Football Governance White Paper

Lord Parkinson of Whitley Bay Excerpts

Thursday 23rd February 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, with the leave of the House, I shall now repeat a Statement made earlier today in another place by my right honourable friend Stuart Andrew.

“Mr Deputy Speaker, can I start by offering my deepest condolences to John Motson’s family. John had an incredible impact over his 50 years working at the BBC and his legacy as a legendary commentator will not be forgotten.

Now, Mr Deputy Speaker, with your permission, I would like to make a Statement on the Government’s reform of football governance. As I am sure many people across the House will agree, in this country, football is more than just a sport. It is part of our history, our heritage and our national way of life, bringing communities across the country together, week in and week out.

We invented the beautiful game, and the Premier League and EFL are true global success stories. It is exported and watched in 188 countries across the world, streaming into 880 million homes. But despite this global success, in recent years, it has become clear that there are systemic issues at the heart of our national game. Since the Premier League was created in 1992, there have been 64 instances of clubs collapsing into administration. Some of these are historic clubs that we have lost for ever, taking with them chunks of our history and heritage, and leaving huge holes in their communities.

Just look at Bury FC. Over its proud 134-year history, Bury managed to survive two world wars, countless economic cycles and 26 different Prime Ministers. But it was driven to the wall by financial mismanagement, damaging the local economy and leaving behind a devastated fan base, who are still coming to terms with the loss of their beloved club. It is not just Bury. The same is true of Macclesfield Town, another century-old club, and Rushden & Diamonds. Countless others, like Derby County, have been driven to the brink, after stretching far beyond their means.

Despite the global success of English football, the game’s finances are in a perilous state. The combined net debt of clubs in the Premier League and Championship is now around £6 billion. Championship clubs spend an unsustainable 125% of their revenue on player wages alone and some clubs face annual losses greater than their turnover. Many, if not most, club owners are good custodians of their clubs, but all too often we hear of flagrant financial misconduct, unsustainable risk-taking and poor governance driving clubs to the brink. Owners are not just gambling with fans’ beloved clubs. They are threatening the stability of the entire football pyramid.

Aside from the financial roulette being risked on clubs’ futures, this is also about the way fans have been treated. Over the last two decades, too many lifelong supporters have been let down, ignored or shut out by their own clubs. Whether it is in the decision to move their stadium to a different part of the country, as happened with Wimbledon FC, or to change kit or badges without fan approval, such as when Cardiff’s owners tried to change the traditional kit of the Bluebirds from blue to red, or, as we saw with the European Super League, when a small group of club owners planned to create a closed-shop breakaway league that goes against the very spirit of the game, without any engagement with their fans.

Football would be absolutely nothing without those fans, yet too often their voices have not been heard. But we have heard them. That is exactly why I made sure that one of my first meetings as Minister for Sport was with fan groups. I heard first-hand how poor ownership and governance can leave clubs at the mercy of careless owners. In our manifesto, we committed to a root-and-branch review of football, with fans at the very heart of that review. That review, excellently chaired by my honourable friend the Member for Chatham and Aylesford—that is Tracey Crouch MP—highlighted a number of key issues that urgently needed resolving in football. Today, we are acting on its recommendations, with the most radical overhaul of football governance since the rules were first invented in a London pub back in 1863.

With this White Paper, we will do five key things. First, we will bring in a new independent regulator to make sure clubs are financially resilient. The regulator will operate a licensing system for all clubs in the top five tiers of English football. Those clubs will have to show they have sound financial business models and good corporate governance before being allowed to compete. The regulator will also be tasked with ensuring the stability of the wider football pyramid.

Secondly, we will strengthen the owners’ and directors’ test to protect clubs and their fans from careless owners. There will be greater tests on suitability and on the sources of funds.

Thirdly, we will give fans a greater say in the running of their clubs. This will include stopping owners changing vital club heritage—such as names, badges and home shirt colours—without consulting the fans first. Likewise, clubs will have to seek regulator approval for any sale or relocation of their stadium, and fan engagement will be a crucial part of that process.

Fourthly, we will give the regulator the power to block clubs from joining widely condemned closed-shop breakaway leagues, like the European Super League.

Finally, we will give the regulator backstop powers over financial redistribution. Supporting the pyramid is crucial and His Majesty’s Government have already committed £300 million of funding to support grass-roots multi-sport facilities in England by 2025.

When the financial health of the football pyramid is at risk, and football cannot sort this issue out, the regulator will have the power to intervene and protect the game. In short, we are protecting the long-term success of our national game and restoring fans’ position at the heart of how football is run.

I want to reassure Members that this is not about changing the fundamentals of the game or imposing unnecessary and burdensome restrictions on clubs. In fact, we would not naturally find ourselves in this space of having to regulate an industry that has enjoyed huge success without government intervention over many years. Despite the scale of the problems and the huge harm they could cause, however, and despite repeated calls for reform, the industry has failed to act. We have been forced to step in to protect our national game. This is about taking limited, proportionate action to maintain the Premier League’s position as the strongest league in the world. It is also about safeguarding clubs across the country—from the biggest to those in single-club towns where football sits at the very heart of the community.

This Government have proven time and again that we are on the side of fans. We committed to this review in our manifesto. We stepped in during Covid to make sure English football was one of the first leagues back across Europe. We got fans back into stadia more quickly than almost any other country, and we took action under competition law to support broadcasting revenues during one of the most difficult periods sport has ever faced. This secured £100 million of funding for the game. We stepped in once again to block the European super league—a competition that no fans wanted. When fans have needed us, we have been in their corner, and now we are putting them right back at the heart of football. I commend this Statement to the House.”

--- Later in debate ---

[Lord Addington (LD)]

My Lords, looking through the review and the response, it is good, but it is not everything we hoped for. It is okay. To make it better would mean taking on a much more comprehensive attitude. The nub of this issue is redistribution. That is what everybody is talking about. We have a regulator that will step in if the other people cannot sort it out. That may not be strong enough. It almost certainly will not be, because people do not like giving up money. You can always find a use for money, justifying paying it to shareholders and players, you name it—but this is something where we will step in if we have to, and we almost certainly will.

The problems of professional sport are writ large behind this—let us face it, the problems around the redistribution of grounds and dodgy owners predate the Premier League. Before it was brought in, various organisations raised those problems with me. It is not a new problem; there is simply more money around now and a way of dealing with it more easily, if we intervene.

If we are intervening, what do we expect of these professional clubs? The state has intervened to make sure that they are sustainable, so will we at least impose best-practice models for other things that they do? Will we say to a Premier League club, or to one in the EFL, that they have a duty to support the grass-roots game? That does not seem to be included. If we have intervened to make their lives easier and to allow them to continue to function, we should be doing something to say that they have a responsibility. That is a fairly reasonable thing to do if we use the power of the state to make their positions sustainable. For example, clubs talk about themselves as community hubs; let us make sure these hubs actually do something.

There are many more comments in the White Paper about things such as the contracts for youth development. In the brief conversations I have had with some of these organisations, they say that they do lots of stuff because they run lots of youth teams. They might run lots of youth teams, but it is to spot talent, and then they dump the others when they do not make it. Think about the psychological damage potentially done there. How could that be done correctly?

When it comes to the game as a whole, these children grow up. How are we encouraging them to carry on playing and being involved in sport beyond this? We will miss a huge opportunity if we merely concentrate on people watching the game and do not say that, first and foremost, it is about playing. Those people in a position of privilege should be taking on some of that responsibility.

Other sports have had their problems—rugby league historically, and rugby union right now—with professional structures, games and money and so on. Will the Government consider this as a model for professional sport generally and the messages coming through? That is something we should be hearing about.

For far too long we have sat back and said that although we have a very old structure—in many of these sports the oldest—it is coping fairly well and most of the time runs without us, so just let them get on with it. Football has proven that we cannot realistically do that. The Government have taken the first step to involving themselves more fully. I hope they have a more coherent plan that goes a little wider than just football—big and important as it is.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, both Front-Bench spokesmen have underlined the importance of football in our national life, going beyond just the many people who enjoy and play football matches. Its role in our national psyche is well underlined this week by the announcement of the play “Dear England”, by James Graham, coming to the National Theatre this summer and inspired by Gareth Southgate’s letter; I look forward to it and to seeing Joseph Fiennes play him.

I am grateful to noble Lords for their words of welcome for the White Paper and the action that the Government are taking. I think that makes this a “friendly” in football parlance—

[Lord Leong (Lab)]

Pre-season.

[Lord Parkinson of Whitley Bay (Con)]

Pre-season—normal service will be resumed soon.

On the point about speed, these are technical areas and my right honourable friend the Sports Minister has made clear how hard he has worked and the extensive engagement he has had with fans and others to make sure that we get it right. We make no apology for that, but we want to see these proposals put into action swiftly. That is why the consultation we are proposing will be a swift and short one of four weeks, so that we can bring forward the measures that are needed. Where that requires legislation, that will be set out in the usual way for parliamentary business, but we want to see action taken. As noble Lords have heard me say before, there are many things that do not need to wait for legislation and that clubs can be doing, particularly on financial redistribution. I hope that the publication of the White Paper today further underlines for them the seriousness with which the Government and fans want these issues to be taken.

The noble Lord, Lord Bassam, asked whether women’s clubs will be regulated. Although the regulator will be designed to regulate the top five tiers of the English men’s professional game, in many places there is clear read-across and overlap with the women’s game, particularly in leagues where teams operate under the same legal entity as their male counterparts. Some women’s teams will be subject to indirect regulation in areas such as the owners’ and directors’ test and financial regulation. We are giving further consideration to such areas of overlap and how they could be managed. He will also know that the review of women’s football which the Government commissioned, and which is due to conclude later this year, will, I am sure, take that into account as well.

The noble Lord, Lord Addington, talked about using the power of the state here, and it is an important point to make. The regulator will have targeted powers of last resort to intervene in relation to financial distribution if a football-led solution is not brought forward. A mutual agreement remains the preferred solution to resolving the issues of insufficient and destabilising financial flows. The regulator will take an advocacy-first approach to regulation but will be given the powers to mandate and intervene swiftly and boldly when that is needed. Checks and balances will be embedded in the design of the regulator and its system to ensure that it exercises its functions in a fair and appropriate way. For instance, it will be subject to legal processes to govern how it uses its powers, including requirements to consult and to meet set thresholds for intervention. As the Statement said, we are looking to act in a proportionate manner here.

Finally, the noble Lord mentioned Newcastle United in relation to the owners’ and directors’ test. Although I cannot comment on specific instances, it gives me the opportunity to wish Newcastle good luck for Sunday. I would be remiss if I did not do so, particularly with family back at home on Tyneside. I wish them the best for the match on Sunday.

[Lord Polak (Con)]

My Lords, to a football fanatic such as me, John Motson was an icon, and I send my condolences to his family.

Usually the Government are moved to regulate when an industry is failing in a significant way. The football industry in the UK is not failing in a significant way—unless like me you are an avid Liverpool fan, though I remind noble Lords that it is only half-time and we have done it before. Sometimes, heavy-handed and intrusive regulation can have an unsettling effect. The Premier League is the best in the world and the Championship is the best second-tier league in the world, so can my noble friend the Minister assure me that the regulator will do nothing to impact the football that is loved both here and around the world, or to impact the success of the Premier League, which is so important to supporting the wider football ecosystem?

[Lord Parkinson of Whitley Bay (Con)]

I am afraid I cannot agree entirely with my noble friend. The examples cited in the repeated Statement are just a handful of examples which point to the failures we have seen and the great disappointment it causes to fans right across the country when their clubs are put in peril, or in some instances cease to exist. My noble friend is right, though, that we want to act proportionately. We are very proud to have such world-leading teams and leagues in this country, but we want to ensure that fans’ voices are heard loudly and clearly throughout the football pyramid. That is what the independent regulator and the other proposals in today’s White Paper aim to address.

[Lord Faulkner of Worcester (Lab)]

My Lords, I declare a historic interest as the vice-chairman of the Football Task Force more than 20 years ago. The Minister will know, though he obviously was not active in politics at that time, that many of the recommendations in Tracey Crouch’s report were ones the Football Task Force put forward, particularly in its final report when the recommendations were largely overthrown by the Premier League’s opposition.

I hope the noble Lord, Lord Polak, is not actually leaving the Chamber—oh, he is. His defence of the Football League, which was refuted by the Minister, is ill-advised. To say that there is nothing wrong with football and it is all fine because the Premier League is a huge commercial success hides all the problems the Minister referred to in the Statement, and which are also in the White Paper and the report by Tracey Crouch. The game is not healthy below the Premier League. Huge numbers of clubs in the English Football League are heavily in debt. Many pay wages that are in excess of their income. The need for redistribution in the game is without question.

One thing about the Statement and White Paper I think regrettable is that the regulator, whose appointment I strongly support, is not being given a front-and-centre role carrying out the redistribution. I do not believe for one minute that the Premier League will voluntarily give up the income it has on the scale required, and nor does the English Football League. It has given up its negotiations with the Premier League, saying that the parachute payments should be abolished and there should be a significant payment, particularly from television income, which should go down through the pyramid. Can the role of the regulator in financial redistribution be looked at again and, with any luck, be included in the regulation when it comes forward?

[Lord Parkinson of Whitley Bay (Con)]

I pay tribute to the noble Lord’s work in this area. I know he worked closely with and has been a strong voice in this Chamber on behalf of Tracey Crouch and others who worked on the fan-led review of the proposals. A football-led resolution to the issue of financial redistribution is the Government’s preference. We urge football swiftly to come to an agreement on that. I agree with the noble Lord: we have been clear that action is needed. Clubs have had plenty of opportunity to take action and in many areas have not done so, which is why we are taking these steps today. Ideally, the regulator would not need to intervene in this space. The process will be designed to empower and encourage football to find a solution first. If it fails to deliver a solution, the regulator will deliver one. The steps we are bringing forward will set that out.

[Baroness Evans of Bowes Park (Con)]

My noble friend will know that clubs such as Norwich City—I declare an interest as a season ticket holder, some might say “long-suffering” but many of us would not—are at the heart of their local communities and, crucially, inspire young boys and girls to experience all the benefits sports can bring. Can my noble friend confirm that, as a result of this review and the further investment I believe has been announced, funding will flow down and increase provision at local level of 3G pitches and other facilities, in order to ensure that young people can enjoy the benefits of football and to increase the talent pool we want to see in the game?

[Lord Parkinson of Whitley Bay (Con)]

I am particularly glad to hear from my noble friend because her husband asked the final question of my right honourable friend the Sports Minister when the Statement was made in another place—asking his question in the final minutes like one of those dramatic goals in extra time. Her question, in earlier time here, underlines the importance of financial redistribution and the life-changing opportunities it provides for young boys and girls who wish to play the game. Alongside that, as I said in the Statement, the Government are providing £300 million to make sure there are multisport playing facilities around the country, including in Norfolk, to inspire young people.

[Lord Snape (Lab)]

Does the Minister accept that it is important not to over-emphasise the role supporters can play in the running of football clubs in the EFL? I speak from bitter experience, having twice been a director of my hometown football club, Stockport County. In 2010, a group of us inherited a club that had been almost bankrupted by the well-meaning efforts of the supporters’ trust. The supporters’ trust system has not been particularly successful in English football. I confess to the Minister and your Lordships that, having become chairman of Stockport County, I led the club to its least successful period in its 130-year history. Stockport County is currently owned by a Stockport-based millionaire and is sixth in the English second division, having been led out of the national league by Mr Mark Stott, the current chairman. I speak still as a season-ticket holder at Stockport County. I would much prefer, and I suspect other supporters would agree, a club such as Stockport County to be run by an enthusiastic millionaire rather than an inefficient amateur like myself.

[Lord Parkinson of Whitley Bay (Con)]

The Government do not want a one-size-fits-all approach to fan engagement. That would be wrong, not least because the five leagues cover 116 clubs of many different shapes and sizes. Our proposals allow the regulator to implement a minimum standard of fan engagement and protection, particularly regarding club heritage, that would ensure that clubs have a framework in place regularly to meet representative groups of fans to discuss key strategic matters at the club and areas of interest to them. The noble Lord is right: there is a difference between the day-to-day financial management and the long-term preservation of the identity of clubs, but with the flexible approach we are taking, we are ensuring the regulator is able to facilitate that.

[Lord Hannan of Kingsclere (Con)]

My Lords, the three Front Benches were unanimous on the excellence of our football. The noble Lord, Lord Bassam of Brighton, used the phrase “envy of the world”—a phrase that is often used loosely, but on this occasion may be exactly accurate. That excellence came about because of self-regulating bodies that existed for no purpose beyond the pleasure of their own members, who did not ask for state permission and who have built what we all seem to agree is this world-leading, excellent system. So to what problem is this a solution? Of course we can all identify some imperfections—perfection is not for this life—but is my noble friend really confident that state-appointed regulators will be more interested in the welfare of clubs than the people who own them, who presumably have some interest in the success of their investment? We are not some Comecon country or insecure South American junta where sport is a matter of national prestige that cries out for national regulation. Should we not hold ourselves to a higher standard?

[Lord Parkinson of Whitley Bay (Con)]

I am enough of a Conservative to agree with my noble friend that it is much better when solutions are found not by the state but when people take matters of good custodianship into their own hands; but I am enough of a Tory to be sad at the demise of much-loved historic institutions such as the 64 clubs which have gone into administration since the Premier League was created in 1992, much mourned by fans and communities in the towns and cities where they long played. That is why we are taking the step to create a regulator: to ensure that fans’ voices are heard and that these historic clubs endure.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, we will have a short adjournment while we find the Minister and her file. We will return in a few minutes.