Football Governance Bill [HL]

Lord Jackson of Peterborough Excerpts

Committee stage
Monday 16th December 2024 Lords Chamber

These amendments provide an important chance to clarify the Bill, reduce the risk of regulatory overreach and ensure that financial licensing is both effective and proportionate. In my view, they would do a huge amount to give comfort to those of us who remain worried about preserving the vibrancy, fairness and competitiveness of the game we love.

[Lord Jackson of Peterborough (Con)]

My Lords, it is a pleasure to comment on this part of the Bill. I rise to support the amendments in the name of my noble friend Lord Moynihan and the clause stand part notice of my noble friend Lord Parkinson of Whitley Bay, and to develop some of the points raised by my noble friend Lady Brady.

I begin with Amendment 128 in the names of the noble Lord, Lord Bassam, and the noble Baroness, Lady Taylor. I feel that there is no balance in it; that it creates an imbalance in terms of its impact on smaller clubs. While I have problems with the whole clause, I think this is the most difficult and onerous part, in its capacity for gold-plating and regulatory overreach. I also think it cuts across existing primary legislation, such as the Proceeds of Crime Act. What we are potentially seeing in these very loosely worded and wide-ranging powers—

[Lord Bassam of Brighton (Lab)]

Is the noble Lord really saying that it is onerous for the regulator to know from a club who the owner of that club is, what the source of the funds might be or that the owner has funds that enable them to properly operate a football club?

[Lord Jackson of Peterborough (Con)]

I think that is a fair question, but the amendment that the noble Lord is inviting the Committee to support today is what I might call a dangerous dogs amendment. It is basically reacting—legislation by anecdote or by the lowest common denominator. You find one bad apple in a barrel and you smash the barrel up and throw the apples everywhere. This will have a big impact on clubs.

I pray in aid the financial guidelines 17/6 that the Financial Conduct Authority put out in 2017 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The road to hell is paved with good intentions. That was about stopping people laundering money—fair enough. What it has actually resulted in is dozens of people in prominent positions, such as local councillors, Members of Parliament, judges, chief executives of local authorities—even Members of your Lordships’ House—not being able to open bank accounts, and their sisters, their wives, their husbands and their brothers not being able to open bank accounts, because of onerous, overzealous regulation.

I am not saying that the IFR would necessarily develop in that way, but some of the most innocuous wording in primary legislation can sometimes give rise to that kind of gold-plating. It began, of course, under the anti-money laundering and counterterrorism regulations that we all supported. My point is that the sins of some clubs should not be visited on all clubs. My noble friend Lady Brady is absolutely right that if we do not have an objectives-based strategy, if we do not have a focused strategy for dealing with the most egregious issues, we will have a universalist approach of assuming that all clubs will be owned by dodgy owners—drug traffickers, people smugglers; I exaggerate for effect. There is the perception that that is the case and, of course, it is not the case at all. I say to noble Lords: be careful what you wish for.

On Amendment 173 in the name of my noble friend Lord Markham, I have very serious issues with this clause, because it fails on its own merits, in many respects, because it is not commercially flexible. If we are going to give a power, under Clause 22(5), for the Secretary of State to vary the licence conditions—and I have big problems with “add”—which are already settled, we will want to do that quickly and in an efficacious manner. We will not be able to do that using the affirmative resolution in this House and the other place, because we cannot move quickly or make decisions quickly to respond to commercial change.

I am also very worried about the limited sanctions available in terms of mission creep. Clause 22(6) says:

“The Secretary of State may make regulations under subsection (5) only if requested in writing to do so by the IFR”.


Again, mission creep is almost built in there. Then, in Clause 22(7):

“A request under subsection (6) must explain why the IFR considers that the making of regulations under this section is compatible with the purpose of this Act”.


The question is: is a Secretary of State likely to refuse that? Probably not. There is not really a built-in self-policing mechanism in the Bill, and it is because of the wide-ranging powers and the permissive nature of this wording that I have problems.

The provision fails because it is too onerous and too draconian. However, it also fails on the other side, in that it cannot work quickly enough to address the specific club-based issues that the licencing condition variation is needed for. For those reasons, I ask the Minister to consider Amendment 128 carefully. This is a sledgehammer to crack a nut, and it invites the independent football regulator to exercise its powers ultra vires, which is not in the best interests particularly of smaller clubs.

[Lord Markham (Con)]

I rise to speak to my Amendment 173, but first I echo the words of many other noble Lords. I support the outcomes-based approach the noble Lord, Lord Wood, is trying to achieve with his amendment, and I think there is broad support for that.

To pick up on the debate between the noble Lords, Lord Maude and Lord Bassam, on strategic business plans, and to give a bit of detail by way of background, the information one needs to provide for an audit is necessarily backward-looking, looking at the last year for which accounts have been provided. A strategic business plan, by its very nature, is forward-looking. I would be very surprised if smaller clubs with, say, a turnover of £500,000, do that as a matter of course. Lots of small businesses and shops have that sort of turnover, and I am sure they are not doing it either. I am not saying it is not desirable, but it could quite quickly turn into a consultant’s paradise if every single club, including the small ones, suddenly had to produce three-year or five-year business plans. They would have to resort to consultants to do that, which would become burdensome.

This brings us to another problem that we have talked about a number of times. Noble Lords have heard me talk about liquidity issues. By trying to solve the sins of one or two clubs, we are in danger of putting a burden on all of them, particularly if we are asking clubs to deposit money as part of a liquidity ratio to ensure they have a safety net. That will inevitably take money out of football. I had a meeting with the Minister and her team last week, and I thank her for that. We had a very good conversation about exactly this point, and what she promised was a proportionate, sensible approach.

That brings me to my Amendment 173. We are having very sensible conversations, in general, based on the desire of all noble Lords to do what is best for football. However, the problem is that whatever happens here, the Secretary of State has the ability quite easily to change everything. So, in response to everything we discuss, such as ensuring that the licences required are proportionate, the Secretary of State can easily say, “Well actually, we want a more muscular approach”. All the debates over the last five days and counting, the meetings and the various consultations could quickly be set aside because a different approach is wanted. That is my concern.

It does not matter where we have got to in the conversations we have had over the past few days: they will suddenly count for nothing if the Secretary of State can completely change the rules, raise the bar and change the discretionary licensing conditions. I would like assurances from the Minister. How do we safeguard against the fact that these—in my opinion, very good—debates could suddenly be set aside because in a few years’ time, a Secretary of State wants to take a completely new approach, which could be entirely disproportionate?

This has been a rigorous and constructive “two plus two equals five” process, as I call it, as we try to agree on an approach to checks and balances. None of us will be totally happy with how it turns out, but we have all had constructive input into to it. However, all of that could be quickly set aside by a future Secretary of State being able to change the approach.

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[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.

[Lord Jackson of Peterborough (Con)]

On that specific point, in Clause 22(8), the language is quite permissive and wide-ranging regarding who the IFR considers it appropriate to consult in respect of wide-ranging powers, particularly those to add or remove an item from primary legislation. Can the Minister confirm that the guidance that the Government will publish will tidy that up and make it tighter on who the IFR has to consult before it would write to the Minister seeking to vary the licence conditions?

[Baroness Twycross (Lab)]

We discussed in one of the previous groups why the legislation does not currently have specific people that have to be consulted every time. I commit to write to the noble Lord to clarify the specific point he raises. The regulator would have to provide clear reasons and consult stakeholders ahead of making such a request. The Bill has not stated every single person the regulator would have to consult every single time, but there are principles at play around how the consultation would need to take place.

[Lord Jackson of Peterborough (Con)]

I thank the Minister but she will agree that the guidance could, for instance, include groupings of particular types of people who would be key stakeholders and would need to be consulted, because this would obviously be quite a wide-ranging intervention by the IFR.

[Baroness Twycross (Lab)]

I will write to the noble Lord on that point. I hope it will give noble Lords some reassurance that Parliament would also be able to scrutinise any change, as regulations would need to be made by the affirmative procedure.

We do not believe that Amendments 174A and 174B, in the name of the noble Lord, Lord Moynihan, would be helpful to the regulator, as we explained to the Premier League prior to introduction. The addition of a minimum six-week period would mean a total minimum of eight weeks once you include the minimum period for making representations or giving a commitment in lieu. That would mean an eight-week delay, during which the regulator would not be able to impose a financial condition, which might mean that the regulator would have no choice but to sit idly by while the issue identified at the club gets worse. That would be contrary to the regulator’s objectives and principles and is therefore not considered acceptable by the Government. Slow action has been a common feature of industry self-regulation. We will not allow it to become a feature of the independent regulator’s regime.

The regulator already has a regulatory principle to proactively and constructively engage with the regulated industry, including competition organisers. This means that regulatory intervention at one of their clubs should never come as a shock to a competition organiser. Once the regulator has given notice of its intention to attach a financial discretionary licence condition, the competition organiser will have a minimum of 14 days to propose a commitment in lieu. To be clear, this is a minimum; the regulator may well decide to specify a longer period, but, equally, if the situation was sufficiently serious and urgent, the regulator should not be prevented from acting without delay. The minimum period of 14 days therefore strikes the right balance.

Amendment 174B only adds further burden and confusion to the process of applying financial discretionary licence conditions. The regulator is required to follow the procedure set out in Clause 23, except in very limited circumstances. This includes urgent circumstances where the regulator considers that the issues are so significant and urgent that the condition needs to be imposed immediately. Under those circumstances, burdening the regulator with a requirement to go through the process of commitments in lieu when it has already acted under urgency and has its own regulation in place is not acceptable. This would also leave clubs in an ongoing state of uncertainty, where an existing financial licence condition might be replaced with a different competition organiser requirement. This would be unnecessarily complicated, confusing and burdensome.

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[Lord Mann (Lab)]

My Lords, there is nothing wrong with supporters’ trusts, but working-class fans have other models as well, historically and currently; that voice also needs to be heard. Supporters’ trusts are one model and should be empowered, but they are only one model for football.

I have eight amendments here more or less doing the same thing. There is an issue here, which the noble Baroness, Lady Brady, alluded to and spoke to, with the fan advisory boards. There is a fundamental choice here, and I would advise the Government to be careful with the politics of this. Some clubs are choosing the fans to go on their fan advisory board; it is not the fans choosing the representation but the clubs. That is one model, but it is many miles away from the Crouch review. It is the total opposite of what fans would hope to see. The fans in this country have not gone for the German model and demanded comparative boards, 50% et cetera, supervisory boards, and that kind of power in relation to the clubs.

I have helped to establish a range of Jewish supporters’ groups. These are Jewish supporters who want no more than to be meeting up with other Jewish supporters of their club—full stop. But they do hope as well to be able to give the occasional bit of advice, sometimes very productively and positively, to their club—if the club does not refuse, as one has, to recognise a large group of Jewish supporters who simply want to be themselves—and, if there are any issues, they want to be listened to. It might be about the provision of kosher food, or ticketing policy, or that there are a lot of fixtures on a Friday night and people are finding it difficult to be religiously observant and still be able to go. It might be to do with giving advice on issues relating to racism within the stadium. On issues like these, this is a group that should be listened to; it is not a group that should have the power to tell a club what to do.

But the idea that fan advisory boards should be chosen by the club is anathema to fans. Fans are perfectly capable of choosing their own representatives. Let us think about what will happen if this Bill goes forward and the regulator has powers, but clubs can still say to fans, “No, we will choose who the fan voices will be. We will pick persons 1, 2, 3, 4 and 5. They will be there under our criteria. You, the fans, will have no say”. What will happen is that conflict will emerge, and the Government will not come out of the conflict well. The perception will be that the Government had the chance to ensure this.

Let us think about a supporters’ trust, made up of people giving of their free time to organise. As a member, you elect whoever to be your representatives, and they are then your representative; it is not the club coming in and saying, “No, we will pick Lord Shamash because we love Lord Shamash. If he is elected, that is all well and good because he represents what we would like to see in Manchester United”. That would be an invidious position for anyone to be in. I hope the Minister can give some reassurance that the fan voice on those big issues—moving the ground, changing the colour, changing the name—will actually be a fan voice. If it is not, then government and Parliament will become unpopular at some stage.

[Lord Jackson of Peterborough (Con)]

My Lords, I want to respond very briefly to Amendment 224 in the name of the noble Lord, Lord Mann. He made a wonderful peroration, but I am not sure it bore much relation to the amendment that he has laid down. Of course, none of us wants clubs to hand-pick fans who will be nodding dogs— ersatz fans who will go along with the corporate line of the football club. We do not want that.

I am not sure if this is a probing amendment for Ministers to consider before we get to Report, but it is a lock. It locks in and fetters the discretion of football clubs to make decisions that might be existential for the future of that club; in other words, diversifying activities, and not just in terms of the freehold. Clause 46 specifically mentions—

[Lord Mann (Lab)]

I thank the noble Lord for giving way. If it was proposed that Peterborough was to be moved to King’s Lynn, or to Norwich, should not the Peterborough fans have the right of veto on moving their club out of their town?

[Lord Jackson of Peterborough (Con)]

Perish the thought. There are many Peterborough fans who do not live in the city of Peterborough but in the Fens; they may not be too displeased at going to King’s Lynn—not that I am in any sense proposing that. He alludes to the Posh. The Posh have been able to develop a number of commercial activities over the last few years. Darragh MacAnthony, the owner, started out in 2007 as a very rich man. Now he is just a rich man, because of his love for Peterborough United.

The point is that that club has been able to stay afloat financially because the board of the club, backed—disproportionately I would say—by the fan base, has supported the diversity of activities. The noble Lord’s amendment and Clause 46 as written would lock out the possibility of many clubs and boards making decisions to protect their long-term financial sustainability.

I respectfully say to the noble Lord, for whom, as he knows, I have huge respect—particularly for the great work he has done on kicking out anti-Semitism in football—that that is a different issue from regulated fans and setting up fan organisations. This amendment would be quite prescriptive for clubs, and it would not be in their long-term interests, particularly those teetering on the edge of financial instability and unsustainability. For that reason, I hope the Minister will consider these issues when she responds to the noble Lord’s amendment and others.

[Lord Watson of Invergowrie (Lab)]

My Lords, I will speak to my Amendment 138A on what consultation means. The wording—

“leave out ‘consults’ and insert ‘meets regularly with’”—

is taken from the Explanatory Notes. On page 44, paragraph 271, under the heading “fan consultation”, they say the following:

“This mandatory licence condition … requires clubs to regularly meet with a group which the IFR considers representative of the club’s fans, which could be a group elected by the club’s fans”.


Throughout these debates, many noble Lords have quoted the Fair Game document, which refers to fan engagement as a communication process, and to a range of formal and informal face-to-face processes being part of that. That is what I am trying to get across here. It is important that clubs meet regularly with the fans and do not just consult. To consult could mean anything. It is not exclusive—of course, it could take various forms—but they must meet regularly. I hope that ultimately, the Government will accept that. It remains to be seen, but I will return to this issue on Report because it is very important.

I will comment on some other issues that noble Lords have raised, particularly my noble friend Lord Mann, who I usually agree with. I did not really take to his dismissive comment in response to my noble friend Lord Shamash. My noble friend Lord Mann said that it is all very well having supporters’ trusts, but you need organisations with working-class members. I do not know much about the Manchester United Supporters Trust, but I am sure it has working-class members.

I am a member of two trusts and have been for some 20 years. One is in Scotland—my old club, Dundee United; I pay £15 per year for that. I am also a member of the AFC Wimbledon trust, called the Dons Trust. I pay the princely sum of £10 per year for that. For that reason, I think there are more than a few working-class fans. I think that my noble friend Lord Mann was suggesting that supporters’ trusts price some fans out. I do not know if that is the case, but I would not have thought so. By definition, you would think that would be rather pointless.