Football Governance Bill [HL]

Debate between Baroness Twycross and Baroness Evans of Bowes Park

Committee stage
Wednesday 18th December 2024 Lords Chamber

[Baroness Twycross (Lab)]

I thank my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton for their amendments on this important topic. I thank my noble friend for outlining why distributions are so important to the football pyramid. I will aim to take the amendments in a sensible order, with logical grouping where possible. In appreciating comments on the size of the group, I note that there is a logic to this, as outlined by my noble friend, and I say to the noble Lord, Lord Markham, that I do not think we have skimped on debate during Committee—though I agree with the noble Lord, Lord Goodman, both that the hour is getting late and that it does not feel like the debate has finished or will finish any time soon.

I acknowledge the probing intent of the amendments and it is really helpful to have this debate. I know that subsequent groups will go into this a bit more as well. I agree with the noble Lord, Lord Addington, that it is important that we do our absolute best to work through the issues that noble Lords have raised and to get the regulator right, which was the point that he made.

I reassure my noble friends that we agree on the importance of regulatory intervention on distributions— I appreciate that not all noble Lords have exactly the same view of this. Amendments 260, 269, 270, 293, 295 and 288 would broaden the powers that the regulator has to intervene by allowing it to trigger the back- stop process. I understand the intention behind the amendments, but we must maintain the backstop process as a last resort, to be triggered by the leagues only if they cannot come to an agreement themselves.

[Baroness Evans of Bowes Park (Con)]

The noble Baroness keeps saying that, and I understand that it is what we hoped was going to happen, but I do not think that anyone in this Committee believes that it will be a last resort. From the briefings that all noble Lords—including, I am sure, the Minister—have had from all sides, we know that the backstop is likely to be triggered very early on by the regulator. I really hope the Minister can move from what we hoped might be the position to where I think we are, whether we like it or not, and look at these processes on the basis of what is likely to happen. This could be one of the first things that the regulator has to deal with.

We have heard concerns about the nature of the conversations and the way that those might set up leagues against one another. I know that the Minister would hope that it was a last resort, as I think we all did, but I urge her to accept that if we are being genuinely honest—and other noble Lords may have heard differently from the various leagues we have all been speaking to—it seems to be a view that this is likely to happen. It would be much more helpful for our discussions if we could stop saying, “It’s a last resort”, and accept that it is very likely to happen quicker than we all wanted.

[Baroness Twycross (Lab)]

I appreciate that the noble Baroness, Lady Evans, may take a different view and I completely understand people’s concerns that it will be a front-stop—as a spoiler alert, and with apologies to my noble friend, I am not going to accept these amendments; we will come to that in a moment. However, we genuinely think that the model we have established is very similar, apart from the possible inclusion of the parachute payment—for want of a better word; it is not the phrase used in the Bill, but that escapes me for a moment—should the “state of the game” report suggest to the regulator that it needs to allow that to be taken into account.

My view is that the model we have presented should incentivise the leagues and the parties to come to an agreement themselves, and that opportunity to do so does not go away once the regulator is established. That is the design of the model and an essential part of it, as it was in the previous iteration of the Bill, so this is absolutely intended as a backstop process. We can go on to debate that in later groups as well as in this group. I am happy to do that and to meet people individually to go through why we think this will be a backstop and not a front-stop whereby the minute the regulator sets off in motion, everybody will claim that they want to have the backstop triggered.

However, there are things that the regulator will need to take into account if somebody asks for the backstop process to be triggered. It is not the necessarily the case that the regulator would have to accept that that process was set in motion. The whole model is designed around the principle of trying to get people to come to an agreement themselves. It is really important to ensure—

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[Baroness Twycross (Lab)]

I am not going to comment on what people did or did not say in that committee meeting at this point. The backstop would be applied only if certain high thresholds were met. The regulator will be an independent regulator and it will have strict measures to meet—high thresholds which it must be satisfied of if the backstop is to be triggered. If there is still no agreement, the parties will move to a final proposal stage and, at that point, the regulator would convene an independent expert panel and invite final proposals from both relevant leagues with accompanying analysis, and the independent expert panel would choose the most appropriate proposal. This model incentivises both parties to compromise, as unreasonable proposals would not be chosen.

The whole model, which is almost identical in every detail to how the previous Government were planning to do this, is intended—

[Baroness Evans of Bowes Park (Con)]

The Minister keeps coming back to the previous model. I think most of us here thought the previous model was nuts, and we still think it is nuts. We never discussed this in the House, so to keep saying that is quite insulting to quite a lot of us who always thought this was a bad idea. We are trying to engage with the Minister now about why we think it is a bad idea, and we would really like her to talk about the detail rather than keep saying, “Well, it was your Government”. Honestly, I would never have voted for this beforehand and, in my ex-position, that would have probably been quite a bad thing, but I am sorry, I would not have done so. I would like the Minister to focus on what we are talking about rather than keep using those issues to deflect from getting into the detail.

[Baroness Twycross (Lab)]

I am not sure how many times I have said that this evening, but it is really not very many. I am trying to establish that this model has been worked on and discussed for some time. I appreciate that noble Lords in this House did not get the opportunity to discuss it under the previous Government. It is a model that has been worked through, with examples from different organisations. It encourages compromise and tries to get people to reach a deal that everybody can work through and which meets the criteria of the regulator.

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[Baroness Evans of Bowes Park (Con)]

I support Amendment 263 and declare an interest as a supporter of Norwich City, who, over a number of seasons, endured the pain of relegation and then the joy of promotion on a regular basis. So, unlike my noble friend Lord Maude, I am well aware of the benefits of parachute payments, although unfortunately not for a few seasons now.

As we have heard, parachute payments are a critical foundation for the competitiveness of the Premier League. They help clubs manage the financial impact relegation from the Premier League can cause and give a degree of stability at a time of significant challenge to allow them to adjust to their new financial and footballing reality. That is true of all clubs. Well-run clubs like Norwich City could not have survived, even with the benevolent owners they had, without the benefit of a parachute payment. A parachute payment does not, however, in any way ensure that clubs continually go up to the Premier League, as, unfortunately, the last few seasons for Norwich City have shown.

I am sure a number of noble Lords will have seen the letter from Cliff Crown, chairman of Brentford FC, who said:

“For Brentford FC the parachute payment model provided an essential safety net, enabling us to invest in the team and infrastructure when we secured promotion. This support was pivotal in ensuring we could compete effectively and establish ourselves in the Premier League.”.


Like other noble Lords, I am concerned that the Bill as it stands may inadvertently incentivise bottom-half Premier League clubs and Championship clubs seeking promotion to significantly curb their investment over time, given the greater risk relegation would undoubtedly present. As my noble friend Lady Brady said, relegation would become a real financial cliff edge that would see clubs lose enormous amounts of revenue overnight, while having to continue to cover the costs predicated on their involvement in the Premier League. If that were to happen, the competitiveness of the Premier League would be severely weakened, and I believe the Championship would be significantly weakened too, undermining the very attributes that attract the revenues that sustain the game.

I urge the Minister to look again at this issue and to carefully consider the concerns raised in our discussions today. In particular, if she has not already done so, I urge her to talk to the clubs whose first-hand experience of the stabilising effects of parachute payments surely must be central to any discussion of this issue. I really hope that their experience will not be dismissed out of hand.

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Markham, for this amendment and all noble Lords who have taken part with a degree of passion that shows their commitment to the game and to the legislative scrutiny process.

First, I acknowledge that all noble Lords—I include myself in this—agree that parachute payments are a significant part of football’s financial landscape. I reassure noble Lords that the Government recognise that they play an important role in supporting the survival of relegated clubs. I agree with the noble Baroness, Lady Brady, that they can provide a lifeline. However, the regulator needs to be able to consider all relevant revenue sources as part of the backstop process to get an accurate picture of the proposal’s impact on financial sustainability. That is why parachute payments have not been excluded in this Bill’s definition of relevant revenue.

We believe that allowing the regulator to make a more informed decision, rather than restricting what it can consider, will only help to achieve the best possible outcome for the future of the game. Notably, parachute payments will be reviewed as part of the process only if the regulator deems them a relevant consideration. The current drafting does not require that parachute payments be considered; it allows them to be so only if they are deemed relevant by the regulator. So, if it agrees with the point made by the noble Lord, Lord Markham, based on the state of the game report, it will act accordingly. What that means in practice—

[Baroness Evans of Bowes Park (Con)]

The Minister talks about the state of the game report, which I completely agree is going to be extremely important, but the fact of the matter is that the backstop could be triggered before the state of the game report is published. From what I remember, it is quite a long time before it needs to be published. It could be that both leagues—the EFL and the Premier League, or whoever—will trigger the backstop before that, so parachute payments will be included. Unfortunately, the state of the game report may have no impact whatever on an initial decision by the regulator. The timescales simply do not work. I am not expecting a particular answer today, as the Minister can well say that she is not in charge of the regulator, but it is important to note that the timing of these things does not necessarily tie up, so unfortunately, reassurances like that are not really reassurances.

[Baroness Twycross (Lab)]

Clearly, it does not need to wait for the state of the game report to decide whether they are relevant. The approach we have adopted in the Bill means in practice that if the regulator has clear evidence, whether from a different source or from the state of the game report, that parachute payments are causing sustainability issues to the wider pyramid, it will now be able to address them. In our view, this was a potentially serious gap in the legislation that we feel has now been rectified. I stress “potential”.

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[Baroness Twycross (Lab)]

I will intervene again, and I thank the noble Lord for giving way. Labour tabled an amendment on this in opposition, so I am surprised that there seems to be so much surprise that the Government have now put this in the legislation. I accept that perhaps it was not noted at the time.

[Baroness Evans of Bowes Park (Con)]

The Minister will also know that Labour tabled a lot of amendments, many of which we are also now pushing, but are told they are not going to be considered. So, yes, but equally perhaps the Minister might like to look through all the amendments tabled by her colleagues in the Labour Party in the other House and see whether she is now prepared to accept them all.

Football Governance Bill [HL]

Debate between Baroness Twycross and Baroness Evans of Bowes Park

Committee stage
Monday 9th December 2024 Lords Chamber

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

I thank the noble Baroness, Lady Brady, for tabling this amendment, which gives us a further opportunity to have a discussion on international competitions. I understand that the intent of the amendment is to ensure that English clubs can continue to participate and compete successfully in international competitions. That is something we all want. As we have discussed at length previously, the Government are confident that nothing in this Bill as drafted will jeopardise the participation of our clubs in international competitions.

The noble Baroness, Lady Brady, raised a point on UEFA statutes. As I have reiterated previously, in the strongest terms, we have engaged extensively with UEFA in the development of the Bill. As has been confirmed by the FA, we are confident that the Bill as drafted will not breach any of UEFA’s statutes. The regulator will be operationally independent of this Government and any future Government, and will not exert an undue influence on the FA’s ability to govern the game. This was confirmed by the FA itself in oral evidence given to the House of Commons Public Bill Committee on 14 May this year, during the passage of the previous Bill, introduced by the last Government. Both Ministers and officials have engaged regularly with the FA, UEFA and FIFA about the Bill, and they will continue to do so as the Bill progresses and beyond.

[Baroness Evans of Bowes Park (Con)]

Obviously that is great, but the Bill has changed since then, particularly around the backstop provision. The noble Baroness on the Labour Bench was talking about before this new Bill came into effect: does that still stand? Has there been an update from the FA on that, because some of the provisions in the Bill have changed?

[Baroness Twycross (Lab)]

I understand that the FA’s position on this point has not changed.

We completely agree that, in the course of regulating, the regulator should not unduly harm the ability of regulated English clubs to compete against their rivals and to succeed in those competitions. This is why Clause 7(2)(a) already relates to avoiding effects on the sporting competitiveness of one regulated club against another. This would cover the “differential impact” to which the noble Baroness’s amendment refers.

Clause 7(2)(b) also relates to avoiding

“adverse effects on the competitiveness of regulated clubs against other clubs”.

This includes against international competitors, as the Explanatory Notes clarify. These provisions already achieve the aims of the noble Baroness’s amendment to minimise impacts on competitiveness, and in fact do so more holistically, recognising that competitiveness matters beyond just the relatively small proportion of clubs competing in, or vying for, European football.

On the points made by the noble Lord, Lord Moynihan, while I remain confident that nothing in the Bill as drafted would jeopardise the participation of English clubs in international competitions, I do understand his concerns. On UEFA and FIFA, we are speaking to the relevant authorities and will give noble Lords the reassurance on the specific points raised by the noble Lord in the coming weeks before Report.

For the reasons I have set out, I am unable to accept the noble Baroness’s amendment and hope that she will withdraw it.

Football Governance Bill [HL]

Debate between Baroness Twycross and Baroness Evans of Bowes Park

Committee stage
Wednesday 4th December 2024 Lords Chamber

[Baroness Twycross (Lab)]

We cannot pre-empt or direct the regulator, which will make objective decisions on a case-by-case basis. However, I repeat that I am very happy to sit down with the noble Lord to discuss and go through the unintended consequences that he appears to be concerned about. I will move on.

I turn to Amendment 30 tabled by the noble Lord, Lord Markham. When a club applies for a provisional licence, it has to submit a personnel statement setting out its owners, ultimate owners, officers and senior managers. The regulator will then approve the personnel statement, subject to any modifications, once it is satisfied that it is accurate. The club must then publish it, and this must be updated on an ongoing basis to ensure that it stays accurate. This, therefore, already provides clarity to the club, owners and fans as to who the owners, ultimate owners, officers and senior managers are.

A core part of ensuring that clubs have suitable owners and directors is the fitness test, which Amendment 177 seeks to expand. Let me be clear: the individual fitness test criteria for owners—honesty and integrity, and financial soundness—have been carefully designed. They are based on precedent and are specifically relevant to whether someone is suitable to be an owner of a football club. This amendment seeks for an owner’s competence to be assessed too. We do not believe that this would be relevant in the regulator’s assessment of someone’s fitness to be solely an owner. Some owners are hands off, and so their competence is not strictly relevant. If an owner also meets the definition of an officer, the regulator will be able to test them as both an officer and an owner. Therefore, as an officer, their competence would be assessed. However, an owner simply having a financial interest in the club does not mean that they make decisions that an officer would about how it is run on a day-to-day basis.

I turn to Amendments 181 and 183 in the name of my noble friend Lady Taylor of Bolton on the information that must be provided as part of a prospective owner’s application. I agree with the intention of the amendments —that the regulator will need information about an individual’s fitness in order to make an assessment—which is why Clause 28(2) already does that. It gives the regulator the ability to require information from an individual about their fitness. In fact, the Bill goes even further: it recognises that information about an individual’s fitness may come from, or be corroborated by, another source. That is why the Bill establishes information-sharing gateways with organisations such as the National Crime Agency. Specifically on Amendment 183, there is a risk that this amendment incentivises applicants to submit large volumes of unrequested information to the regulator, which could make it more difficult for the regulator to process applications efficiently.

The Government recognise and support the intent behind Amendments 182 and 184 in the name of my noble friend Lord Bassam of Brighton: to ensure that football continues to be played in a club’s home ground and that owners are committed to this. However, in many instances, neither clubs nor club owners own their home grounds. This amendment would therefore place a requirement on prospective owners to commit to something that may not be in their control. The Bill already has a number of comprehensive home ground protections to safeguard against inappropriate sales or ill thought-out relocations, including duties on the club itself about selling the club’s home ground or relocating from it—an issue that my noble friend highlighted effectively today. Under the current proposals in the Bill, the regulator can hold senior managers to account if they are responsible for breaching these duties.

Amendment 186 from the noble Lord, Lord Markham, and Amendment 187 from my noble friends Lord Bassam of Brighton and Lady Taylor of Bolton concern the timelines and deadlines for testing prospective owners and officers. I absolutely agree and understand that timely decision-making about the suitability of new owners and officers is highly important. Without deadlines, we have seen league determinations drag on, unable to reach a decision and leaving clubs in limbo. We believe it is important that the regulator has the time to conduct tests with an appropriate level of scrutiny, but it also needs to make decisions in an appropriate time- frame to ensure that clubs are not unnecessarily impacted in what is a fast-paced industry—I think all noble Lords can agree on that. That is why the regulator will be bound by a statutory timeframe, as well as by its objectives, general duties and regulatory principles.

We are confident that, with these existing provisions, the regulator will already conduct tests as quickly as reasonably practicable. However, putting a specific deadline in the Bill would restrict the flexibility for this deadline to be amended in future. That is why we have proposed that the determination period, including the maximum amount of time by which it can be extended, will be set by the Secretary of State in secondary legislation. This will ensure that the regulator is bound by it but that there is still flexibility for the deadline to be amended in future. I hope noble Lords agree that future-proofing is a key consideration for this and any other legislation.

In the spirit of the debate, although the noble Baroness, Lady Grey-Thompson, is not in her place, I will speak briefly to Amendments 187A and 187B in her name. They concern whistleblowing on the suitability of an owner or officer, as the noble Lord, Lord Parkinson, highlighted. I share the noble Baroness’s desire to ensure that concerned parties can blow the whistle on unsuitable owners or officers. However, I assure noble Lords that there is no need to amend the Bill to allow this. It is already open to anyone, including all those listed in Amendment 187A, to share relevant information with the regulator. Therefore, we do not see the need to create a separate obligation in the Bill for individuals to report information to the regulator.

The noble Baroness, Lady Evans of Bowes Park, raised a number of pertinent issues covered by the subjects raised in Amendments 188 and 189 in the name of the noble Lord, Lord Markham. They seek to ensure that the regulator can test an incumbent owner or officer on their fitness only if it is in possession of information that gives it concern about whether the individual would meet the applicable fitness criteria. The Government very much agree with the intent behind these amendments, so I would like to reassure the noble Lord that the intent of these amendments is already delivered in the current drafting of the Bill. Clauses 34(1) and 35(1) give the regulator the powers to test incumbent owners or officers on their fitness if the regulator

“is in possession of information that gives it grounds for concern about whether the individual meets those criteria”.

If the regulator is not in possession of such information, it will not be able to test an incumbent owner or officer. The definition of an incumbent is clearly set out in Clauses 34(3) and 35(2). For the reasons I have set out, I will be grateful if the noble Lords do not press their amendments.

[Baroness Evans of Bowes Park (Con)]

I am very grateful for the Minister’s very clear answer on the Premier League and the regulator’s suitability test clashing. She said that the regulator is statutory and therefore would override the Premier League saying that it wanted someone the IFR did not. It may be a very unusual situation, but does it therefore follow that, if the Premier League decides through its test that an owner is unsuitable but the IFR decides that they are, the IFR can, in effect, impose an owner on a club? The Minister answered half of my question, and I am very interested to hear about the other half. If she cannot answer now, can she write to me?

[Baroness Twycross (Lab)]

No, it cannot.