Football Governance Bill [HL] Debate

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Lord McLoughlin Portrait Lord McLoughlin (Con)
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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.

Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, my noble friend Lord McLoughlin has made an incredibly important point. While I do not think that this is the moment for us to test it, we should give due consideration to whether this ought to go before the Examiners after Committee and before Report, particularly because the Minister has today said that the leagues are not confused about which leagues this legislation applies to.

We are grateful to the Minister for writing to us today. She stated in her letter that:

“The initial intended scope of the top five tiers of Men’s English football is built on a strong evidence base and extensive consultation with all key stakeholders”.


Nothing could be clearer about exactly who this Bill is meant to refer to. Yet, in this whole long Bill, there is no reference to the five tiers of men’s English football and we have no idea whether the Secretary of State will ultimately keep to that or not. We are going through legislation about which we have no clarity to whom it refers. That is, if not unprecedented, extremely rare. It is important that we heard from my noble friend Lord McLoughlin, not least because, to repeat what his committee said in its report:

“The argument that something should not be fixed in primary legislation because it might need changing in future would be an argument against having any primary legislation”.


I urge the Minister to listen carefully to my noble friends and to make sure that the Government at least place what we are talking about in the Bill, so that we know which clubs it refers to and where the onerous powers contained in it for the potential state-appointed regulator will fall. Without that, we are talking in a vacuum.

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
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My Lords, one of the amendments in question is in my name and that of my noble friend. I am surprised that Members opposite think that the previous Conservative Government would have introduced a hybrid Bill. I remind the House that this Bill is almost identical to the one they introduced and I am surprised that they thought that that might be hybrid. That Bill was discussed in another place at quite some length, but this question was not raised. As I understand it, the Bill would not have received a Second Reading had it been deemed to be hybrid at that time, so I do not think there is any question that this Bill is hybrid now. It can be made hybrid only if one House or the other passes an amendment that makes it so.

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Moved by
27: Clause 3, page 3, line 15, leave out “influence or”
Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, in moving my Amendment 27, I will also speak to my Amendments 28 and 29. These amendments seek to omit reference to the “influence” a person can have over the activities of a club being considered for a licence to operate as a professional football club in England.

Walking through this maze of state-imposed regulation on professional sport, for the purpose of the amendments I assume that the Government intend to allow the government-appointed regulator to determine who is a fit and proper person to be granted a licence on the question of their “influence” over a club’s activities. If we try to seek clarity in the Bill, we are immediately referred to Schedule 1, where, in keeping with this hydra of a Bill, we are once again left totally in the dark. It says, at page 83:

“The Secretary of State must prepare and publish guidance about the meaning of significant influence or control for the purposes of this Schedule”.


So the Bill continues to blindfold parliamentarians before they take the knee and kick off their important scrutinising role, which is the central purpose of your Lordships’ House.

Perhaps the best way to seek clarification from the Government is to work through a specific example. Newcastle is majority owned and financially controlled by the Saudi sovereign fund, the PIF. The PIF became the majority shareholder and de facto owner of the club, with 80% of the shares acquired in October 2021. The chair of the PIF is Crown Prince Mohammed bin Salman, son of Saudi Arabia’s King. MBS, as he is known, runs the Saudi Government.

For once, the noble Baroness, Lady Taylor, cannot pray in aid that this is an inherited Conservative Bill, because in the Conservative Bill there was a protection against the Government-appointed regulator investigating whether, for example, the Crown Prince and chair of the PIF was a fit and proper person to exercise control over Newcastle through his chairmanship of the PIF. The current Government deleted the very protection that the Conservative Government put in the Bill that required the regulator to,

“have regard to the foreign and trade policy objectives of His Majesty’s Government”.

This removal was a direct result of UEFA’s insistence to the current Prime Minister that this protection politicises sport. When faced with expulsion from the European Championship in 2028, which, incidentally, is to be hosted in the United Kingdom and the Republic of Ireland, and asked to jump, he said “How high?” and deleted the protection, clearly without the Government considering the consequences. This is a classic example of the need to beware of unintended consequences.

When the Prime Minister heads off to Saudi Arabia this month to promote trade and relations with Saudi Arabia, what will he say when the Crown Prince asks, “As I exercise influence over the PIF and since the PIF owns Newcastle, am I to be subject to detailed investigation by the regulator as set out in your Bill, and is there anything the regulator will not take into account about me as a ‘person of influence’ over the future of Newcastle United?”

Sadly, I can assure the Committee that for anyone who has read the Bill, the answer to Newcastle fans is that, unlike under the Premier League or UEFA rules, the Crown Prince is to be subject to investigation by the regulator. That is exactly what the Government intend the regulator to do, because they have removed the one protection it had. So let the Prime Minister be in no doubt that the answer he has to give to the Crown Prince and the PIF, which is investing billions in global sport and encouraging full British co-operation with the growth of boxing, golf, the International Olympic Committee’s Esports and tennis, to name just a few recipients of Saudi influence in global sport that is celebrated by many professional sports in this country, all of whom benefit from it.

When the Minister comes to answer, the Committee is looking for simple clarity. Yes, the regulator has full rights to use his or her many powers to investigate and opine on the suitability or otherwise of any owner who exercises a degree of influence over, for example, Newcastle United. That is just one example of such detailed and intrusive investigation which exists solely in the powers of the proposed regulator but nowhere else in football—not in UEFA, FIFA, the EFL or the Premier League. The intrusive investigation which this phrase leads to will be replicated across the Premier League unless we accept my amendments.

We have a clear understanding of the first meaning of an “owner”, which is those who control or exercise control over a club, and shareholders are a good example. However, to understand the second phrase, the concept of “influence” over a club, we need to understand what the Government mean by “influence”. What is deeply disturbing is that, from other parts of the Bill, it is clear that the definition conflicts with the approach to ownership of the government regulator, the Premier League, UEFA and the EFL, all of which would be conflicted with the government regulator’s role. I predict that it would be mired in litigation for years to come and lead to capital flight by current owners in the Premier League and other leagues, so I owe it to the Committee to explain briefly why.

The starting point is whether there is a difference in the definition of an owner between what is in the Bill and in the Premier League’s rulebook. If there is a difference, what will this mean in terms of whether a newly identified owner would have to go through a test or whether they would still be defined as an incumbent owner who, incidentally, will have to go through extensive new tests under this legislation?

This Bill tells us that the regulator must identify an “ultimate owner” as opposed to companies that have ultimate control. How is this defined in the Bill and what does it mean? At what point in the process must the ultimate owner be identified? For example, can he or she be identified for a provisional licence? I would argue that they have to be. If new individuals are identified, will they have to go through the full owners and directors tests as new prospective owners or will they be treated as incumbents?

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Baroness Twycross Portrait Baroness Twycross (Lab)
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I thank the noble Lords, Lord Moynihan and Lord Markham, in her absence the noble Baroness, Lady Grey-Thompson, and my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton for the amendments in this group. It is absolutely right that clubs have suitable owners, a point made by the noble Baroness, Lady Evans of Bowes Park, among others. That is why a new statutory owners’ and directors’ test is a key element of the regulatory regime.

In response to the point made by the noble Lord, Lord Moynihan, the current tests have proven ineffective. They result in a drawn-out process that still allows unsuitable owners into the system. We have seen numerous instances of unsuitable owners and officers causing harm to clubs and detriment to their fans—that stops now. The definitions ensure that those who are responsible for clubs can be identified and tested. They cannot hide behind complex ownership structures to avoid this, as existing tests currently allow. My noble friend Lord Mann made a strong case for strong tests, and my noble friend Lord Watson of Invergowrie added his own experience of Wimbledon.

The noble Baroness, Lady Evans of Bowes Park, asked a number of questions around the owners’ and directors’ tests. In response, I will say that football authorities can still conduct their owners’ and directors’ tests if they choose to do so, but the regulator’s test is set in statute. Any owner who fails the regulator’s tests will be removed and any prospective owner must pass the regulator’s tests before taking ownership, no matter the results of the league’s tests.

Given the importance of this issue, I welcome the opportunity to clarify the Government’s position further. I start with Amendments 27, 28, and 29 from the noble Lord, Lord Moynihan. The definition of an ultimate owner is an important part of the Bill, and we are confident that we have the right definition that achieves the Bill’s aim. The current drafting takes its lead from the precedent of other Acts that use “influence or control” together, including the Companies Act “persons with significant control” regime and the economic crime Act “beneficial owners” regime. This ensures that an individual who exerts significant influence over a club, more than that of any other owner, can still be identified as the ultimate owner, even if they do not have formal legal control.

Lord Moynihan Portrait Lord Moynihan (Con)
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That is an exceptionally helpful and clear answer; now she has given us the Government’s view on what “significant influence” means. Why, then, do the Government not put that in the Bill, rather than simply say that at some stage in the future it will come forward under secondary legislation?

Baroness Twycross Portrait Baroness Twycross (Lab)
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The Government’s view is that we do not need to put it in the Bill.

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Lord Moynihan Portrait Lord Moynihan (Con)
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It is absolutely critical to achieve the clarity that the noble Lords, Lord Mann and Lord Watson, have been talking about, and I agree with them completely. What is needed is clarity for investors. It is absolutely essential that it goes in the Bill; it is critical to the definition of ownership and to the whole regulatory framework that is being placed in a hugely lengthy enabling Bill. The clubs and owners at the EFL and the Premier League need clarity. The Minister has very kindly given the Committee clarity on the definition, as she sees it, of significant influence, so what is there to resist in terms of placing it in the legislation so football clubs can consider it in detail?

Baroness Twycross Portrait Baroness Twycross (Lab)
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I am happy to meet with the noble Lord and discuss this further, but in our view this is not required in the Bill but will become clear from the work of the regulator. We think this will be clear in practice.

This is also a term and a part of the Bill that was within the iteration of the Bill laid before Parliament by the previous Government, notwithstanding the noble Lord’s right to object to the Bill that his Government may have laid before Parliament.

Lord Moynihan Portrait Lord Moynihan (Con)
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I am sorry to intervene again on that, but that is actually not correct. The one area of the Bill that is actually different from the previous Bill is the requirement on the regulator to have regard to the foreign and trade policy objectives of the Government, which is why we used the example of Newcastle. The Minister has not answered the very clear question: as chairman of the PIF, does the Crown Prince, who exercises control over the PIF, now exercise control over Newcastle, and as a result would be captured by the regulatory requirements of the Bill and not by the Premier League requirements?

Baroness Twycross Portrait Baroness Twycross (Lab)
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My Lords, earlier, I said that I was not confused. I am now slightly confused, because noble Lords were very clear earlier in Committee that any issue with the legislation that might lead to UEFA objecting to it was problematic; now, the Government have removed a part of the Bill that was problematic and objected to by UEFA, that risked us being able to compete as a country in leagues within overseas competitions. So, I am slightly confused on that point, but as I said, I am happy to meet the noble Lord.

The other point is that the Companies Act guidance on this is long and complicated. In our view, it has more detail than is appropriate for the Bill, and I assume that the previous Government took the same view.

Lord Moynihan Portrait Lord Moynihan (Con)
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Can I clarify this point once and for all? Anything—not just the clause on the Government’s foreign and trade policy objectives—that could put a stop to our entry into European competition or World Cup competition should not appear in the Bill. I have argued consistently that anything that would cause the independent bodies regulating international football—UEFA and FIFA—to stop our clubs competing in international tournaments should be resisted at all cost. UEFA intervened and said that the clause to which we were just referring was a political clause and should be removed from the Bill, and the Prime Minister immediately removed it—but the moment you remove it from the Bill, there are unintended consequences.

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Lord Moynihan Portrait Lord Moynihan (Con)
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I thank everybody who has participated on this set of amendments. I heard a somewhat surprising answer from the Minister just now and I hope that it might be clarified. My noble friend Lady Evans put the question to the Committee as to which regulator takes precedence. My clear understanding of this Bill is that, through the licence procedure, the regulator we are setting up will take precedence over anything that the Premier League may choose to do. Indeed, that would be part of the contract of the licence issued by the proposed regulator, and that would take priority over, for example, the suitability and fitness tests, the degree of political interference or whatever the league might wish to do on the licensing of a club. However, I heard the Minister perhaps giving a somewhat different answer and, again, I would be grateful for clarification. A meeting is gratefully accepted and I look forward to meeting with the Minister, but, more importantly, these specific points need to be covered in writing to all members of the Committee, because I think there is wider interest than among just those whom she has kindly and graciously offered to meet.

I am sorry she did not respond to my noble friend Lord Parkinson’s question about Qatar. For the record, I am a great believer that sport is a catalyst for change. You know, when you win the right to host the World Cup, that you are shining a torch into the inner recesses of that country, which few other opportunities do. It means the world’s press and the football fans of the world are very conscious of what is happening in your country.

There is no doubt that hosting the World Cup in Qatar had significant influence on important social and employment changes that took place in that country. The fact that the ILO had an office there, worked there beforehand with the Government, was pushing for changes and continues to be there, is a great example. It is the only country in the Middle East that has that office. It is a great example of the power of sport for good and the power of sport for change. So I am sorry the Minister did not respond to that point, because I think it is an exceptionally important one.

I regret to say that I have not been persuaded by the Minister’s defence of retaining influence on the face of the legislation and yet not defining it, saying that it is for secondary legislation. It is one of many, many things that are for secondary legislation. For example, once the regulator identifies the owners and ultimate owners at the stage of the licence application, the regulator can, as the Minister said, make use of its powers under Clause 34 to determine the suitability of those owners. That includes whether the owner meets the individual fitness criteria and whether they have a source of wealth connected to serious criminal conduct. Serious criminal conduct is an extremely important concept that needs defining. If we look further towards the back of the Bill, it comes under “minor definitions” and will be for the Secretary of State to come forward with secondary legislation to define what he means by serious criminal conduct.