Football Governance Bill [HL]

Debate between Baroness Twycross and Lord Markham

Committee stage
Wednesday 18th December 2024 Lords Chamber

[Lord Markham (Con)]

My Lords, I rise to move Amendment 251 in my name and to speak to Amendments 257 and 258 from my noble friend Lord Parkinson.

Amendment 251 seeks to place a limit on the rate of interest the regulator may charge on any unpaid levies. I think all noble Lords have agreed that we want to keep the regulator fees and cost burden on clubs as low as possible, so having a reasonable rate of interest seems helpful. The proposal is that we take the formula the Government currently use for tuition fees, and which is proposed for the tobacco levy, which is the RPI rate plus 2%. I am not absolutely wedded to that figure, but we believe there should be a figure we can all agree on.

Amendment 257 from my noble friend Lord Parkinson would remove the provision whereby the regulator does not have to consult on changing the levy if it considers the change to be minor. We understand the intent behind that provision, but all sorts of discussions could then be got into about what is minor and what is not, so it is probably easier just to establish that it be properly consulted on if there is a change.

Amendment 258 is pretty straightforward. It seeks to establish that if the regulator plans to change the levy rules, it gives six months’ notice before the chargeable period begins. We have said a number of times that we want clubs to improve their financial budgeting and planning, and this would help them to do that. With those simple changes, I beg to move.

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

I thank the noble Lords, Lord Markham and Lord Parkinson of Whitley Bay, for their amendments concerning the levy. On Amendment 251 from the noble Lord, Lord Markham, setting the rate of interest charged on non-payment of the levy is an operational decision for the regulator, which needs the flexibility to charge interest at a rate that deters non-payment. A rate that is too low could increase the incentive for non-payment and jeopardise the regulator’s ability to carry out its functions. The level of interest charged would be subject to the same consultation requirements as the levy itself. This will ensure a firm but fair level of interest.

Amendment 257, in the name of the noble Lord, Lord Parkinson of Whitley Bay, would require the regulator to consult every regulated club and others such as the Secretary of State and the Treasury on minor changes to the levy rules. These would be immaterial amendments or replacements to levy rules, such as correcting mistakes. Going out to gather the views of all clubs feels like it would be a disproportionate burden on clubs and on the regulator. For material changes, the Bill already requires the regulator to consult as appropriate. No club, especially those in the National League, wants the administrative burden of unnecessary consultation.

Finally, on Amendment 258 in the name of the noble Lord, Lord Markham, requiring the regulator to publish its levy charge six months before the chargeable period would create an operational challenge. The regulator would have to estimate a levy charge having only half a year’s costs to base it on. This could lead to inaccurate levy charges, which could see the regulator underfunded or clubs needlessly burdened. The current requirement of charges being publicised as soon as reasonably practicable strikes the right balance, we feel, between adequate notice for clubs and operational flexibility for the regulator to ensure an accurate and appropriate levy charge.

I therefore hope that the noble Lord will withdraw his amendment.

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[Baroness Twycross (Lab)]

The noble Lord may not be surprised to know that I am not going to commit to doing that. We believe that the model in the Bill is the correct one. I am happy to meet the noble Lord and others to discuss this before Report, However, on the basis of the arguments I have made this evening, I urge the noble Lord, Lord Markham, to withdraw his amendment.

[Lord Markham (Con)]

I thank all noble Lords for their contributions. We can all agree that everyone spoke with passion on this point. We are passionate because we know it really matters.

I am grateful to the Minister for her acknowledgement of the importance of parachute payments. They really are critical. I echo the point made by my noble friend Lady Brady that, since parachute payments were brought into this, my understanding is that there has been only a 30-minute meeting with the clubs, where this was barely brought up. I urge the Minister to consult more with the clubs.

[Baroness Twycross (Lab)]

I asked officials to draw up the words that I said on consultation because, night after night, group after group, it has been said to me that there has been insufficient consultation on the Bill. I went back and asked whether I could stand up and say that there has been sufficient consultation on the Bill. What consultation happened? When has it happened? How has it happened? Who has it been with? I am confident there has been a huge amount of consultation on the Bill and I will continue to state that when I am asked. I will follow up things that people feel have not been followed up, but any club that wanted to have a meeting has had one, and some have said they did not want one. I will sit down and allow the noble Lord to finish, but I am not going to accept that there has not been sufficient consultation.

[Baroness Brady (Con)]

I am sorry to intervene, but I want to say again that on the specific issue of parachute payments there was no consultation with either the Premier League officials or the Premier League clubs that attended that meeting before this went into the Bill. I am not saying that there was not consultation on other areas, but this is a significant change to the Bill that had zero consultation with the Premier League or Premier League officials.

[Lord Markham (Con)]

It may be that it should be a matter of fact and we can find out one way or the other. The question is: how much consultation has happened specifically on the parachute payments? Obviously, they have been a recent introduction. My understanding from my noble friend is that there was just that 30-minute meeting, at which this was barely raised. I would be grateful if the Minister could ask her officials directly.

[Baroness Twycross (Lab)]

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

Football Governance Bill [HL]

Debate between Baroness Twycross and Lord Markham

Committee stage
Monday 16th December 2024 Lords Chamber

[Baroness Twycross (Lab)]

I agree that statutory regulation should exist only where it is necessary. In our view, the regulatory system is already designed to be proportionate so that intervention can automatically scale up and down as needed. Clubs that are already well run and are lower risk should not face additional requirements. We want standards in the industry to improve, and if this were to happen and the market was derisked, I would expect the regulator to be less involved and less noticeable. I want also to stress that the regulator will not stop the leagues imposing their own competition rules so long as they do not conflict with the regulator’s regime. However, this is not an amendment which we feel would serve the sector well, and that was why I asked the noble Lord to withdraw it.

[Lord Markham (Con)]

I thank noble Lords; it has been a genuine exchange of views. I am also glad that it gave an opportunity for the noble Lord, Lord Hayward, to make a positive point about Spurs over the weekend—and that there was a positive point available to be made about Spurs.

I genuinely appreciate the constructive challenge that we have had in this debate. I feel that there has been a bit of a misunderstanding, however. When we say that we are asking for delegation, as in contracting out the function, it is not abdication, because the independent regulator will always be ultimately responsible for that decision. It always has the final say. It is just trying to adopt the policy, which I think many of us believe in, in terms of devolution or subsidiarity—call it what you want—but it is another form of trying to make sure that the power is as close to the coalface as possible, at the same time always giving the opportunity for the regulator ultimately to make the decision. As my noble friend Lady Brady said, this point was absolutely envisaged in the White Paper. The FA and UEFA welcome it, and I must admit that I cannot see why we would not want those who are closest to it to have responsibility first.

Again, I want to clear up that I am not talking about the clubs; they are different from the competition organisers. The clubs and the Premier League, for instance, have very different views, as we have seen recently on financial fair play. The amendment is about giving those regulatory bodies—such as the FA, the Premier League and the EFL—an opportunity, where they are best placed to do it, to make those decisions themselves. If the regulator does not agree with that, ultimately it always has the final say.

I hope we will be able to return to this, because I hope it would demonstrate the collaborative approach that all noble Lords and the Government are trying to bring. I know that it is what we have all said many a time in this debate as well. At this stage, I beg leave to withdraw the amendment.

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[Lord Markham (Con)]

I thank the noble Lord. Of course, we want to have the flexibility to react to such situations. This issue comes up in various other contexts, such as government statements. There are lots of points where the Secretary of State can vary the approach. The question is: how do we get the checks and balances right? However, I think there is basic agreement on this issue, and I would like to hear the Minister’s views.

[Baroness Twycross (Lab)]

I thank the noble Lords, Lord Markham, Lord Parkinson of Whitley Bay and Lord Moynihan, and my noble friends Lady Taylor of Bolton, Lord Wood of Anfield and Lord Mann for tabling the amendments in this group. I also thank all noble Lords for their contributions. I will take each of the amendments in turn before responding to the noble Lords, Lord Markham and Lord Parkinson, and their opposition to the entire licensing regime standing part of the Bill. I will endeavour to get the noble Lord, Lord Pannick, a response to his question in the near future; I do not have the detail he requested today.

Amendment 128, from my noble friend Lady Taylor of Bolton, and Amendment 129A from the noble Lord, Lord Moynihan, relate to owners. The first seeks to make identifying an owner’s source of funds a prerequisite for a provisional licence. I absolutely agree that it is crucial that the regulator has oversight of an owner’s funding, so it knows how a club expects to fund its activity and the source of this funding. I hope my noble friend will be reassured that this is why a club is already required to provide such detail as part of its application for a provisional operating licence.

When a club submits its application for a provisional operating licence, this must include a strategic business plan. Among other things, this must contain detail about the club’s operating costs, how these costs are to be funded and, crucially, the source of such funding. This will enable the regulator to scrutinise the source of the funds. On the point made by the noble Baroness, Lady Grey-Thompson, importantly, a club must set out how much it plans to spend and how it will fund that cost. Furthermore, if the regulator has concerns at any time—even before it has received its provisional operating licence—about the source of an owner’s wealth, it can test that owner. Should it find that an owner’s source of wealth is connected to illicit finance, that owner will be found unsuitable.

I also agree that it is important that the industry has certainty as to what the regulator will consider “significant influence” by owners. Of course, what is meant by “significant influence and control” would need to have been set out in guidance before clubs and the regulator can consider who meets this definition. That is why I can assure noble Lords that the Secretary of State’s guidance will be produced in good time, in order to give this clarity.

Noble Lords should note that the provisions in Clause 3 and Schedule 1 that define “owner” come into force on the day the Bill becomes an Act. That means that the obligation on the Secretary of State to produce this guidance comes into force on that day, whereas the licensing provisions and other provisions which rely on the definition of “owner” will be commenced later, by regulations.

I turn to Amendment 132, from my noble friend Lord Mann. Although the risk of clubs going into administration will be greatly reduced, it may still happen. The regulator revoking a licence would be the ultimate punishment and would be used only in the most extreme of circumstances. I assure my noble friend that the regime is designed to avoid the situation his amendment aims to provide for, and that ensuring that a club has a plan for adverse shocks is at the heart of the regulator’s financial regulation regime. This might include a plan to keep the club going if, for example, an owner can no longer continue to fund it. We have spoken to many football clubs while developing the Bill, and know that the well-run clubs already do this.

Turning to Amendments 167A and 168A to 168C, from the noble Lord, Lord Moynihan, I understand his intention that the regulator should identify a clear risk before acting. The amendments are not necessary to achieve the aim in relation to his points on discretionary licence conditions, as was explained to the Premier League when it suggested these exact amendments prior to introduction. The regulator can attach discretionary licence conditions only if the conditions contribute to a club meeting the threshold requirements, or if the conditions advance systemic financial resilience.

The regulator is bound by its general duties, meaning that it must have regard to its regulatory principles and must act reasonably and proportionately. In effect, that means that the regulator can attach a discretionary licence condition only to address a risk it has identified. I assure the noble Lord that the regulator cannot take any action that is meaningless or does not advance its objectives. If a club feels the regulator is doing that, it can appeal any action through the appeals regime.

Ultimately, these four amendments all seek to raise the threshold for intervention and limit when and how the regulator can act. For every discretionary condition, the regulator would have to demonstrate that there was no possible alternative to achieve the aim than to impose that specific condition. This would be an unacceptably high bar, fettering when the regulator can act. In practice, we think the risk of legal challenge could lead to an excessively risk-averse regulator, afraid to act swiftly or at all.

I thank my noble friend Lord Wood for Amendments 168 and 169 and for his genuinely constructive approach to scrutinising the Bill, which I very much appreciate. I note that the noble Baroness, Lady Brady, also expressed concern on the points he raised. My noble friend has met with officials and me regarding these amendments and I hope that those meetings were useful. We believe these amendments would severely limit the regulator’s flexibility to meet its objectives and ensure clubs reach their threshold requirements. The regulator should not take its lead from the competition organisers. Of most concern is the blurred accountability that this approach would introduce. The fan-led review laid bare the significant issues with self-regulation, and that is why we are introducing an independent regulator.

That said, the system is designed so that the regulator should not need to intervene if the required standards are being met. If clubs meet their threshold requirements naturally—for example, through their compliance with the industry’s own existing rules—the regulator should not need to apply discretionary licence conditions. The model in this legislation is the right one, with clear accountability, and where discretionary licence conditions are not applied in a one-size-fits-all way but reflect each club’s specific circumstances.

My noble friend Lord Bassam raised the basic requirement for clubs to have a sustainable business plan. I agree with him that that is important. That basic requirement, as well as the requirement for clubs to engage with their fans and ensure that their owners and officers are suitable custodians, are light-touch, appropriate measures that should already have been in place.

On Amendment 169A, from the noble Lord, Lord Moynihan, the regulator is already required to publish guidance about how it will use discretionary licence conditions, including the outcomes it seeks to achieve. That will give upfront clarity to clubs and competition organisers. However, the Government do not believe that the level of detail in the noble Lord’s amendment is appropriate for the Bill. He and I would agree that we are not in-depth experts on football finances—had I looked ahead in my speech, I perhaps would not have said that, and I apologise. I am not an in-depth expert on football finances, the inner workings of football clubs or how football clubs operate; I will allow the noble Lord to make his own conclusions on the extent to which he is. The regulator will employ experts in this sector who will have far more knowledge of these areas than we do. They will also have a stronger evidence base on which to base their actions, informed by things such as the “state of the game” study and consultation with the industry itself. That is why we have required the regulator to publish guidance on discretionary licence conditions and why we think it should be left to do this independently. We do not want to unintentionally hamstring the regulator with overly prescriptive requirements for the guidance it must produce.

In response to the point made by the noble Lord, Lord Moynihan, if the regulator agrees with him that it should include detail on financial shocks, liquidity and debt management, it will include this.

I turn next to Amendment 173, from the noble Lord, Lord Markham. The Bill outlines the specific types of discretionary licence conditions that the regulator may attach to a club’s licence to address its financial or non-financial resources or to improve systemic financial resilience. It is possible that, as the industry evolves, these types of conditions might not remain adequate to address the new or different financial risks faced by clubs, and there might be more effective ways to address them. That is why it is crucial that there is a mechanism in the Bill to enable the types of conditions available to the regulator to be updated. This amendment would deny the regulator this flexibility and potentially make the regime unable to adapt to changing economic circumstances. It is vital that the regulator has appropriate the tools to regulate football effectively, both now and in the future.

I reassure the noble Lord, Lord Markham, that the Bill does not give the regulator or the Secretary of State free rein to make changes. The Secretary of State can amend the types of discretionary licence conditions that can be attached only if requested in writing to do so by the regulator—a point highlighted by the noble Lord, Lord Pannick. The regulator would have to provide clear reasons and consult stakeholders ahead of making a request.

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[Lord Markham (Con)]

My Lords, I hope this will be a nice, quick and simple group ahead of dinner break business. Clause 17 refers to awarding or refusing a provisional licence. I think we all agree that, if a provisional licence were not agreed, it would have serious consequences for a club, which would not be able to carry on playing or start a season, for example. That would have serious consequences on the fans, as well. All this amendment seeks is to give clubs sufficient time to respond. Generally, in serious situations, 14 days is not enough time to respond fully, so the suggestion is to give clubs a month in these circumstances. I beg to move.

[Baroness Twycross (Lab)]

I thank the noble Lords, Lord Markham and Lord Parkinson of Whitley Bay, for their amendments. Apart from Amendment 148, which I will turn to shortly, they all seek to extend to a month the minimum period for clubs, individuals and competition organisers to make representations to the regulator on a number of issues—far longer than the 14 days that the Bill sets out.

The 14 days set out in the Bill for representations is the minimum to ensure that the individual concerned has a fair amount of time to prepare and present any representations to the regulator, though it is not an absolute. The regulator may choose to specify a longer period if it thinks it is appropriate. However, the 14-day minimum also means the regulator can respond quickly to urgent issues without an extended delay if necessary. We do not think it is appropriate to introduce unnecessary delays into the regulator’s regime that would slow down decision-making and leave clubs in an extended period of uncertainty. A 14-day period for representations is not uncommon among other regulators such as the FCA and CMA.

Turning to Amendment 148 specifically, I understand that the intention of the noble Lord, Lord Markham, is to ensure that, if the regulator is looking to revoke a club’s provisional licence, the club will have an opportunity to make representations. I reassure the noble Lord that this is already captured by Clause 18(4), which says that, if the regulator considers that a club has not met the full licence test, it needs to give the club notice. This must include

“inviting the club to make representations about the proposed action”,

be that to extend the provisional licence period or to revoke the provisional licence. To be clear, the regulator would look to revoke a provisional licence only if the club had persistently and without excuse failed to take reasonable steps to meet the requirements for a full licence. This is a high bar. Therefore, the club will have had sufficient opportunities to take remedial action even before the opportunity to make representations under Clause 18(4). The club will also be able to appeal a decision to revoke a provisional licence if it believes the regulator has acted unfairly. This is yet another way in which the regulator can be held to account and decisions can be scrutinised.

I will close with the question that Clause 18 stand part of the Bill. I understand that the rationale of the noble Lord, Lord Parkinson, in tabling the clause stand part notice is the same as that which we already discussed in relation to the earlier group on licensing. I am happy to provide further detail on Clause 18 in writing if the noble Lord wishes it, but, as I set out earlier, we do not believe there is a credible risk that clubs will refuse en masse to participate in the regime. Clubs at all levels of the game have welcomed this regime.

[Lord Markham (Con)]

I thank the Minister for her response. The main thing is not only having a sensible conversation but making sure that the regulator is aware that, where there are circumstances in which more than 14 days are required, it demonstrates that flexibility. I beg leave to withdraw the amendment.

Football Governance Bill [HL]

Debate between Baroness Twycross and Lord Markham

Committee stage
Monday 9th December 2024 Lords Chamber

[Lord Markham (Con)]

I want to make sure I properly understood the answer to the question on the circumstances in which the Minister would say it was appropriate to take money from one club and give it to another. The Minister answered that the Bill was not seeking to do that because it was looking at the movement of money between competitions. But if you take more money from the Premier League to give to the Championship and other clubs, by definition the clubs receive less money, so that is what happens there. I am not sure that saying money is coming from the competition, not the clubs, is an answer; the money is coming from the clubs. I was not sure about the Minister’s answer. When you change the payments between the Premier League, that directly impacts the clubs and the money they receive.

[Baroness Twycross (Lab)]

My understanding is that the amendment would prevent money going from club to club. The model is around distribution between leagues or competitions, as the noble Lord suggests. There is already a situation in which the Premier League recognises that some financial redistribution is needed. I refer the noble Lord to previous discussions about why the regulator and financial redistribution of some type are required within the football pyramid.

Amendments 126 and 130 relate to the regulator being able to state in its rules any further information that is required to accompany the application for a provisional licence or the strategic business plan. The regulator will be independent, and it will be the expert. We need to give it the flexibility to implement its regime as it considers appropriate. This includes being able to request additional information in a club’s application if necessary to satisfy itself that the club will meet the test for a provisional operating licence. This will be set out up front in the rules, so clubs will always know in advance what is required of them when submitting an application or a strategic business plan. For the reasons I have set out, I am unable to accept the noble Lords’ amendments, and I hope they will not press them.

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[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Markham, for Amendments 56 and 58. I look forward to reading the letter to which he referred when it is forwarded to the Committee.

On Amendment 56, while we appreciate the intent of the amendment and agree that English football should continue to be as successful as it has been, we do not believe the amendment is necessary to safeguard this. The growth of English football over the past 30 years and the financial investment in it have been widely regarded as a huge success and have turned it—as has been noted by a number of noble Lords across the Committee—into a global export. However, in pursuing such growth and investment, systemic issues have grown throughout English football which justify regulation. Some noble Lords have suggested that football’s growth is evidence that regulation is not needed, but these two things are not mutually exclusive. English football is both successful and fragile, with issues of sustainability throughout the pyramid.

We have discussed the reasons why the game needs regulating at some length, so I am not going to go through them again, but the main aim of the Bill is to address these issues to ensure financial soundness and resilience of clubs and to safeguard the heritage of English football—all things that football has shown itself unable to do. On growth and attracting investment, on the other hand, football has already shown itself to be incredibly good at both those things and does not need, in our view, a statutory regulator to promote them. Indeed, as is clear from its articles of association, “promoting” the game is one of the objectives for which the FA is established.

Noble Lords have raised concerns about breaching UEFA and FIFA’s statutes. In my view, stepping on the FA’s toes here is exactly the sort of thing that might risk that. That is why we do not believe that the regulator needs primary objectives to actively pursue growth and financial investment. However, the Bill already makes provision to safeguard these features. As part of its general duties, the regulator must have regard to the desirability of avoiding impacts on important outcomes in football—domestic sporting competition, the competitiveness of our clubs against international clubs, and investment into football—rather than a general growth objective.

The bespoke and novel duties in Clause 7 acknowledge the specific market features that have contributed to English football’s growth and will be key to its continued success. Much of the success of English football has come from investment and exciting competition, and we do not believe the Bill will in any way deter this. Indeed, a stable and more certain regulatory environment will be more likely to attract investors. These amendments would require the regulator to bring into scope anything that relates to the growth of English football. This would include things like broadcasting revenues, transfer fees, sponsorship deals and many other areas. Not only would this dramatically widen the scope but the regulator would also be required to become actively involved in these areas.

My noble friend Lord Watson of Invergowrie highlighted that these amendments would broaden the scope of the regulator. We cannot on the one hand warn against scope creep and over-intervention in a successful free market and on the other hand call for a statutory regulator to be tasked with growing the market. Regulators exist to address specific problems that the market cannot address itself. Football has a sustainability problem and not a growth one.

On Amendment 58 specifically, the additional detail in subsection (1)(a) to (c) in the noble Lord’s proposed new clause is already included in the Explanatory Notes which cover heritage. Explanatory Notes provide illustrative detail about the intention behind legislation and not drafting intended for the Bill. As the noble Lord will appreciate, the purpose of Explanatory Notes is to provide additional illustrative detail. However, this kind of detail is not appropriate for the face of the legislation, because good legislation should be clear and concise, and the current drafting is in line with that ambition.

I want also to draw noble Lords’ attention to the letter I sent to the noble Baroness, Lady Evans of Bowes Park, on this same topic of a growth duty. A copy of that letter was also placed in the House Libraries. For the reasons I have set out, I hope that the noble Lord will not press his amendments.

[Lord Markham (Con)]

I thank noble Lords for their contributions, and the Minister for replying. Before I come to address what has been said, I thank my noble friends for their contributions and especially my noble friend Lady Brady for her point that there are concerns about UEFA competitions as well that we are seeking to address in this.

Although I did not hear anyone say that these were not desirable objectives, I heard two reasons not to introduce them. First, the Minister said that we are already successful on investment and the Bill will not deter it. I am afraid that is where there is a fundamental disagreement, because the Bill introduces new aspects to this. It gives the regulator responsibility to make sure clubs are sustainable and says that the regulator can look at this through things such as the parachute payments and the solidarity payments. That fundamentally changes the investment proposition in clubs. The letter from the Brentford chair makes the point, as have others, that clubs would be much less likely to invest in new players and in resources if they did not have the safety net of parachute payments if they were to go down. That will directly affect investment in clubs via the change in the laws that we are talking about and the responsibilities of the regulator to look only at sustainability. It is the same for solidarity payments. We are changing the playing field and moving the goalposts, so we cannot expect everything to go on as normal. That will inevitably affect the investment proposition, so it will impact the amount of money we see going into the game.

That comes on to the second point that was raised about why we should not introduce these amendments: that we are somehow trying to expand the regulator’s duties, which goes counter to everything we have said so far about it being light touch. That is not what we are trying to do. We are trying to make sure that the regulator will have more than one objective when it looks at the measures it can take. If it has only one objective, about sustainability, we hope it will interpret it broadly, but I could make all clubs sustainable tomorrow by saying that all the Premier League money should be distributed. That would do it. It would give everyone loads of money, it is completely sustainable and the regulator could say, “That’s fantastic, job done”. But we know it would fundamentally harm the whole structure and the whole environment.

I do not think for one moment that a regulator would be as unwise as that, but the main point of what we are trying to do is to set out what we believe are the right objectives. As I mentioned, the Government have done that with the Bank of England and given it growth objectives alongside inflation objectives. They have done it with Ofwat and with Ofgem. They have given all of them their regulatory requirements and a growth objective. We are trying to make sure that the regulator is wise in any measures it puts in place by always having other objectives that are for the good of the game. That is not increasing its reach; it is just making sure that it has more than one objective. I hope this is something we will be able to talk about further.

Football Governance Bill [HL]

Debate between Baroness Twycross and Lord Markham

Committee stage
Monday 9th December 2024 Lords Chamber

[Baroness Twycross (Lab)]

The noble Lord might need to be content with my sympathy at this stage. I genuinely look forward to future discussions on this point.

Overall, the Government have been clear that the regulator should take a participative approach to regulation, meaning that it would co-operate constructively with the regulated industry where possible. There are some parts of the Bill—this is one of them—that directly relate to the people or organisations being regulated, rather than to stakeholders across the game more widely. The intention of the regulatory principle in question is to guide the regulator to co-operate constructively specifically with the regulated industry where possible, as this co-operative approach might not otherwise be explicit. We think that to list every possible stakeholder, or possible interpretation of fans or fan groups, that the regulator “should” ever engage with during the course of regulation, could be onerous on participants and the regulator. However, I am happy to meet my noble friends to discuss further how we can reassure fans that they will be consulted where appropriate. For supporters and their relevant representative groups it is clear that the regulator should be acting in their interests. There are several places where this is formalised through specific consultation requirements; for example, in relation to Clause 45, the prohibited competitions clause.

For decisions materially impacting players, I recognise that the game is nothing without players, as I said earlier; it is absolutely right that the regulator works with them on matters that impact them. As I mentioned, the specific regulatory principle in question is intended to steer the regulator to co-operate with the regulated population. This does not include players, as they are not themselves subject to the regulator’s regime. This would be not an appropriate place to include players, or indeed any other stakeholder group. However, I understand the desire among noble Lords to ensure that important stakeholder groups are appropriately acknowledged in the Bill.

I am sure we will revisit this topic ahead of Report and in future debates. With that said, and for the reasons I have set out, I am unable to accept the amendments in this group. I hope that noble Lords and my noble friends will not press them.

[Lord Markham (Con)]

I thank the Minister. I thought we had an uncontroversial set of amendments with a great deal of consensus around the issue of players and fans. I thought that we almost had the ball in the back of the net. We had some sympathy from the Minister, who said she was looking forward to discussing this further; unfortunately, we did not quite get a yes. I hope we can firm that up as we continue to press for a goal as the Bill approaches Report. There was a large degree of consensus in the Chamber that we definitely “must” include players and fans, rather than just “should”. I hope we are able to pursue that further as the Bill progresses. With that, I beg leave to withdraw my amendment.

Football Governance Bill [HL]

Debate between Baroness Twycross and Lord Markham

Committee stage
Wednesday 4th December 2024 Lords Chamber

[Lord Markham (Con)]

This looks at the tests around the officers and I start by saying that we are all united in the Chamber in wanting good management in place, so the officer tests involved here, I think we would all agree, are well intentioned, because it all comes down to good managers. However, at the same time, I think we are quite aware that a lot of the things we are talking about here are beyond the directors and Companies Act tests that are in place. We are extending to a new category of officer, or senior manager, and we are putting new responsibilities on them. The amendment tries to be quite simple. First, the Bill is not clear who an officer is. It talks about having one or more club affairs that they are responsible for. So, first, we are trying to get clarity by letting those people know who they are.

That is important because we are talking about having some pretty serious and quite intrusive checks on them. Again, those are well intentioned—there are amendments coming up later in Committee where we will go into what those checks should be—but they are quite intrusive; they are looking at your criminal record and whether you have been involved in any court or tribunal. Maybe they are all very good tests, but I think people should be aware of them, because they might not be certain that they are actually an officer of a club. So, again, this is making sure that they are aware of it before they take something on.

Thirdly, and probably most importantly, not only are we giving them director-style responsibilities but we are potentially putting even wider-reaching penalties on them, of 10% of club revenue or £75,000, which many people would say is quite a deterrent. I am not talking about the big clubs. A lot of this refers to clubs that are pretty small, maybe run by a handful of people and for which a £75,000 penalty is pretty big. At the very least, they need to be aware that they are taking on those sorts of responsibilities and that should be outlined. That is what Amendment 31 tries to do.

Regarding Amendment 179, again, we talk about one of the tests being financial soundness. I think that we would all agree that, around an owner, that is right in terms of their financial soundness. I would like an officer or senior manager of a club to be financially sound too, just for their own good sake, but that does not necessarily make them a good or bad manager. They are not personally putting money into that club. Therefore, whether or not they have run up a lot of debts is not relevant to their ability to carry out the duties that we would want them to undertake.

Many of the 116 clubs are quite a bit smaller and often depend on people working on a voluntary basis. Those people suddenly having all their finances investigated and it being determined whether they are deemed sound or not, when we are not asking them necessarily to contribute any money to those clubs, is not proportionate. It might deter people who could probably be very helpful in the running of that club. I beg to move.

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Markham, for these amendments. I agree that it is important for transparency and accountability to fans and officers that it is clear who a club’s officers and senior managers are. That is why this is already an integral part of the Bill. When a club applies for a provisional licence, it must submit a personnel statement. In that personnel statement, the club must set out its officers and senior managers, which the regulator will approve once it is satisfied that it is accurate. The club must then publish it and keep it updated. Therefore, this already provides clarity to clubs, officers and fans as to who has a role in the running of their club.

On Amendment 179, it is essential that clubs have suitable officers. The regulator has a key role to play in this. It is officers who exercise a significant level of direct control over the day-to-day operations of the club. These can include financial decision-making. That is why it is vital that the regulator ensures that these decision-makers are financially sound. It includes assessing the personal finances of anybody where they have held a position of responsibility. This will help to identify any concerns or irregularities that would impact on their ability to act as a suitable custodian of a football club. For example, I am sure that noble Lords will agree that if a club’s chief financial officer has bankrupted companies in the past, that is a relevant fact for the regulator to consider. Ultimately, these tests should help to prevent fans suffering the consequences of poor leadership and financial mismanagement, as has often been the case to date.

I hope that such clarity gives reassurance to noble Lords on these points. For the reasons I have set out, I would be grateful if the noble Lord did not press his amendments.

[Lord Markham (Con)]

I thank the Minister for her replies. While we understand financial soundness in the context of a chief financial officer, in terms of the senior managers, as referred to in the Bill, we are talking about non-financial duties. I think that most people who run a club would say that the chief operating officer or the person responsible for the actual operations of the ground on the day is a key person. I am sure that they would be drawn into this definition and so would have all their finances investigated. Do not get me wrong: we want people as far as possible to be in a financially good position but, as I mentioned before, their personal finances are not necessarily relevant to whether they can be a good operating officer who can run the club very well on match days, with all the decisions involved with that. My fear is that we will deter people who are sometimes the backbone of the running of a lot of the smaller clubs from wanting to take on that sort of role because they know such intrusion will take place.

Those are the things that I am talking about. I absolutely get it when it is a financial director—the Companies Act and directors’ responsibilities cover that for finance directors. People who are not finance directors but who may be very involved in the operations are where the concern lies. I hope that we can cover this in more detail later on, but at this point I beg leave to withdraw my amendment.

Football Governance Bill [HL]

Debate between Baroness Twycross and Lord Markham

Committee stage
Monday 2nd December 2024 Lords Chamber

[Baroness Twycross]

If I correctly understood the noble Lord’s point, I do not believe that clubs should be concerned about that particular instance. We will be discussing licences and licensing conditions in a later group so, with your Lordships’ indulgence, if we could wait until then, that would be appreciated.

The amendment would also require the regulator to submit a report on its effects on the financial position of regulated clubs. I reassure the noble Lord that the Bill already includes comprehensive reporting requirements on the regulator—for example, the “state of the game” report and the regulator’s annual report to the Secretary of State, which must be laid before Parliament. These reports would of course be expected to include an assessment of the regulator’s own impact on the market. In our view, the intent of this amendment is therefore already achieved in the Bill.

The noble Lord, Lord Moynihan, asked whether we are risking jeopardising English clubs’ involvement in international competitions. As I reiterated during the last debate, the Government are confident that the Bill and the regulator will not breach the statutes of UEFA and FIFA. This Bill will constitute the business regulation of football clubs in this country; it will not constitute interference in how the FA, or any international body, governs the game. For the reasons I have laid out, I hope the noble Lord will withdraw his amendment.

[Lord Markham (Con)]

The Minister will be aware that I made quite a few points on how the only thing a regulator can really do—the only shot in its locker—is to put in more deposits, and on the impact that would have on clubs in terms of that safety net. I perfectly understand that she may not be able to answer that question now but I would welcome a follow-up in writing, and perhaps we can arrange a meeting on it.

[Baroness Twycross (Lab)]

I am happy to meet the noble Lord to discuss it further.

Football Governance Bill [HL]

Debate between Baroness Twycross and Lord Markham

Committee stage
Wednesday 27th November 2024 Lords Chamber

[Baroness Twycross (Lab)]

Yes, suffering—all noble Lords will suffer for their football clubs as well, at times.

[Lord Markham (Con)]

I think the Minister did not quite understand. She was talking about success in terms of success of teams. The point about success that the noble Lord, Lord Hayward, and I were trying to make was about TV viewership, which drives the media rights value. I have not seen that anywhere else in the Bill, and I would be grateful if the Minister could say where it is addressed.

[Baroness Twycross (Lab)]

I might have been being flippant, so I apologise to the Committee. After the length of time we have been discussing this, I came up with some flippant remarks. That was not to undermine the noble Lord’s point.

Much of the success of English football has come from investment, and we do not believe the Bill will in any way deter this. Nor do we believe that the regulator will detract from the noble Lord’s point about what might be measures of success. Indeed, a stable, more certain regulatory environment is likely, in the Government’s view, to attract investors with a more long-term, prudent approach to stewarding and growing these community assets.

These amendments would require the regulator to bring into scope anything that relates to the growth of English football. This would include things such as broadcasting revenues—which the noble Lord referred to—transfer fees and sponsorship deals, alongside many other areas. Not only would this dramatically widen the scope but the regulator would be required to become actively involved in these areas, potentially causing unintentional harms when looking to advance these worthy objectives. I am sure noble Lords will agree that this is not a space we necessarily want to have the regulator interfering in.