This amendment is consequential on the insertion of NC4.
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
For the backstop process to be viable as a regulatory solution, it needs to be legally enforceable. The clause sets out that, once the regulator has made a distribution order, it must keep the relevant leagues’ compliance with the order under review and monitor whether there is any need to take enforcement against the relevant leagues if they do not comply. Without this power, the sustainability issues that the backstop seeks to address will remain present.
Although constructive engagement with clubs will be the regulator’s default first step, the clause references its ability to take enforcement action, as outlined in part 8 of the Bill, to ensure that a distribution order is upheld. Furthermore, the clause allows the regulator to make rules on how costs associated with the backstop are to be paid. That could, for example, allow it to pass on the cost of mediation to the leagues. Finally, the clause also explicitly highlights the ability, at any stage, for the leagues to come to an alternative agreement.
It is important to reiterate that the distribution order is a last resort power, only to be used in cases where football cannot come to an agreement itself. If the leagues reach an agreement to resolve the issues in dispute before the backstop process concludes, the regulator will not impose an order. If they reach an agreement after the backstop has run its course, the regulator must revoke its order. I commend the clause to the Committee.
Mr French
The clause requires the regulator to periodically review distribution orders and monitor compliance. It also gives the regulator power to determine who should bear the costs of the resolution process, including mediation and the final proposal stages.
I have the following questions for the Minister. First, who is liable for the cost of reviews, and is there a cap on the expenses that can be passed on to clubs? Secondly, what criteria will determine how costs are apportioned between parties? Lastly, will the regulator be independently audited on its cost management in conducting such reviews to minimise the costs for clubs?
Stephanie Peacock
I am grateful for those questions. As I said, the clause sets out the rules for how costs associated with the backstop are paid. It could, although it does not have to, allow for the costs of mediation to be passed on to the leagues. If it is helpful, I am happy to write to the hon. Gentleman with more detail. The clause sets out the regulator’s ability to pass the cost on to the leagues if it feels it is appropriate, but I reiterate the regulatory principle of proportionality.
Question put and agreed to.
Clause 64, as amended, accordingly ordered to stand part of the Bill.
Clause 65
Power to require information
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
Clause 65 is the first clause in part 7 of the Bill, which covers the regulator’s investigatory powers, and relates to information gathering. It gives the regulator a power to require specified information and sets out the associated procedures for obtaining the information.
Accurate, reliable and timely information will be central to the regulator’s regime. Without a full and up-to-date picture of clubs and the market, it would not be able to regulate effectively. It would be reliant on voluntary disclosures or publicly available information, which could be incomplete, outdated or selectively presented. That is why the power in the clause is important to the regulator’s regime. The clause gives the regulator the power to issue an information notice to a person, requiring the person to give the regulator specified information that it considers necessary in exercising its functions. For example, the regulator may require information in order to monitor clubs and investigate possible non-compliance with the regulatory regime.
The ability to request information is not a unique or controversial power for a regulatory body. It is common practice among regulators to seek information from the regulated industry and from those subject to investigation. For example, the Competition and Markets Authority, the Financial Conduct Authority, Ofcom and many more all have information gathering and investigatory powers, which they use regularly. Such powers are regulators’ bread and butter, without which they would be unable to effectively regulate. I commend the clause to the Committee.
Mr French
Clause 65 allows the regulator to require persons, including clubs and their officers, to provide information that may be needed for the exercise of the regulator’s functions.
I have the following questions for the Minister. First, what are the limits on the volume or sensitivity of information that the regulator can demand from clubs? Secondly, could the clause lead to regulatory overreach if requests are too frequent or expansive? Lastly, how will the cost of compliance be managed, especially for smaller clubs?
Stephanie Peacock
We acknowledge that this is a new regime for football clubs to be operating under. They already submit information to the football authorities, and we expect that submitting information to the regulator should not be any different.
As with anything it does, the regulator should act proportionately. In this context, that means that it will consider the burden that an information request might place on a club. For example, the burden might be higher for a smaller club, so the regulator might also consider the nature of the information request. For example, the volume and nature of the information required might differ depending on the circumstances of the club.
Question put and agreed to.
Clause 65 accordingly ordered to stand part of the Bill.
Clause 66
Reports on clubs by expert reporters
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
The clause gives the regulator the power to appoint a person to prepare a report on a regulated club. The person is referred to as an expert reporter, and they must have the necessary skills and expertise to prepare the report. The regulator will have expert staff and the ability to request the information it needs, but this power will allow it to draw on specialist third-party expertise and resources. For example, the expert reporter might be a firm with audit experience, where the regulator thinks that it would benefit from the firm’s ability to synthesise and analyse information gathered from the club at first hand. That could enable the regulator to exercise its functions more effectively.
The report can be on any matter that the regulator considers appropriate in order to carry out its functions. For example, the report might deal with a specific issue or with the club’s circumstances and operations more generally. The expert reporter will have the ability to require information from as many persons as necessary for the purpose of preparing the report.
The clause also covers other procedural matters relating to the appointment of the expert reporter, including rules on expenses incurred in the appointment of the reporter and requirements to co-operate with and assist a skilled person once appointed. There is precedent for such a power: the Financial Conduct Authority, for example, has the power to appoint a skilled person to a firm.
We expect that the regulator will find the power useful when it would benefit from the expert reporter’s skills to combine and interpret information gathered at first hand or on a more continuous basis over a period of time. Based on a report, the regulator may be better informed to determine whether it needs to take action on a club, or which action to take—for example, whether to impose a discretionary licence condition or to take enforcement action. I commend the clause to the Committee.
Mr French
As the Minister outlined, the clause gives the regulator the power to appoint an expert to prepare a report on a club. I have three questions for her. First, who will select the expert reporters and how with their independence be assured? Secondly, will there be cost limits or reimbursement rules in place to prevent financial strain on clubs that are required to co-operate? For example, without naming any individual companies, over the years we have seen many examples of excessive costs being applied by certain accountancy firms for such reviews. I am sure that we would not want those overburdening small clubs. Lastly, will clubs have a right to comment on or challenge a draft of the report that the expert provides before action is taken?
Stephanie Peacock
The regulator will be able, if it is thought appropriate, to provide for the club concerned to cover the costs associated with the expert reporter. That is because it will not be a commonly used tool and the cost will be specific to a single club, so, rather than all clubs picking up the cost through the levy, where possible, the regulator can ensure that the regulated party pays. However, the regulator will have discretion, and it might be the case that the club’s financial means are low and the regulator does not think it appropriate to impose additional costs on it.
Question put and agreed to.
Clause 66 accordingly ordered to stand part of the Bill.
Clause 67
Meaning of “relevant infringement”
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to consider the following:
Schedule 7.
Clause 68 stand part.
Government amendment 65.
Schedule 8.
Clauses 69 to 74 stand part.
Stephanie Peacock
This group of clauses and schedules covers the meaning of “relevant infringement”, investigations into any relevant infringements, and the regulator’s investigatory powers.
Clause 67 explains the meaning of “relevant infringement” for the purposes of the Bill by reference to schedule 7. Relevant infringements are breaches of the requirements set out in the Bill and can be investigated and enforced by the regulator. Schedule 7 sets out the cases in which a relevant infringement is committed and the persons who can commit such an infringement, which could be a club or competition organiser, but also senior individuals at a club.
The fan-led review made it clear that it was vital that those in senior positions at clubs—those who make the damaging decisions that hurt clubs—were made subject to sanctions by the regulator. That is why we have ensured that the regulator may investigate and enforce on not only clubs and owners of clubs that may commit a relevant infringement, but officers and senior managers of the club.
In addition to the information offences, which we will debate in due course, the infringements in schedule 7 are a comprehensive and complete list of the possible non-compliance that might occur in relation to the Bill and the regulator’s regime. They include failure by a club to comply with a licence condition; failure by an owner to comply with a direction to cease to be an owner; and failure by competition organisers to comply with a distribution order.
The regulator may apply sanctions in response to a relevant infringement being committed, in accordance with the enforcement provisions in the Bill, but any conduct that is not listed in schedule 7 as a relevant infringement will not warrant enforcement action by the regulator. A closed list of possible relevant infringements on the face of legislation provides up-front clarity to the regulated industry and other persons as to what conduct is not permitted. It also clarifies the limits of the regulator’s enforcement regime.
Clause 68 gives the regulator the power to undertake an investigation if it has reasonable grounds to suspect that a relevant infringement has been committed. Powers of investigation are necessary to facilitate effective evidence-based enforcement. Such powers are commonly exercised by regulatory bodies across a wide range of industries. Any enforcement action the regulator takes must be based on sound evidence. The regulator does not need to carry out an investigation before taking enforcement action if it has sufficient evidence through other means. However, the regulator will need to be able to exercise investigatory powers in cases where it does not yet have sufficient evidence to decide whether to take action.
The specific investigatory powers of the regulator are set out in schedule 8. Like the general information-gathering powers in earlier clauses, the powers are exercisable only when the regulator opens an investigation into whether a person has committed a relevant infringement. The powers will enable the regulator to obtain the relevant information that it needs to look into suspected non-compliance with its regime. It has two investigatory powers: the power to ask questions of or interview any individual, and the power to enter business premises under a warrant issued by the courts or the Competition Appeal Tribunal. Those are proportionate powers that are common across other statutory regulators; for example, the Financial Conduct Authority, Ofcom and the Competition and Markets Authority all have similar investigatory powers.
Clause 68 also sets out important procedural requirements in respect of an investigation. Specifically, the regulator is required to give notice to a person under investigation explaining the matter being investigated.
Clause 69 sets out the potential outcomes of an investigation by the regulator. When investigating, the regulator must determine whether a relevant infringement has been committed and whether there is a reasonable excuse for doing so. The regulator can close an investigation by issuing a closure notice if no infringement is found to have taken place. The notice must clearly set out the regulator’s decision and the reasoning behind it. If the regulator decides that a relevant infringement has been committed, it can take enforcement action, which we will discuss in the next group.
Clause 70 enables the regulator to accept a commitment from a person under investigation in relation to their behaviour in certain circumstances. That means that, instead of carrying on with the investigation and potential enforcement action, the regulator is able to accept a binding commitment in lieu of the investigation. For example, a club could come forward during an investigation and offer to take certain action itself to rectify a possible infringement. The clause is intended to help facilitate a participative approach in place of formal investigation and enforcement. I want to reassure the Committee that a commitment is not a way that clubs can dodge scrutiny from the regulator, or reach settlements behind closed doors in order to avoid sanctions. The regulator is not obliged to accept a commitment and is still free to investigate different behaviour, even if a commitment is accepted.
Clause 71 is supplementary to clause 70 and sets out further detailed procedures for accepting, reviewing, varying and releasing a person from a commitment. It sets out safeguards, including to keep commitments under review to ensure that they remain effective, necessary and appropriate, as well as to issue notices when taking action on commitments, which may be published in the interest of transparency.
Clause 72 imposes a duty on persons to preserve information that may be relevant to an investigation. That means that a person who knows or suspects that an investigation is being conducted or is likely to be conducted must not destroy, dispose of, falsify or conceal relevant information. As set out in schedule 9, which we will come to in the next group, failure to comply with the duty could be met by civil or criminal sanctions.
On clause 73, information is crucial to the work of the regulator. I have discussed the powers the regulator will have to obtain the information it needs. However, those powers will not cut across legal professional privilege. The confidentiality between professional legal advisers and their clients is an important protection and it would not be appropriate for the regulator to interfere with that. That is why the clause clearly sets out that the regulator cannot require any person to produce, generate or provide it with any privileged communications.
Transparency has always been a key principle when designing the regulatory regime. Clause 74 requires the regulator to publish certain notices related to investigations. The specific requirements in the clause build on the general regulatory principle of transparency in clause 8. Requiring notices to be published will enable transparency and clarity in respect of the regulator’s investigations.
Government amendment 65 to schedule 8 will ensure that the regulator can conduct investigations thoroughly and without imposing unnecessary burdens. At present, if the regulator obtains information when entering business premises under a warrant as part of an investigation, it can only keep that information for three months. On reflection, we think that is an unnecessary and arbitrary restriction. While the regulator must strive to carry out investigations promptly, we do not want the process to be curtailed artificially and risk affecting the quality or thoroughness of the investigation, nor do we want the regulator to be forced to burden clubs with repeat requests for the same information simply because the three-month deadline has passed. It is in the interests of all parties that the regulator follows best practice on the retention of information taken under warrant, including the Home Office powers of entry code of practice. This is why we tabled the amendment to remove the three-month timeframe. I urge the Committee to accept it.
Mr French
The provisions in this group all relate to infringement and the enforcement of infringements. Schedule 7 sets out the detailed definition of what constitutes a relevant infringement for the purposes of parts 7 and 8 of the Bill. It provides clarity on the types of conduct that may lead to investigation and enforcement action by the football regulator, including failure to comply with a duty under the Bill, a condition of a licence or a direction issued by the regulator. The schedule also enables further types of infringement to be specified through regulations. The intention is to provide a clear and comprehensive basis for the regulator’s investigatory and sanctioning powers.
Does the Minister think there are sufficient limits in schedule 7 to prevent the scope of relevant infringement from expanding over time without parliamentary scrutiny? Could broad definitions allow the regulator to pursue cases not originally envisaged by Parliament? How will consistency in interpretation be maintained across different clubs and cases?
Clause 68 allows the regulator to investigate whether a relevant infringement has occurred. It sets out the procedure to be followed and the types of action the regulator may take during an investigation, including seeking information and issuing notices. The clause forms part of the regulatory enforcement framework. What procedures are in place to prevent investigations from becoming unnecessarily protracted or burdensome? Could smaller clubs face disproportionate challenges in dealing with investigations due to limited resources?
Schedule 8 outlines the investigatory powers available to the football regulator in relation to relevant infringements. It includes the power to ask questions, require documents or information, and apply for a warrant to enter premises where necessary. The schedule also sets out the circumstances in which those powers may be used and the procedural safeguards that apply. The powers are designed to assist the regulator in establishing the facts of a case and determining whether enforcement action is appropriate. The provisions reflect standard regulatory practice and are intended to ensure that investigations are conducted in a proportionate and lawful manner. Does the Minister believe that there are sufficient safeguards to ensure that investigatory powers are not used disproportionately? Could the powers result in unnecessary costs or disruption to the day-to-day operations of clubs?
Clause 69 covers the outcomes of investigations. The clause sets out that the football regulator may find that there has been no infringement or, if it finds that there has been an infringement, that it may decide to take no action —possibly because the person had a reasonable excuse for committing the infringement. In what circumstances does the Minister envisage there to be a reasonable excuse, and does she worry that this risks setting a dangerous precedent? If an individual is found to have had a reasonable excuse, will that encourage others in the leagues to consider using that excuse if they are investigated? How will the outcome of an investigation be communicated to the relevant club or individual? Will the outcomes of investigations be publicly available? Once again, clause 69 raises important questions about consistency. If closure notices or outcomes are not published, what mechanism will there be for ensuring that investigations by the regulator are consistently applied?
Clause 70 sets out that the football regulator may accept an appropriate commitment from a person during the course of an investigation into certain relevant infringements. Does the Minister anticipate that that will be a regular feature? If so, what effect will that have on the football regulator’s ability to conduct an investigation? The clause clarifies that accepting a commitment does not prevent the regulator from continuing an investigation into different behaviour in relation to the same or a different relevant infringement, or starting a new investigation in relation to the same behaviour to which the commitment relates. It is therefore for the regulator to determine whether to continue the investigation. What criteria will be used to determine whether a commitment should defer or withhold investigation? Does this leave scope for inconsistencies in the approach of the regulator? If a commitment does not prevent the regulator from starting a new investigation into the same behaviour, it raises the question: why add another layer of bureaucracy when the ultimate result may be the continuation of said investigation?
Clause 71 adds provisions to clause 70. For example, it sets out that the football regulator must give the person a notice as soon as reasonably possible after it decides to accept, or not to accept, a commitment in lieu of investigation, and sets out what the notice should state. Can the Minister clarify how this notice will be given to individuals at a club? It also clarifies that the football regulator may accept a variation to a commitment, provided the varied commitment would still be appropriate. What is the process an individual would need to go through to amend or vary a commitment? Furthermore, it sets out that the football regulator may release a person from a commitment and must give the person a notice as soon as possible after deciding to do so. Many of the factors that the football regulator must consider are at its discretion, such as reviewing the appropriateness of a commitment. That raises further questions about consistency and the importance of making unbiased decisions.
Clause 72 places a duty on individuals under investigation to preserve information. The clause is key, but how will a person suspect they are subject to an investigation? Furthermore, the clause does not provide a date range up to and from when an individual must preserve relevant information. Will the football regulator adjudicate on whether information has been disposed of on purpose or accidentally? Likewise, will the regulator determine whether a document is falsified or authentic? The phrase “relevant” is broad, and it is open to interpretation by the regulator.
Clause 73 ensures that privileged communications are to be protected from the football regulator’s requirements. That is extremely important, as it covers communication between a professional legal adviser and their client to do with legal proceedings. However, will the football regulator have any powers to challenge claims that a communication is privileged? I would appreciate if the Minister could clarify whether that is a possibility. Furthermore, who will verify that a communication is privileged? Could the football regulator seek voluntary waivers of privilege in exceptional circumstances? What assessment has been made of the potential of the clause to inadvertently delay or obstruct investigation?
Clause 74—you will be pleased to know that this is my last point, Sir Jeremy—requires the football regulator to publish a notice where it has given a person an investigation notice under clause 68 or a closure notice under clause 69. Is there a timescale for such publication? How will the notice be communicated or published? Will it be publicly available? If so, will full details of the investigation be published, or will some material be redacted or withheld? Will there be an opportunity to appeal before publication to avoid reputational damage? Will clubs or individuals have the right to respond with advance warning prior to publication, if that is the case?
Stephanie Peacock
I am grateful to the shadow Minister for his questions. I noted as many down as I could, but I will endeavour to check Hansard if I do not cover all of them. First, he spoke about scope creep. I draw his attention to my comments earlier about how any conduct that is not listed in schedule 7 as a relevant infringement will not warrant enforcement action, and how we believe a closed list of possible relevant infringements in legislation provides clarity to the regulated industry and other persons as to what conduct is not permitted. The scope therefore cannot expand. I absolutely agree that things should be done in a timely fashion. In debates on the Bill, we have talked continually about proportionality, and we would expect cost and disruption to be kept to a minimum.
On the shadow Minister’s point about reasonable excuse, I draw his attention to my previous comments that it is not about sidestepping responsibility, but about being collaborative throughout. We expect the regulator will publish some information about investigations that it undertakes. It is required to publish an investigation notice issued to a person under clause 68, as well as an investigation closure notice under clause 69. However, the Bill allows for certain information to be withheld from publication if the regulator believes the disclosure or publication would significantly harm a person’s personal or business interests. The regulator is not required to publish revenue and customs information or information that might contravene data protection legislation or prejudice the prevention of crime.
Question put and agreed to.
Clause 67 accordingly ordered to stand part of the Bill.
Schedule 7 agreed to.
Clause 68 ordered to stand part of the Bill.
Schedule 8
Investigatory powers
Amendment made: 65, in schedule 8, page 109, line 14, leave out “a period of three months” and insert “so long as is necessary in all the circumstances”.—(Stephanie Peacock.)
This amendment provides that information obtained by the IFR under a warrant may be retained for so long as is necessary in all the circumstances.
Schedule 8, as amended, agreed to.
Clauses 69 to 74 ordered to stand part of the Bill.
Clause 75
Sanctions
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Schedule 9.
Clauses 76 and 77 stand part.
Stephanie Peacock
Together, the clauses and schedule in this group cover the sanctions available to the regulator for a variety of infringements, and the procedure for taking enforcement action. Clause 75 sets out the enforcement actions that the regulator may take and the sanctions that it may impose, by reference to schedule 9. We expect that the regulator will seek to pre-empt and address instances of non-compliance through constructive engagement where possible, but that will not always be appropriate. That is why this clause empowers the regulator to reach for stronger and more direct tools, and gives it the mandate to use them boldly when necessary.
The range of sanctions set out in schedule 9—sanctions of varying type and severity—will help the regulator to deter any non-compliance with its requirements. In particular, they include “name and shame” censure statements, and financial penalties. Where relevant, these sanctions can be applied to individuals making the decisions at clubs, as well as or instead of the clubs themselves. This can act as a better deterrent and avoid indirectly hurting fans. The regulator will also have the ability to appoint a skilled person to a club where relevant, to help the club to return to compliance. This presents a less punitive and more assistive enforcement tool for certain circumstances that call for it.
Schedule 9 also provides for the ultimate sanction—suspension or revocation of an operating licence. That can apply to either a provisional or a full licence, but it has a very high threshold for use, in that one or more of the “aggravating conditions” specified in the schedule must be met. We do not expect the regulator to need to reach for this sanction, particularly given that it can target owners and officers at clubs first. However, it is a necessary part of a licensing system, and a deterrent for the most egregious behaviour—for example, the threat of clubs joining a prohibited breakaway competition.
Clause 76 requires the regulator to give a warning notice before it takes any enforcement action. This is common practice and ensures a transparent and fair process by providing early warning and an opportunity for the target to make representations. Clause 77 requires the regulator to issue a decision notice once it has considered any representations received on the warning notice. The decision notice will set out whether the regulator has decided to take enforcement action and, if so, what that action is. As set out in clause 80, which we will debate in the coming groups, the regulator is obliged to publish warning and decision notices, to ensure complete transparency.
Mr French
Sir Jeremy, you and the Committee will be pleased to know that I will not seek to repeat word for word everything that the Minister has said on each of the clauses, but I will pose a number of questions to her on each of them.
As we have heard, clause 75 gives the football regulator the power to impose sanctions in response to relevant infringements. How is proportionality assessed when deciding between different types of sanction? What is the estimated administrative cost of monitoring, imposing and reviewing sanctions? What legal protections are in place to prevent sanctions from being used punitively?
Clause 76 requires the regulator to issue a warning notice before imposing a sanction. The notice must set out the proposed action and give the person an opportunity to make representations, which is welcome, but is there an independent review mechanism if a club believes that a warning notice is unjustified?
Clause 77 requires the regulator to issue a decision notice, following a warning notice, if it decides to proceed with a sanction. The decision notice must explain the reasons for the decision and the right of appeal. Is there a process to allow clubs to challenge decision notices before they are published? What legal advice and support will be available to smaller clubs facing regulatory action?
I will move on to schedule 9, regarding sanctions overall. This schedule sets out further details on the sanctions available to the football regulator. Part 1 deals with sanctions related to information failures, including financial penalties and censure statements. Part 2 concerns infringements of substantive duties and conditions and includes suspension or revocation of licences and the appointment of a skilled person. Part 3 contains further provisions regarding financial penalties, including about daily rate calculations and enforcement of penalties as civil debts.
The schedule supports the enforcement powers in clauses 75 to 78 and provides the operational framework for sanctions. How are the levels of financial penalties determined in order to ensure fairness across clubs of different financial sizes? What checks exist to prevent excessive reliance on fines as a primary enforcement tool? Could any of the sanctions—for example, licence suspension—create unintended consequences for fans and local communities?
The Minister will be aware that I have pointed out in previous sittings the sporting competition impacts of any removal of a licence and how that may or may not affect relegation. We are interested in the Minister’s comments on how licence conditions would work when sanctions are applied.
Stephanie Peacock
The minimum period for representations on a warning notice is 14 days. A warning notice is an important procedural safeguard on the regulator’s enforcement process that ensures that the person in question can make their case. For example, that might be to explain that there was a reasonable excuse for non-compliance. We will talk about appeals in a moment. We have said throughout Committee and other proceedings on the Bill that appeals can be made.
On the hon. Gentleman’s point on cost, as well as the ability to impose significant financial penalties, including fixed penalties of up to 10% of a club’s revenue, the regulator will be able to hold a club’s senior management accountable for the club’s compliance where relevant. That means that, where appropriate, the regulator can take enforcement action against individuals as well as, or instead of, clubs. Targeted enforcement of that kind will be effective in changing behaviour, deterring non-compliance and aligning the incentives of those calling the shots with the club itself. It will also mean that sanctions do not need to unduly punish a club, and so indirectly hurt its fans, when not appropriate.
Question put and agreed to.
Clause 75 accordingly ordered to stand part of the Bill.
Schedule 9 agreed to.
Clauses 76 and 77 ordered to stand part of the Bill.
Clause 78
Offences
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
Clause 78 backs up the regulator’s information-gathering powers by creating information offences, including offences relating to the destruction or concealment of information and the provision of false or misleading information. The possible penalties for a person guilty of those offences include a fine or even imprisonment. The ability for the regulator to impose strong sanctions for what are clear offences should deter any person from information-related misconduct that would hamper the regulator. Information offences and sanctions are well precedented among other regulators, and their existence acts as a powerful and necessary deterrent. I commend the clause to the Committee.
Mr French
Again, I will not seek to repeat the Minister’s words. Clause 78 creates specific offences for destroying and falsifying information, providing false or misleading information, and obstruction. On summary conviction, a person who is guilty is liable for imprisonment for a term not exceeding the general limit in a magistrates court, for a fine, or both. On conviction or indictment, a person who is guilty is liable for imprisonment not exceeding two years, for a fine, or both. In relation to those offences, what evidentiary threshold must be met before a criminal offence would be pursued? Could the clause deter voluntary disclosure for fear of criminal liability? What is the projected cost to the public purse of enforcing those offences through the criminal justice system?
Stephanie Peacock
The effect of the clause is that it is a criminal offence to destroy, dispose of, falsify or conceal relevant information; to permit the destruction, disposal, falsification or concealment of relevant information; to provide false or misleading information to the regulator or an expert reporter; to give to another person information that is false or misleading, knowing that the information will be given to the regulator; and to obstruct an officer of the regulator exercising a warrant.
We are talking only about information-related offences, so it is fairly unobjectionable that persons should not be able to conceal or destroy information that the regulator asks for. The potential for criminal sanctions is normal for offences of that kind at other regulators. Those regulators tend not to have to ever use criminal sanctions, but having them available sends a clear and strong message that misconduct related to information will not be tolerated.
Question put and agreed to.
Clause 78 accordingly ordered to stand part of the Bill.
Clause 79
Urgent directions
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
Clause 79 will enable the regulator to give urgent directions to respond quickly to a risk of serious harm. These are directions to a person, such as a club, to take or to cease a certain action within a specified timeframe to bring an infringement to an end. Urgent directions will give the regulator a strong tool to intervene quickly where serious, ongoing non-compliance jeopardises the regulator’s objectives.
We expect compliance to be the norm and that, if necessary, most cases of non-compliance can be addressed using the sanctions set out in schedule 9. However, urgent directions will provide a more direct enforcement option to bring the most serious and potentially harmful issues to an end swiftly. Given the urgency, the regulator will not be required to give the person an opportunity to make representations. There is precedent for that among other regulators. The Financial Conduct Authority has similar “voluntary requirement” and “own-initiative requirement” powers. If a person fails to comply with an urgent direction, the regulator can apply to the courts for an injunction.
Clause 80 will require the regulator to publish certain notices and directions related to enforcement. This will ensure complete transparency around enforcement proceedings for fans, the industry and the wider public—something that has been lacking in the industry to date. I commend the clauses to the Committee.
Mr French
I have some brief questions for the Minister. On clause 79, what criteria will the regulator use to justify issuing an urgent direction? Is there a risk of overreach if urgent powers are exercised without immediate oversight? Will clubs have a right to appeal or review such directions after the fact?
We believe that clause 80 mirrors clause 74 in providing a general duty for the regulator to publish various notices and statements issued under the Bill. Are there exceptions where publication could be delayed to prevent market disruption or reputational harm?
Stephanie Peacock
An urgent direction will be used only in response to non-compliance that is ongoing and of sufficient seriousness. That is reflected in the statutory threshold for the use of an urgent direction. The threshold—that the infringement must jeopardise or risk jeopardising the regulator’s objectives—is used in multiple places in the Bill as a high bar for more severe actions, for example revoking an operating licence.
A person can appeal against an urgent direction, although, as per the appeals provisions in the Bill, the urgent direction would be binding while the outcome of the appeal was being decided.
Question put and agreed to.
Clause 79 accordingly ordered to stand part of the Bill.
Clause 80 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Vicky Foxcroft.)