Football Governance Bill [HL]

Baroness Blake of Leeds Excerpts

Committee stage
Wednesday 18th December 2024 Lords Chamber

[Lord Pannick (CB)]

My Lords, I support the noble Lord, Lord Moynihan, and the noble Baroness, Lady Brady, in this matter. It cannot possibly be fair to have a regulatory system in which, if the regulator does not perform and reach a decision within the specified time, for reasons that are not the responsibility of the applicant, the application fails. That is plainly unjust and, as the noble Baroness, Lady Brady, says, it is contradictory to the approach adopted in competition law, where the regulator has short time limits and must comply with them. The alternative is to have a more open-ended system, whereby the regulator can take more time if it is necessary to do so in exceptional circumstances.

[Baroness Blake of Leeds (Lab)]

My Lords, I start by thanking the noble Lords, Lord Markham and Lord Moynihan, for tabling these amendments. I will start with Amendment 180, in the name of the noble Lord, Lord Markham. The regulator needs to know who a club’s prospective new owners and officers are before they can buy or join the club, so they can be tested.

Although clubs, owners and officers are required to pre-notify the regulator, there may be occasions where someone becomes an owner or officer of a club without having first notified the regulator. In these circumstances, it is vital that the regulator is notified after the event—precisely what this amendment would remove. That is because, if the regulator is not aware that someone has become an owner or officer, the regulator will not know to test them. This risks clubs having unsuitable owners or officers in place.

I turn now to Amendments 187ZA and 187ZB, in the name of the noble Lord, Lord Moynihan. I will not deviate to talk about Leeds United at this point, although we always find reasons to do so in our general conversations. I am grateful for his comments and for those of the noble Baroness, Lady Brady, and the noble Lord, Lord Pannick. Clearly, I think we come down to the issue of timely decision-making on the suitability of new owners and officers, and we recognise that this is important for clubs’ financial sustainability.

It is a fact that, without deadlines, we have seen league determinations drag on, unable to reach a decision. That is why the regulator will be subject to a statutory deadline when it tests the suitability of prospective new owners and officers.

We believe that Amendment 187ZA would undermine the regulator’s tests. It would require the regulator to deem an owner or officer suitable to take up a position at a club if the deadline had been met, and the regulator had otherwise been unable to make a determination. This means that it would have to approve an applicant it did not know was suitable.

Amendment 187ZB would then allow that owner or officer to remain at the club until such point as the regulator found them unsuitable. This creates very concerning outcomes. If the end of the time limit resulted in an automatic pass, this could incentivise prospective applicants to stall and withhold information. More worryingly, as I set out, it would also mean that new entrants were approved even if the regulator was not confident that they were suitable—which is something that we simply cannot have.

This risks owners and officers who should never have been allowed to take up positions at clubs in the first place to potentially do considerable harm to clubs, which is why the statutory deadline must result in an automatic negative determination if reached, because this is the only way to ensure that suitable owners and officers become custodians. If the end of the time limit resulted in an automatic affirmative determination, this would incentivise prospective applicants to stall, as I have already outlined. It would also mean that new entrants would be approved if the regulator was not confident, and I hope that noble Lords will understand that this is not an acceptable position to be in. That is why—

[Lord Pannick (CB)]

Does the Minister accept that the current wording of the clause means that the application fails even if the delay is due entirely to the incompetence of the regulator or the failure of the regulator to have an efficient system for dealing with applications? Surely that cannot be right.

[Baroness Blake of Leeds (Lab)]

I understand the noble Lord’s comment but I really believe we are covering our tracks in this. We are improving the situation where the regulator works to avoid the situations that he outlined. I will add that this also provides certainty to the industry and, most importantly, it will incentivise the prospective person to promptly provide information to the regulator to allow it to make its determination. With those comments, I hope that noble Lords will not press their amendments.

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[Lord Moynihan (Con)]

My Lords, I too will speak to Amendment 204 on multi-club ownership, as the noble Baroness, Lady Taylor, has made some important points and it would be helpful for the Committee to understand the position of the Government. It can alleviate risk. It is also highly complex and can make it very difficult, in terms of due diligence, for the regulator to look at an English club under this legislation without taking into account the financial exposure that a multi-club owner could have in another country with other clubs.

This is a growing trend; it is not new. A significant number of Premier League clubs and six EFL Championship clubs form part of a wider multi-club model, a structure first explored exclusively in Europe by ENIC, now the majority shareholder of Tottenham Hotspur. The rationale underpinning multi-club ownership aspirations, which underlines just how complex the situation can be, ranges from player recruitment and development efficiencies to knowledge sharing, resource synergies and brand penetration.

Furthermore, accruing interest in clubs that compete in the continent’s top leagues—those that hold higher bands and therefore score more points in the governing body endorsement system—is seen as a means for Premier League and EFL clubs to access a more eligible foreign pool of players. Having interests in multiple clubs is not a phenomenon unique to the UK; it pervades the European game. UEFA reports that clubs with cross-ownership relations account for more than a third of the top division in each of Belgium, France and Italy, in addition to England. Integrity of competition, reconciling the model with football’s rulebook, has become a complex issue for UEFA. At the centre of sport is competition, so if the same person, either a natural or a legally based entity, was to have control or influence over two rivals, there would be a risk to the integrity of competition whenever those rivals competed.

To mitigate that risk, football’s governing bodies have introduced rules to preserve the independence and integrity of competition between its clubs. At a domestic level, approximately two-thirds of European national football associations have rules directly limiting or restricting multi-club ownership. The famous article 5 of the regulations of the UEFA Champions League, on the integrity of the UEFA club competitions, stems from the governing body’s concern, which started back in the late 1990s. Article 5 regulates common ownership by prohibiting the same individual or legal entity having control or influence over more than one club playing in the same UEFA club competition. That notably includes the ability to exercise, by any means, a decisive influence on the decision-making of the club concerned.

With that brief explanation on top of the important points made by the noble Baroness, Lady Taylor, I would be very grateful if the Minister could confirm that she is completely comfortable with article 5 and will instruct the regulators not to impose any conflicting regulations in this area.

[Baroness Blake of Leeds (Lab)]

My Lords, I thank the noble Lords, Lord Parkinson of Whitley Bay, Lord Addington, Lord Markham and Lord McNally, who I am sorry to hear is not available today, and particularly my noble friend Lady Taylor of Bolton, for the amendments in this group.

Starting with Amendment 190 from the noble Lord, Lord Parkinson, I do not agree that the foreign and trade policy objectives of the Government have any bearing on suitability. Suitability should be based purely on an impartial assessment of the individual’s fitness, whether they have a source of wealth connected to serious criminal conduct, and their financial plans and resources.

[Lord Parkinson of Whitley Bay (Con)]

I am sorry to intervene so early, but the noble Baroness has said something quite stark. The policy of the United Kingdom is very clear in relation to the Russian Federation at the moment. Roman Abramovich was sanctioned because of the UK’s very clear position and the ownership of Chelsea was changed for a brief period. The Department for Culture, Media and Sport owned it on behalf of the nation and oversaw the sale. I understand the Government’s stated reasons for taking this out of the Bill, but should the regulator not be able to take into account the foreign policy issues of the day on something as important as this?

[Baroness Blake of Leeds (Lab)]

The noble Lord has pre-empted the further comments that I was going on to make. I can address this here. Clearly, in the example that is given regarding Russia, anyone connected to a state that is subject to sanctions would not pass the test. That is a straightforward way of picking up some of the concerns that he has raised.

The intention with all this is to ensure that the test can be applied consistently and remain fair, transparent, robust and focused on whether an individual is suitable to own a football club. Furthermore, the Government have been clear that the independence of the regulator is vital. That is the point I want to stress here and that is why the Government have removed the requirement for the regulator to have regard to His Majesty’s Government’s foreign and trade policy objectives when assessing an owner’s suitability, which is the precise requirement this amendment seeks to include.

Turning to Amendment 191, I thank the noble Lord, Lord Parkinson, and assure him that the intent of his amendment is already achieved in the Bill as drafted. The Bill sets out a number of matters the regulator must take into account when considering an owner or officer’s fitness as part of the owners’ and directors’ test. One of these is whether the owner or officer has been party to civil proceedings. As with all public bodies, the regulator must take into account all relevant matters and must disregard irrelevant matters when it comes to making decisions. That means that the things listed in Clause 37(2) will affect the regulator’s decision only if they are relevant in a specific case. That picks up on the issue of relevance.

In other words, the regulator must treat these things as potentially relevant to its decision, but it must consider the specific facts and context in every case. The noble Baroness, Lady Brady, also picked up on the issue of relevance. For example, the regulator will not be concerned with whether an owner or officer has contested a speeding ticket. However, it will be concerned if a civil court has found that an owner or officer has acted in a seriously dishonest way or if they have a track record of civil cases that cast significant doubt on their integrity. The test is designed to allow the regulator to make a holistic evidence-based assessment of suitability, taking the context into account, as I have mentioned previously.

I turn to Amendment 192, tabled by the noble Lord, Lord Addington, and Amendment 201 in the name of my noble friend Lady Taylor of Bolton. On the latter, I completely agree that an unspent serious criminal conviction is likely to affect whether an individual is suitable to be a club’s custodian. That is why the regulator is already required to take any criminal convictions into account when assessing an owner or officer’s suitability —it does not have a choice: it has to. I reassure my noble friend that we take her comments seriously and are grateful for the way in which she expressed them today.

The Bill does not set out exhaustive details on every element of the fitness test as to what constitutes a pass or fail. Instead, it allows the regulator to make a holistic assessment, which, crucially, is able to take into account any context and relevance. We believe this approach is key. If someone’s criminal history makes them unsuitable, the regulator can fail them on that basis. By comparison, the binary nature of the league’s current tests leads to a less sophisticated assessment of suitability. That is why this test takes a different approach. I reassure noble Lords that the Bill as drafted already requires the regulator to consider any unspent serious criminal convictions, and we fully expect the regulator to treat these as very significant factors in its assessment.

I turn now to Amendments 195 and 198 in the name of the noble Lord, Lord Parkinson—

[Lord Goddard of Stockport (LD)]

Can the Minister help me? She said she would comment on the amendments. What are her comments on Amendment 192, tabled by my noble friend Lord Addington, which would require the Bill’s propriety test to include equality, diversity and inclusion? We had a long and wide-ranging discussion on that the other night, and the Government made it clear that they supported including equality, diversity and inclusion in the Bill. I would like some clarity. The propriety test seems fixated on criminal charges and litigation.

[Baroness Blake of Leeds (Lab)]

I am sorry that we have not had a fuller discussion on that, but I thank the noble Lord, Lord Addington, for his amendment and I agree that equality, diversity and inclusion are significant factors which the regulator has a duty to highlight. Equality, diversity and inclusion are not named criteria in the fitness test, and I do not believe they should be. If an individual has behaved in a seriously discriminatory and harmful way that rises to the level of a criminal offence, and which results in a civil lawsuit or regulatory or disciplinary action, the existing test will capture this. We believe that this is the appropriate threshold. It would not be proportionate to require the regulator to assess individuals’ commitment to equality, diversity and inclusion.

I will return to the point the noble Lord, Lord Parkinson, made regarding a blank cheque, and pick up on his Amendments 195 and 198. The Bill sets out a list of matters the regulator must consider when assessing an owner or officer’s honesty and integrity as part of the fitness test. Those are the relevant matters when assessing an individual’s honesty and integrity, and they are based heavily on precedent—namely, the Financial Conduct Authority’s fit and proper person test. However, as we have discussed before, football is a changing industry and the regulator must be able to adapt to this. Matters may emerge in the future that are crucial to assessing an individual’s fitness.

The purpose of the owners’ and directors’ test is to ensure that clubs have suitable custodians. That is why it is vital that the regulator be able to consider other matters. This sort of discretion is well precedented; indeed, the FCA has more discretion when conducting its fit and proper tests. However, we want to make it explicitly clear that it would not be appropriate for the regulator to add any matters which would allow it to determine an individual’s suitability solely based on their connection with a Government. That should not be what determines whether an individual is suitable or not.

Turning to Amendment 204 from the noble Lord, Lord Parkinson, nothing in the Bill prohibits an owner owning more than one club. I thank the noble Lord, Lord Moynihan, for his comments on this issue. Concerns about multi-club ownership are to do with conflicts of interest and competition, which is why the leagues and UEFA have rules about multi-club ownership. Clubs competing in these competitions will be required to abide by any applicable rules.

Turning finally to Amendment 202, from the noble Lord, Lord McNally, I agree that it is crucial that clubs be protected from unsuitable officers, which is why the Bill gives the regulator the powers to disqualify any unsuitable officer from being an officer at any regulated club, up to and including for life. That, I am sure noble Lords will agree, is a very strong tool that has powerful ramifications. It means that all clubs will be better protected from unsuitable officers, but it should be used carefully.

There are scenarios where the regulator must find an officer unsuitable—for example, if an officer lacks the requisite qualification, experience or training to take up that specific officer role at the club—but it should not automatically follow that they are deemed unsuitable for any officer role at the club. Indeed, there may be other officer roles that they are suitable and qualified for, but this amendment would ban that. It would mean that the regulator would have to disqualify them from being an officer anywhere. This we cannot and should not accept. That is why it is important that the regulator has the power to disqualify unsuitable officers but is not always required to do so. For the reasons I have set out, I hope the noble Lord will be able to withdraw his amendment.

[Lord Pannick (CB)]

Could the noble Baroness say something about the UEFA letter which expresses its views on the Bill? Will she assure the Committee that a copy of this letter will speedily be sent to the noble Baroness, Lady Brady, and a copy put in the Library so that we know what it says?

[Baroness Blake of Leeds (Lab)]

My understanding is that we will not be sending it, but I am sure there will be further clarification on this point.

[Lord Pannick (CB)]

Can I ask why? This is a letter from the sports regulatory body that governs European football. Surely the Committee is entitled to know what its views are on the substance of the Bill we are debating.

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[Baroness Blake of Leeds (Lab)]

We have already covered this point. We are talking about a private letter to the Government. That is my understanding of the situation. I do not feel qualified to comment further at this stage.

[Lord Parkinson of Whitley Bay (Con)]

It is a private letter that has convinced the Government to change the Bill in the way that we are debating here, so I hope the noble Baroness will take that away and hear the repeated request from the Committee to see this letter. It has persuaded them to take out the provision that I am probing with my Amendment 190 and every time we return to this matter, the Committee gets a bit more confused about why the Government have done it and what may or may not be in that letter. I appreciate what she says but I would be grateful if she could let us see it.

I apologise for intervening so early. What the noble Baroness said subsequently was very helpful. Also, the example I gave was not a helpful one because Roman Abramovich was sanctioned and if a person becomes sanctioned, as the noble Baroness went on to say, that individual would indeed be covered. To give her another, necessarily hypothetical example, if an unsanctioned citizen of the Russian Federation, connected to the Russian Government and supportive of their illegal war in Ukraine, wished to become an owner of a football club in this country, the combination of taking out this provision about allowing the regulator to have regard to the foreign policy objectives of the Government of the United Kingdom and the refusal to accept my Amendment 198, which covers links to foreign Governments, means that the regulator would not be able to prevent that person—a Russian citizen connected to the Government of the Russian Federation—becoming an owner of a club? Does she not think that is an unfortunate consequence of the changes the Government have made to the Bill because of this UEFA letter which we have not seen?

[Baroness Blake of Leeds (Lab)]

With regard to the UEFA letter, I refer noble Lords back to the comments that my noble friend Lady Twycross made previously. To clarify, we did not in fact say that the letter was the reason for changing the Bill; we said that UEFA’s views more generally were the reason for change. With that, I think I can leave that there. I also want to make the point again that anyone subject to sanctions would not pass the test.

[Lord Parkinson of Whitley Bay (Con)]

But somebody who is not subject to sanctions but who is connected to a Government whom the UK is in dispute with would not be covered because of the removal of this provision from the Bill. I am happy if the noble Baroness wants to write on this, but this is an important matter because this is a change to the Bill. I understand the Government’s stated reasons for changing it—we do not want to see football teams in this country unable to take part in international tournaments and we want to make sure that the regulator is independent of government—but I worry that by making the change in the way that we have and by not adding in the additional safeguard such as the one I am proposing through my Amendment 198, we open ourselves to a situation where somebody connected with a foreign Government cannot be taken into account by the regulator. If she is happy to commit to write on that, we would be grateful.

[Baroness Taylor of Bolton (Lab)]

I think everybody is thinking about the previous examples we have been given, but would not the example that the noble Lord, Lord Parkinson, just gave us of the non-sanctioned Russian individual be covered by the other considerations and the holistic attitude that my noble friend the Minister was telling us was the basis of the approach of the regulator?

[Baroness Blake of Leeds (Lab)]

I thank my noble friend for her helpful comments. I am not able to comment further at this moment. I think the detail is probably beyond this discussion and I recognise the comments about going round and over things again.

[Lord Parkinson of Whitley Bay (Con)]

I am grateful to the noble Baroness but it would be helpful if we could have something in writing on this. As I say, I gave a poor example in the case of Roman Abramovich, but the hypothetical example is one that I would be grateful for an answer to. That would be appreciated. But I am grateful to her for what she said and the reassurances she gave on some of the other amendments that I have tabled in this group on civil offences and so on. I take on board the points that the noble Baroness, Lady Taylor, raised about multi-club ownership. I recognise that this is a live and lively debate in the sport. What we were trying to test with Amendment 204 was that the regulator should not be restricted on that basis alone. But with gratitude to the noble Baroness and eagerly awaiting the letter that will follow, I beg leave to withdraw my amendment.

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[Lord Shamash (Lab)]

My Lords, I specifically remember this as it involved Manchester United. It is propitious that the noble Lord, Lord Johnson, has arrived as it was his brother, the then Prime Minister, who said “I would drop a legislative bomb on this proposal”. Do your Lordships remember the language? That is precisely what happened and it killed it dead.

[Baroness Blake of Leeds (Lab)]

We have interventions on interventions here and we should move on.

[Baroness Twycross (Lab)]

My Lords, before we have any further interventions, I thank my noble friends Lord Bassam of Brighton and Lady Taylor of Bolton, as well as the noble Lord, Lord Parkinson of Whitley Bay, for their amendments. I also thank the noble Lord, Lord Maude of Horsham, for his contribution on this group, which sparked a lively debate, and for giving notice of his intention to oppose the Question that Clause 53 stand part of the Bill. It is useful to remember why we are here, but my comments will focus on the amendments in this group. It is imperative that the regulator can raise the funds necessary to deliver its regulatory functions, so I thank my noble friends and the noble Lords who have raised this important issue.

Turning first to Amendments 250 and 254 in the name of my noble friend Lord Bassam, I want to reassure him that the existing drafting in Clause 53(3) is comprehensive, in the Government’s view, and provides the necessary mechanism for raising these funds. Clause 53(3) also acts as an important constraint on what the regulator can charge clubs for. We believe that the amendment would risk bypassing this safeguard. We also want to be clear that, under the existing drafting, any such central fund could not be used as a form of lifeboat fund to prop up clubs in distress. It is the Government’s opinion that a zero-failure regulator, as implied, would create moral hazard and encourage the very risk-taking that the regulator is trying to address.

On Amendment 252 in the name of my noble friend Lady Taylor of Bolton, the Government acknowledge the importance of any charges on clubs being transparent and proportionate, and offering value for money. These values should be at the heart of any public body. This must be achieved while maintaining the regulator’s operational independence and flexibility, which is why it would not be appropriate to prescribe an exact methodology in legislation for charging the levy. Doing so would remove the regulator’s ability to explore other, possibly more effective and proportionate, methods of charging. The Bill already requires the regulator to have regard to clubs’ financial resources and position in the pyramid. I am confident that this will be sufficient to ensure that the levy is fair and proportionate. I hope this will give my noble friends reassurance that these costs will not be burdensome to clubs.

Amendment 256 in the name of the noble Lord, Lord Parkinson of Whitley Bay, would require the regulator to consult with the Chancellor of the Exchequer specifically, as opposed to the Treasury, when making, amending or replacing levy rules. Consulting with the Treasury on levy rules is standard practice for a regulator, and this approach has been agreed with the department. The Chancellor, as head of the Treasury, will have full oversight of the Treasury’s response to the consultation. The Chancellor is accountable for the decisions of the Treasury and any consultation with the Treasury is likely to have the approval of the Chancellor. Therefore, the Government’s view is that the existing requirement to consult with the Treasury is sufficient to ensure value for money.

Finally, on whether Clause 53 should stand part of the Bill, this clause will allow the regulator to charge a levy to licensed clubs that covers the regulator’s running costs. This follows the precedent of other regulators such as the FCA, the CMA and Ofcom.