Football Governance Bill [HL]

Lord Markham Excerpts

Committee stage
Wednesday 4th December 2024 Lords Chamber

[Baroness Brady (Con)]

My Lords, I refer the Committee to my interests, which are declared in the register. I defer to other noble Lords who have experience of the technicalities of hybridity and parliamentary procedure, but I hope it is helpful and illuminating in this context to raise the issue of consultation with clubs. We are creating legislation that will profoundly affect 116 unique institutions, from Premier League clubs through to the National League community clubs. But it is important for everyone to understand that the consultation with these affected businesses by the current Government has been remarkably limited—almost unbelievably so.

Just seven Premier League clubs—mine was one of them—were granted a brief half-hour meeting with the Secretary of State over the summer. Following this cursory engagement, significant decisions were made that could fundamentally affect the future of English football, most notably with the inclusion of parachute payments within the backstop mechanism. I say again: seven clubs out of 20 have been seen for just half an hour since the Government took office and before they made that seismic decision.

This is particularly concerning given that fundamental issues still remained unresolved. We still lack any clarity on UEFA’s position regarding state interference, for example. This clearly creates profound uncertainty for clubs competing in, or aspiring to, European competition, as well as our national teams. We do not know what the ownership test will look like. This causes significant uncertainty for potential investors as to whether they are able to own a club.

I have listened with real interest to this debate on hybridity. Can the Minister help my understanding here? Can she confirm that, if my noble friends are correct and hybridity is a live question for the Bill, this would give clubs at all levels a real opportunity to present their specific circumstances to Parliament? For example, would it mean that National League clubs could explain their concerns about the regulatory burden and the concerns of the many that they say “would not survive” this regulation? Would it mean that Premier League clubs could have more than half an hour to detail the very serious implications for them, and the risk that we may harm the competitive balance of the Premier League, which we have all agreed that none of us wants to do?

That would be especially important, given that the impact on Premier League clubs is very different from that on other stakeholders in the Bill, as the Premier League is the only party that provides funding to any other part of the football pyramid. The backstop is clearly designed as a mechanism to gain direct access to, and apportion, Premier League revenue and no one else’s. It would allow the IFR to do this even if it was against the Premier League clubs’ will, or even without the clubs’ agreement, even if it was to have a detrimental effect on the clubs and the overall competition that it removes revenue from.

I have spoken to many of my colleagues across the whole football pyramid. We are all alarmed about, and puzzled by, the lack of discussion on the Bill with Ministers. Does the Minister agree that we all want to get the detail of the Bill right, and can she see any downsides to providing meaningful opportunities to hear from all clubs across the football pyramid affected by the legislation?

[Lord Markham (Con)]

I must admit that, probably like other noble Lords, I am scratching my head over this. As the Minister said earlier, it is very clear that the leagues know who we are talking about here and that a large section of the Bill is talking about the whole arrangement, and in Clause 6 about the distribution agreement, the pyramid, the parachute payments and all that. There are only two instances where that counts, in the payments from the Premier League to the other leagues, so it is very clear that we are referring to Premier League and English Football League clubs. I do not think there is any doubt about that at all. As I was taught as a kid, if it walks like a duck, looks like a duck and quacks like a duck, it is probably a duck.

I am pretty sure that this is a hybrid Bill already. I am not an expert, but I cannot see why it is not a hybrid Bill because, as the Minister just said, it is very clear to everyone which leagues we are referring to. The argument that somehow we could not change things if things changed, or if league structures changed, just does not stand up. Just as we are going to nominate which competitions we are talking about under secondary legislation, we could do exactly the same if there was any change in the format of the leagues. The Minister wrote in her letter about trying to stop people gaming the system, but we have a very easy way to stop them gaming the system. It is set up there already—you can change it in secondary legislation, just as the Government intend to do in defining the competitions involved in the first place.

I cannot see any reason why we would not call it as it is. It is as if we were somehow trying to stop the clubs having the proper amount of consultation. As my noble friend Lady Brady just said, it is clear that there has been very little consultation to date. The clubs themselves have said that there was very little consultation. The people here who are members of those clubs probably know more than anyone else about this.

I believe that we are all united in this Committee in wanting the best for football. That comes through very clearly in every conversation we have had. I know that colleagues from right across the spectrum want what is right for football, and I know that the Minister wants what is right for football—so why not give clubs the opportunity to be properly consulted and have proper input on something that is going to profoundly affect the whole game?

[Lord McLoughlin (Con)]

My Lords, I will very briefly support my noble friend Lord Parkinson’s Amendment 19. I do so as chairman of the Delegated Powers and Regulatory Reform Committee, although the noble Lord, Lord Rooker, chaired the relevant meeting in my absence. My noble friend’s amendment addresses a serious issue. I would have thought that, given the committee’s report on this, the Government would have at least considered the arguments and sought to alter them.

As noble Lords have noted, our committee’s eighth report highlighted that this Bill, as drafted, does not make the fundamental definition of English football clear. The committee was concerned because this Bill leaves us wanting. It leaves us with no definition in primary legislation of what it seeks to address; it is a Football Governance Bill that does not define what part of football it will govern and leaves such a key part of the definition of the Bill to come later in secondary legislation. As my noble friend has pointed out, certain parts of it say that the secondary legislation, if it were to be hybrid, should be ignored as hybrid. That gives a very wide-ranging power which we should be cautious about.

The memorandum explains that

“the rationale for regulatory intervention is based on market failures in the professional men’s game, and problems or harm that most typically and markedly arise in clubs of a certain size and type (typically professional clubs)”.

It then gives four different reasons why the Bill does not explicitly state that it intends to regulate the top five tiers of the professional men’s game. These reasons have been covered by other Members, so I will not go over them.

The Government argue that they need to define the scope in secondary legislation to allow them to change it in future. However, should they need to amend which leagues are in scope, they could still amend primary legislation to alter those leagues by statutory instrument. There is no change to that in my noble friend’s amendment. We have seen hybrid Bills before. I took one through the other place as Secretary of State for Transport, dealing with a rail link from the West Midlands to London. They are more complicated, but people know how to do them and know what regulations need to be abided by.

This amendment is not asking us to decide whether the Bill is hybrid; the Government are being asked to accept that there is inherently a form of hybridity in this Bill regardless, and that they must therefore allow it to go before the Examiners to see what they find. The Government should give very careful consideration to what the amendment says.

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Think of the current owners and just look at the clauses we are considering in this group. The Bill encourages, not diminishes, the long-term potential of a super league. It may in the short term stop it in its tracks but, in the future, this onerous government intervention will do little to attract new investment—why should it? The losers will be the fans. Existing Premier League ownership tests are already onerous, as they should be, but there is no case to add the influence test.

[Lord Markham (Con)]

Before I speak to the amendments in my name, I start by thanking my noble friend Lord Moynihan. This is yet another example where, as we understand this Bill further, we see more and more complexities and unintended consequences which will have a profound impact on the sport that we all love. Those points were very well made by my noble friend, and I look forward to the Minister’s response to them.

My amendments are trying to be helpful and practical, given the complications set out by my noble friend around how you determine who is an owner or who has influence on it all. At the very least, as proposed in Amendment 30, the regulator must inform who it considers to be counted as an owner. I hope noble Lords would agree that that is a fairly sensible move, given that such a person might not consider it themselves but might be deemed to have influence.

Just as we require a certain competence from officers, Amendment 177 suggests that owners should be subject to a similar assessment.

We are all mindful of the numerous situations we have seen where there is a timeliness to the acquisition of a club, particularly in the context of rescuing a club or where there are certain deadlines, as happened in the case of Abramovich and Chelsea. Amendment 186 states that the regulator must make a decision about an owner or an officer within one month. Officers can be critical to the running of a club as well, so we need timeliness there.

My two further amendments, Amendments 188 and 189, propose that where the regulator is seeking to act retrospectively—as has been pointed out, this gives it the power to reopen the issue of ownership and officers—there needs to be a high bar before it is allowed to go in; otherwise, before we know it, it could be investigating and unpicking the officers and owners of every club. Once again, this is a massive example of just how overbearing we are in danger of setting up this regulator to be.

Amendment 188 says that the regulator can investigate the current owners only if it believes that there is a reason for them not being suitable. It is trying to put an evidential burden or barrier on that. Similarly, Amendment 189 is about trying to determine the fitness of current officers only if it already has information in place suggesting that those current officers are not fit. Otherwise, if we add up all the multiple hundreds of officers of the hundred or so clubs, we would be setting up a whole logjam of investigations, which I would hope that all noble Lords think does not best serve the interests of those clubs or football as a whole.

[Lord Jackson of Peterborough (Con)]

My Lords, I support the amendment in the name of my noble friend Lord Moynihan and I commend him on his comprehensive demolition of the Government’s case. I have fundamental problems with this clause, as it stands, in respect of ownership. As my noble friend rightly says, it goes way beyond the admonitions and existing legislation of, say, the various Companies Acts. It is much more draconian and prescriptive than anything we have seen in company law. It is quite sensible, and not ignoble, for all Governments to take a value judgment on who is a fit and appropriate person to be a company director and to trade and take part in commerce. We all understand and support that, but what we see here is very oddly drafted legislation. It seems to me that it may be a reaction to the trade policy clause that existed in the original Bill, which was withdrawn.

At the same time, the Bill is extremely opaque, permissive and open-ended in the power that is bestowed on the Secretary of State. Looking at the schedule, I am very uncomfortable about giving those sweeping powers, not least because there is a differential between the “significant influence”, as contained in the schedule, that a director or a person involved in a football club may have and what we read in Clause 3, which is just “a degree of influence”. What does a degree of influence mean?

It is not all a case of the Saudi royal family and Newcastle United. We are talking about 116 clubs. Is “influence” popping into the dressing room at half-time and saying, “Great match, guys; here’s a beer”? Is it saying, “If you play better next year, my company might sponsor you more favourably”? It may seem ridiculous to use those examples, but this wording is so unclear—so opaque and permissive—in asking to give Ministers very significant powers that we need to think carefully, again, about whether it is appropriate to let it remain in the Bill.

For that reason, I strongly support the eloquent and comprehensive case made by my noble friend Lord Moynihan and, in passing, of course I support the amendment from my noble friend Lord Markham. This is a bad clause. It will give rise to very big risks of litigation. Ministers should think carefully about whether it remains in the Bill and we should think again, perhaps on Report.

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Moved by

[Lord Markham]

31: Clause 4, page 4, line 37, at end insert—
“(5A) The IFR must give a notice to all persons it considers to be an officer of a club for the purposes of this section informing them that they are considered as officers under this section.”Member’s explanatory statement
This amendment requires the Regulator to inform every individual that it considers an officer of a club.

[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.

Amendment 31 withdrawn.

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[Lord Addington (LD)]

My Lords, Amendment 36 seems to be taking a sledgehammer to a nut. If you have some expertise and you are commentating, you may well be qualified to be in that role. There is a balance to be struck here. The Minister might ask, “What would be an unacceptable position within the media that would exclude you from this role?” If you are a senior executive with Sky, in the current situation, that would exclude you, but what if you happen to be a commentator, say, for a local paper dealing with your own local team, and possibly going on further? Would that exclude you? I would be interested to know if the Minister or the Government have an opinion on this, because there is clearly a balance here, as the noble Lord has just pointed out.

[Lord Markham (Con)]

This is exactly why we want to have these sorts of debates in Committee. Funnily enough, I put my name to this amendment. As noble Lords know, when I talk about media interests, I do so as a former director of a pay TV company. I was thinking about media interests less in relation to broadcasting and more that—the noble Lord, Lord Birt, will know this—when you are making sports media rights bids, all information is good information. You would then be party to a lot of privileged, and maybe even inside, information.

I agree that there is a balance to be struck, because these are exactly the sort of people you want involved in the regulator as well; but if they have a current role that involves them bidding for media sports rights, that would probably rule them offside—if you will excuse the pun. Again, that is exactly why we bring issues such as this to Committee to discuss.

[Lord Birt (CB)]

There is a potential conflict on both sides. There are many different roles in media but obviously, it is a single role that might be filled here. I would feel very uncomfortable if someone were sitting in both camps, were I to be in the decision-making capacity ever again in a broadcast organisation.

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[Baroness Fox of Buckley (Non-Afl)]

My Lords, perhaps I could have a clarification. The noble Lord, Lord Parkinson, said that he had lots of experience of regulators. He referred to the Online Safety Act and Ofcom and his dealings there. I found it incredibly unhelpful to be constantly told by Ministers at that time that something was not up to them, it was up to Ofcom, even when we were making a decision about what the Ofcom regulator was going to do.

There are times when it feels as though Governments of any political stripe can outsource authority to a regulator. They tell the regulator what to do and then, when you try and hold somebody to account, the Government say, “Oh no, it’s the regulator that makes that decision”. So it actually removes any accountability. I am very keen on a mechanism for accountability and I am very anxious that, when we constantly stress that they are independent, arm’s-length regulators, that can be a way of avoiding any kind of political accountability.

However, I am also sensitive to the issues raised by the noble Baroness, Lady Brady, about the kinds of things you can imagine happening if there is accountability at Select Committee level. I want accountability and I can take on board what the noble Lord, Lord Jackson, said about the forensic way that Select Committees can hold people to account. That sounds very positive. But it depends which one it is and who is on it. I can imagine the political fads of the day. You can imagine a Select Committee saying, “Why aren’t you doing more on”—my favourite topics—“EDI or the environment?” or “Where’s your environmental target? You’re not doing enough on that, are you?”

We have to be quite precise about the principle. On the one hand, there is the very important principle of parliamentary accountability. On the other, we also have to ensure that that does not become political interference, because it could. There could be a kind of pressure from Parliament for the regulator to adopt political priorities rather than football priorities.

[Lord Markham (Con)]

We have had three days of debate and it is fantastic that we have an outburst of consensus. On all sides of the Committee, we seem to agree that we are putting a lot of trust in this regulator. We have had long and thorough debates about what its objectives should be. I come back not to Erskine May or other writings but to the Gorbachev and Reagan saying, “Trust, but verify”, which I always remember. There is consensus around the Committee about how vital parliamentary scrutiny is for what we think is such an important role. I hope that, when the Minister responds shortly, she will take on board the consensus view of the Committee and respond positively.