Football Governance Bill (Fifth sitting)

Damian Collins Excerpts

Committee stage
Tuesday 21st May 2024 Public Bill Committees

[Ian Byrne]

I wish to support the excellent remarks by the shadow Minister, who gave a very comprehensive overview of why we need amendments to the Bill. There is a real worry, as I have outlined, that the clubs will seek to dilute the power of the supporter’s voice by filling the boards full of stooges, shall we say. We need some sort of system to ensure that boards are appointed through a democratic and independent process. Supporters trusts are a ready-made option. There are over 130 of them in the football world. They are democratic, independent organisations that have the trust of the wider supporter base, mainly. It would be foolish not to utilise that expertise and the system that is already in place.

If a club has not got a supporters trust we need to have some sort of oversight to ensure there are independent fan voices holding clubs to account, which will be a crucial part of the independent football regulator. We have got to ensure that those boards are fit for purpose and, as I said, not diluted by clubs that want to disempower supporters and supporter voices.

[Damian Collins (Folkestone and Hythe) (Con)]

I want to repeat the point I made on Second Reading about the corporate governance statement, which is part of the licensing condition. I think this is incredibly important—indeed, it will be important for the regulator, because it is part of the conditions of issuing the licence.

My right hon. Friend the Minister has said that the regulator will issue of a code of practice. It is important that we are clear what, in passing this legislation, Parliament intends this code of practice should contain. Competition organisers already require clubs to demonstrate many of the requirements discussed in this debate. For example, the Premier League’s own governance statement says that the Premier League handbook acts as the rulebook for all member clubs, which includes the clubs having to demonstrate

“minimum standards of governance and operation on a wide range of areas, from safeguarding and supporter relations to broadcaster access, stadium infrastructure and club academies”.

By asking for this sort of information, the regulator would merely be repeating requests which the clubs have to fulfil for their competition organisers anyway. I agree with the evidence we received from Kick It Out, which said that it would be extraordinary that such a corporate governance statement would not include the club’s policies on equality, diversity and inclusion. I do not think we would necessarily be asking for the clubs to do more work than they do already. We would simply be asking that their own policies in these areas be clearly set out in the corporate governance statement they give to the regulator. That would mean that the regulator would have the power to hold the clubs to account for those policies. If necessary, the regulator could even audit or investigate clubs if it felt they were in breach of those conditions, which would almost certainly be a breach not only of the pledges they have made to the regulator but of the rules of the competitions within which they play.

[Dame Tracey Crouch]

Will my hon. Friend clarify something? Is he saying is that there is no need to change any part of the Bill? This needs to be reflected in the intent of the corporate governance statement, and some of these things can be included without amendment to the legislation?

[Damian Collins]

My hon. Friend makes a very important point. That is exactly correct. I think it is a question of being clear as to what the corporate governance statement should include, either in the Bill or at least in the explanatory notes. The explanatory notes already say that a description of all the operations of all the elements of the club should be included; it would be extraordinary if we thought that that did not include a statement on equality, diversity and inclusion, or on the welfare of the players. This has been requested throughout the passage of the Bill. In particular, we have heard that at present there is no requirement for an EDI statement, nor are players mentioned at all. As my hon. Friend the Member for Chatham and Aylesford says, without changing the structure of the Bill, or maybe even its wording Bill, we could make it really clear that these things are included through these important corporate governance statements.

[Stuart Andrew]

I thank hon. Members for their contributions. I agree with the hon. Member for Barnsley East that the guidance on corporate governance should be really helpful to clubs that are perhaps struggling with that, and puts it on a statutory footing. As my hon. Friend the Member for Folkestone and Hythe quite rightly points out, many of these clubs, by obligation of the leagues they are in, already have to provide a corporate governance code. However, as we go further down the pyramid, there are varying degrees of quality for that corporate governance code. That is why having a statutory requirement will, we hope, improve those standards. We recognise that some of those codes work well, but my hon. Friend is right: this will enable the regulator to hold those clubs to account for the way in which they are implementing those corporate governance codes.

[Damian Collins]

My right hon. Friend makes a good point. The requirements will differ at different levels of the pyramid. It would be wrong for us to require a club in League Two to meet the same corporate governance standards as a Premier League club. However, the provision could be worded to say that the corporate governance statements must set out how the clubs meet all the requirements they are expected to meet by the competition organisers for the competition in which they play.

[Stuart Andrew]

I expect that clubs would have to work closely with the leagues as well.

On the issue of EDI, I hope that it is clear this is an area that I personally feel very passionate about. We have made sure that the Bill and the regulator are tightly focused on the finances of clubs, the sustainability of the pyramid and fan engagement. We recognise the importance of equality, particularly, as the hon. Member for Barnsley East mentioned, in light of unacceptable abuses. I regularly engage with the Football Association and the leagues to put pressure on them and to work with them to do more to make improvements in this area. We also work with organisations such as Sport England and UK Sport, because it is not just football where this is an issue.

[Stuart Andrew]

My hon. Friend makes a really important point, which I was just about to come on to. I am glad that she did so—it was a perfect introduction. She is absolutely right. The regulator can consider all of those, and I would expect that it would do so. It can draw on established principles such as, as she rightly points out, the code for sports governance and the UK corporate governance code. It can also draw on the Wates principles on corporate governance for large private companies, and it can also draw on the regulator’s own state-of-the-game reports. There is a whole host of information which I hope will address those issues.

I can confirm to the hon. Lady for Luton South that the phrase, “likely to be affected”, includes fans, so I expect that they will be consulted.

[Damian Collins]

My right hon. Friend’s response is helpful. If the Government are not willing to amend the Bill, and do not feel the need to do so, would he consider writing to the Committee, setting out the guidance which he would give to the regulator when preparing the codes of practice on what the corporate governance code should include?

[Stuart Andrew]

Yes, I would be more than happy to do that.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Schedule 5 agreed to.

Clause 21

Discretionary licence conditions

Question proposed, That the clause stand part of the Bill.

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[Stephanie Peacock]

I appreciate my hon. Friend’s comments and his work with his local club. I have met its supporters, and that is one example, although not a lone one, because it has been confirmed, in another example, that both Bury FC’s owners, Stewart Day and Steve Dale, passed the EFL tests. The fan-led review took a number of such case studies into consideration, concluding that things needed to change.

Alongside other measures in the Bill, which will be vital in giving owners a better landscape in which to operate and invest, the review made some distinct suggestions regarding the owners and directors tests, such as: ensuring a consistent and independent approach across all men’s football; giving tests the backing of the regulator to enable access to information not otherwise available to competition organisers, such as that from the National Crime Agency; splitting the tests into two parts to recognise the difference in the obligations and duties of owners and directors; and strengthening the qualification criteria to ensure that prospective candidates have integrity and the intention of running a club sustainably. Overall, I think the clause and this part do a good job of achieving those aims and recommendations.

I have one brief question at this stage. The EFL has indicated that it will stop conducting its owners and directors tests once the regulator is running its tests. However, Richard Masters told the Committee that the Premier League would continue to run its tests alongside those of the regulator. Putting aside the issue of clubs paying twice for the same regulation and the lack of efficiency involved in duplicating structures, a dual system could pose a dilemma. If two tests yield different results, whose decision would ultimately be adhered to? That is difficult to tell from the Bill, and I hope that this is something that the Minister can confirm for us today, or that he will write to the Committee about.

[Damian Collins]

I asked Richard Masters that question when he gave evidence to the Committee and he was clear then that it would require two green lights, as he put it: a person has to pass the Premier League’s own test as well as the test set by the regulator.

[Stephanie Peacock]

That clarity is welcome, but I would still be interested to hear the Minister’s comments. Nevertheless, I am pleased to welcome the clause and I look forward to discussing it in detail.

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[Mr Betts]

That is a really helpful point. The Bill is about stopping people from doing the wrong things for the wrong reasons, as opposed to stopping people from making mistakes because they are trying to do the right thing but get things wrong. We will never be able to stop that completely.

[Damian Collins]

I echo what my hon. Friend the Member for Chatham and Aylesford said. Part of the problem with the lack of oversight of spending, particularly in the Championship, is that club owners who go in with the best of intentions find themselves competing against other clubs that are spending over 100% of their annual revenue on salaries. They therefore make mistakes in trying to compete with someone else who is already trading in breach of the league’s rules.

[Mr Betts]

Absolutely. Trying to keep clubs in line with the league’s rules, so that others do not over-compete to match them, is vital. We will come on to parachute payments later, including how they can drive these processes.

We cannot go back and undo all the problems of the past. My concern about new clause 3 is about owners who, for whatever reason, have decided to separate the ownership of the club from that of the ground. I know that in future that will require proper consultation and approval from the regulator, but this is being done in some clubs. My own club, Sheffield Wednesday, is one. Derby County has done it, and I think Aston Villa and Charlton have as well—it has happened at quite a few clubs, for various reasons. For Sheffield Wednesday and Derby, it was a way to try to get round the financial restrictions on clubs. Wednesday just made a mess of theirs and got the timing wrong, so they got a points deduction anyway.

New clause 3 is an attempt to say that although we cannot go back and reverse that decision—we cannot force the owners to sell back the grounds to the same organisation that owns the club—we can say that if the club is to be sustainable, the owner has to demonstrate that the ground will be available. A club cannot play without a ground; if it does not have a ground, it is not sustainable. I hope that the Minister will take that point seriously. If he cannot accept the new clause, because there is some—

Football Governance Bill (Sixth sitting)

Damian Collins Excerpts

Committee stage
Tuesday 21st May 2024 Public Bill Committees

[Rachel Hopkins (Luton South) (Lab)]

I want to carry on the debate about clause 37 and reflect on honesty and integrity as set out in subsection (3), on “matters relevant to determinations” of the “requisite honesty and integrity”, and subsection (3)(g), which talks about

“such other matters relating to honesty and integrity as may be specified”

by rules. I would be interested in a little clarity from the Minister about that. Some of the other prerequisites or matters to be considered, such as whether someone is financially sound, can involve hard evidence, and someone’s competence can be tested by qualifications; integrity, however, is a bit of a subjective matter. It is more about things that are not against the law but are certainly not in the spirit of the law, and it is often behavioural.

Does the Minister have any examples that he might want to see in those rules? Someone might have used poor employment practices, for example, as we have seen in other industries, some of which are regulated and some of which are not. The issue would not reach a tribunal so it would not be a piece of hard evidence, but it would bring into question why an owner or officers of a club, in a different business, deployed fire-and-rehire tactics, for example, that were detrimental to their workforce and local community. Similarly, in a positive sense, would there be any consideration of what high integrity might be: for example, owners and officers who championed equality and diversity—an issue that we have been speaking a lot about in this Bill? I would welcome the Minister’s comments.

[Damian Collins (Folkestone and Hythe) (Con)]

I will be interested in the Minister’s remarks about amendment 1. I understand the point that my hon. Friend the Member for Chatham and Aylesford is making, in seeking to create a bit more flexibility for the regulator. We would all hope that the integrity checks against an individual owner could ultimately “trump”—if she does not mind my using the word—any positive trading relationship. If the person were not considered a good and proper owner, the fact that we had a good trading relationship with their country should make no difference: they should not be able to avoid the checks simply because they come from a trusted trader nation.

However, on the other hand, I can see that having “must” would be helpful for the regulator in two ways. One is that if a would-be owner of a club met all the criteria and therefore should be allowed to acquire the club, but the only block on them was that they were a sanctioned individual, the regulator would have the certainty of knowing that it could not let the deal go through. There would not be grounds for challenge, say, at the Court of Arbitration for Sport over whether an appropriate judgment had been made. There would be no question of the sanctioned person’s suitability on any other grounds. In that particular circumstance, the provision could be helpful.

I imagine that it would be reassuring for the regulator to know that, as was the case when Newcastle United was acquired, if another Premier League club was acquired by a country that was not sanctioned—we did not have a trade embargo with it—but was nevertheless controversial, the regulator would not have to consider that, whether people wanted it to or not, because no Government policy would be saying that we could not trade with or allow investment from that country. The regulator would have the certainty of knowing that it was acting purely within the confines of its role.

I appreciate the intention of the amendment and the reasons behind it, but perhaps the Minister could give us some guidance on whether “must” may be better than “may”.

[Stuart Andrew]

The Government absolutely recognise the intent behind the amendment to ensure the independence of the regulator. We have been extremely clear that the independence of the regulator is vital. That is why the regulator will be set up as a new public body to ensure its full operational independence.

Clause 37(2) does not diminish the regulator’s independence. It does not mean that the regulator needs to consult the Government about the suitability of an owner, nor can the Government interfere with the regulator’s decision. If the regulator determines that an individual does not have the requisite honesty and integrity, or is not financially sound, or that the individual has any source of wealth connected to serious criminal conduct, that individual cannot be determined to be a suitable owner of a regulated club. Clause 37(2) does not override those fundamental requirements. Nor can any individual, fan, league, club or Government influence override them.

The purpose of clause 37(2) is to ensure that the regulator has to have regard to the UK’s foreign and trade policy objectives when it makes a determination about any new or incumbent owner. That will ensure that the regulator cannot make unilateral moral judgments on which countries it may consider unsuitable when it tests owners. We do not want to allow for a scenario where that happens and in effect a regulator, as I said this morning, sets the Government’s foreign policy.

The effect of the amendment would be to increase discretion for the regulator to decide when it will have regard to the UK’s foreign and trade policy objectives when making decisions about owners. The Government believe that their foreign and trade policy objectives are a relevant matter for the regulator to have regard to whenever it makes a determination about the suitability of any and all owners, not just some. Increased discretion for the regulator may risk it making unilateral judgments that stray into foreign policy.

To be clear, requiring that the regulator must have regard to the Government’s objectives does not mean that that must be a decisive factor. It might have limited relevance in a particular case and, if so, the regulator will not have to give that undue weight. The fundamental basis for a regulator’s determinations about owners will be honesty, integrity, financial soundness, source of wealth and, for new owners, sufficiency of financial resources.

I heard what my hon. Friend the Member for Chatham and Aylesford said and we will continue to reflect further, ahead of Report. But for the reasons that I have set out, I am not able to accept her amendment and I hope she will withdraw it.

Clause 37 lists the matters that the regulator must take into account when it conducts owners and directors tests, including what it must consider when determining whether an individual is financially sound and whether they have the requisite honesty and integrity and, for officers only, the competence needed to fulfil the role, and ultimately to determine whether they are sensible—sorry, suitable.

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[Stephanie Peacock]

I am pleased to be able to discuss part 6 of the Bill, which provides a backstop power in the event that certain thresholds are met and football is unable to resolve the issue of financial distribution. Before I begin to explore this clause, it is important to set out that, in an ideal situation, these powers would never be used. As the hon. Member for Chatham and Aylesford set out during the evidence sessions, based on her experience with the fan-led review, a football-led solution to the issue of distribution has always been and remains the preference. I hope that can be kept in mind when discussing this part. Indeed, I welcome the powers but my hope is that their enforcement will not actually be necessary.

Clause 55 broadly sets out the process under this part but most importantly defines what might count as “relevant revenue”, which is money to which the backstop will apply. Relevant revenue is broadly defined as revenue received as a result of broadcasting rights, with the Minister given the flexibility to change that if broadcasting is no longer the predominant source of income. There are a couple of things to clarify. First, it would be good if the Minister could confirm whether such broadcast revenue is meant to cover domestic competitions only. Secondly, it would be appreciated if the Minister could clarify whether broadcasting revenue will still be considered relevant if the funding model changes so that it is paid directly to clubs, rather than through competition organisers. Broadly, though, I think this scope is generally accepted as being the right one.

Issues have, however, been identified with clause 55(2)(b), which is the part of the Bill that excludes parachute payments from the definition of relevant revenue. My hon. Friend the Member for Sheffield South East tabled amendment 27, and I will speak primarily to amendment 31 in my name. First, I would like to set some background to the issue, as it stems from the fact that there is an ever-growing gap between the Premier League and the EFL. Indeed, 30 years ago, EFL revenues were 75% of those of the Premier League; today they are just 6%. In real figures, that means that 30 years ago the gap was £11 million, and today it is £3 billion.

The Premier League’s approach to mitigating that gap is the so-called parachute payments to clubs relegated from the Premier League for up to three seasons. Those payments help to ensure competitiveness in the Premier League by providing clubs with the confidence to invest on promotion in the knowledge that they will be supported if they are relegated. For example, parachute payments might give the club the confidence to sign players on multi-year contracts, and that is incredibly important to consider. The Premier League’s competitiveness and the fact that any team, no matter their size or experience, can compete on any given day is what makes it the most beloved and exciting league in the world.

However, while they help to boost competitiveness in the Premier League, parachute payments—by the White Paper’s own admission—can distort competition in the Championship. In each of the last six seasons, two of the three clubs promoted from the Championship to the Premier League have been in receipt of parachute payments. The knock-on effect of that is that owners of clubs not in receipt of parachute payments are compelled to put ever greater levels of funding into their clubs to try to remain competitive. That overreliance on increasing owner funding has deeply exposed clubs when the funding does not materialise, as we have seen for Wigan, Bolton and Bury.

Further, the size of parachute payments has increased in recent years. Between 2010 and 2020, they have risen from £30 million to £233 million. That is an eightfold increase in a period in which player wages have only doubled. That means that, of the total distributable revenue of the English and Welsh professional game, the top 25 clubs—those in the Premier League—and the five in receipt of parachute payments in the EFL received 92% last season. That is £3 billion for 25 clubs, and £245 million for the other 67 professional clubs. Given the scale of parachute payments, therefore, it is notable that the Bill has definitively excluded them from the definition of relevant revenue. That is why I have tabled amendment 31.

4.30 pm

I want to be absolutely clear that the amendment is not about abolishing parachute payments; I believe that they provide clubs with the confidence that they need to invest, and they are a crucial tool in ensuring the competitiveness of the best league in the world. The amendment would simply give the regulator discretion to decide that, if certain criteria are met, parachute payments need not be excluded from the revenue to be distributed under the backstop provision.

Certainly, there is no reason to single out parachute payments. Whether people are in favour of significant parachute payments or not, they agree that they have an impact on club finances. As such, they will have a significant impact on the regulator’s objectives of protecting and promoting the financial soundness of clubs and the resilience of English football. Given that that relates to the regulator’s core role, the regulator should have the ultimate say on whether parachute payments are considered as part of the backstop provision.

Further, solidarity payments are explicitly linked to parachute payments. Solidarity payments are worked out as a percentage of the value of a year-three parachute payment. Championship clubs receive 30%, League One clubs receive 4.5%, and League Two clubs receive 3% of the value. The regulator, therefore, might find it difficult to look at one without looking at the other.

I emphasise again that the amendment does not predetermine whether the regulator includes or excludes parachute payments. If the regulator has a case, based on its objective evidence base, that excluding parachute payments from relevant revenue is more likely to make clubs financially sound and promote the financial resilience of English football, they will remain excluded. The amendment simply recognises that it should be the regulator that makes the decision, independent from any vested interests.

When making that decision, the regulator will have to pay explicit regard to the fulfilment of its core objectives and its secondary purposes: financial sustainability, financial resilience, competitiveness and investment. Taken together, those are the principles that should decide whether parachute payments are included—not the leagues and not politicians. Only then will we ensure that the regulator can fulfil the purpose of the Bill.

[Damian Collins]

I will make a few points on parachute payments. It is fair to say that they are not part of the redistribution mechanism between the Premier League and the Football League. They can be set as an amount alongside the redistribution that takes place, but, of course, they are not fixed. They are a contractual arrangement that the Premier League enters into with clubs that are in the league or when they get promoted.

For reasons that hon. Members have rightly set out, if the income of a Premier League club drops by at least half after being relegated, even with parachute payments, that will be a severe challenge to its sustainability. It is anyway and it certainly would be if those payments did not exist. Of course, if a club is promoted straight back up, as Leicester City has been this year, the year-two and year-three parachute payments are not kept by the Football League—the money never goes to the Football League—but goes back to the Premier League. Therefore, in many ways, the payments have nothing to do with the Football League; they are made by the Premier League to its member clubs in the event that they go down.

The question is then whether the existence of parachute payments has such a market-distorting effect that the regulator would have to intervene. It is difficult to see why the regulator would need to intervene on the basis of the impact on the clubs that have been relegated; they clearly need that support. From all the evidence that we heard as a Committee—I have not heard anyone this afternoon say anything to the contrary—there needs to be some compensating mechanism for clubs that go down, otherwise the risks are too great.

It is not always about clubs that have gone up and come straight back down again; it is often about quite large clubs—it was Leicester and Southampton last year. Everton could easily have gone down last season and the impact of such a relegation would have been catastrophic. The regulator would therefore have to take a view as to whether the existence of those payments has a distorting effect on the Championship.

Given the remit of the regulator, I urge hon. Members tabling amendments to be careful what they wish for. The regulator may well take the view that its job is not to have an impact on the nature of competition in the Championship, or to make it easier for more clubs to get promoted. Its interest is to promote financial sustainability, so it could easily take the view that parachute payments should stay because they are necessary for the clubs that are relegated.

Alongside that, there must be effective financial controls on Championship clubs. The question of whether a Championship club feels the need to compete against parachute payments is not necessarily one for the regulator. The regulator’s role is to ensure the financial sustainability of the league, so it might say that it can do that through the checks that it can put in place now, and therefore ensure that the situation created before does not happen again.

One could ask whether it is fair for the Championship to be run such that Championship clubs must compete against Premier League clubs, and cannot cook the books or rely on director’s loans because the regulator will stop them. Of course, in some ways the Championship is not competing with the Premier League. It is a league of clubs seeking to get promoted to the Premier League, but it is also looking to develop its own talent. It can buy talent from the lower leagues and from Europe, as it effectively does already. The TV revenue for the Championship, as it stands today, is already greater than for the top division in the Netherlands, Portugal, Belgium or Denmark, all of which are highly-competitive football nations whose pedigree in major international tournaments has been somewhat better than the home nations over the last few decades.

[Mr Betts]

Is it not one of the great strengths of the English pyramid that there is, or should be, the ability for clubs to move around? If there are massive differences in the financial capabilities of the clubs that come down from the Premier League with a view to going back up again very quickly and the other Championship clubs, that effectively removes the element of competition and removes the prospect of promotion from so many clubs that it changes the fundamental nature of the pyramid. Surely that goes against one of the objectives that the Bill is trying to achieve.

[Damian Collins]

I agree with the hon. Gentleman. The strength of the pyramid is one of the most important parts of the English game. It is probably the reason why the Premier League is such a commercial success—there is real promotion, relegation and competitive matches between the leagues. Parachute payments have come in out of necessity because of the requirement for clubs to jump up into a competition in which players are paid so much more and then to come out of it again. The regulator, as we are setting it up, would view the sustainability of the clubs in the Championship as important.

It is difficult to say that Championship clubs in England cannot recruit talent from other major European leagues and cannot develop their own talent. My concern is that, if all we do is push more money into the Championship, we will see a very large inflation of Championship player salaries. There will not necessarily be an improvement in the quality of players in the Championship but those players will be paid a lot more. There would also be even greater calls for bigger solidarity payments between the Championship and League One.

As the hon. Gentleman knows, League One club owners already complain that unless a big club happens to have been relegated into League One—a league that it is not normally in—getting promoted and sustaining a place in the Championship is becoming increasingly difficult because the Championship has largely become a division of former Premier League clubs. There are one or two exceptions—such as Preston North End, which have never played in the Premier League—but they are increasingly rare.

If the amendment were made and parachute payments were to be considered by the regulator, that might lead the regulator to demand much greater payments from the Premier League to the Championship. The logical argument that the Football League is advancing is that it wants more money for the Championship, not that parachute payments should go.

A question that was raised in the evidence session would also come into play: would it be fair for the medium and smaller clubs in the Premier League if the only method of distribution was UK broadcasting revenue, which the Premier League clubs receive equally? As we heard in the evidence session, that would place a much greater financial burden on clubs such as Brighton, Crystal Palace, Nottingham Forest and Everton than it would on Manchester United, Manchester City, Liverpool and Arsenal, for whom that money is a smaller part of their total revenue. Unless European money, other prize money and commercial gate money could suddenly be considered along with parachute payments, we are picking winners. We are saying, “We are going to favour the Championship side at the expense of the teams that play in the lower half of the Premier League.”

This is a highly complex matter with lots of moving parts. As we have heard throughout the debate on the Bill, the different parts of the football pyramid have different demands and income streams, and would make different cases. It is therefore right that parachute payments are kept out of the Bill, because they are a matter for the Premier League and the clubs that are relegated. Of course, the regulator will still be free to take wider consideration of the sustainability of the whole pyramid, which is purely about redistribution and where the money is drawn from. My concern is that—to use the phrase that we have used throughout the Committee’s consideration of the Bill—the unintended consequence of the amendment would be to create different winners and losers. The regulator has the power to look at all those things in the round.

[Mr Betts]

Is the hon. Gentleman saying that the Premier League’s objective in having parachute payments protected in this way is to ensure they that continue, while the issue of the pyramid and more competition lower down is met by even more money from the Premier League to the EFL, irrespective of parachute payments? It seems to me that that is not its position; it actually wants to hang on to as much money as it can for Premier League clubs and to protect parachute payments too. I accept what the hon. Gentleman says about the multitude of issues surrounding competition between clubs in different leagues, but the fact that we cannot solve everything with this amendment does not mean that we should not address one of the problems.

[Damian Collins]

One of the reasons why the Bill is important is that the biggest problem in the pyramid at the moment is the financial sustainability of Championship clubs. There are different pressures and the greatest financial risks are taken there; some of the biggest failures have been at that level. That is why it is important.

Parachute payments exist only because the Premier League wants a more competitive, more attractive league. It does not want a closed league where the same three clubs are going up and down all the time, and the clubs that come up are just cannon fodder for the teams that play in it regularly. It is incumbent on the regulator to take a view on the sustainability of the pyramid, but the Premier League would not wish for that outcome.

We can choose which seasons we want to pick, but I do not think it is proven that parachute payments are having that effect already. There is plenty of evidence of badly run clubs—Sunderland is a good example from not long ago—that have been relegated from the Championship while still in receipt of parachute payment money. A lot of clubs come down with players who are not worth what they are being paid, and are stuck with a Championship squad on Premier League money. That is a problem that many clubs face.

Many problems are about the poor decisions made by managers and owners in the Championship, and a lack of financial oversight. The regulator needs to fix that financial oversight first, alongside considering redistribution in the round. It is easier to do that if we do not confuse that with parachute payments, which as the hon. Gentleman says are a much bigger quantum than the amount of redistribution anyway. We need to get the financial oversight right and look at redistribution in that context. I am concerned that simply asking the regulator to recommend a transfer through the backstop of money from the Premier League to the EFL corporately without the right financial oversight will pour petrol on the fire and drive wage inflation in the Championship.

[Stephanie Peacock]

The hon. Gentleman is making a really comprehensive argument for parachute payments. I want to be clear that my amendment is not proposing to get rid of parachute payments; it simply says that they should not be ruled out. I appreciate that he is saying that we should get this right before we move on, but we are here now setting the regulation. Obviously, if they are excluded, they are excluded.

[Damian Collins]

I will draw my remarks to a conclusion. I appreciate that—the hon. Member for Sheffield South East makes a similar argument—it is not an argument for the abolition of parachute payments. My concern is that if we take that step, we would have to bring into scope all football money, not just the money that the Premier League pays in redistribution to clubs in the lower leagues and through parachute payments. That would be a much wider step and would require further consideration. If such recommendations are to be made in future, that should be done after the regulator is established and we have the state of the game report.

[Dame Tracey Crouch]

I find part 6 to be one of the most infuriating parts of the Bill, not because it is a bad aspect of the Bill but because it should not exist. The truth is that if there had been a deal between the two parties—the Premier League and the EFL—part 6 would look very different. We made it clear in the fan-led review that distributions are an issue for football and they should be able to resolve that issue themselves, but that it was important for backstop powers to be there to intervene if no solution was found. That is what part 6 is, and it has become a more controversial part of the Bill than was perhaps ever envisaged. We had hoped back in November 2021, when we published the fan-led review, that there would be a deal.

--- Later in debate ---

It goes back to the questions that we heard in the evidence session about getting the coding right in the Bill to ensure that, if part 6 is ever triggered, it is correct. However, we cannot ignore the fact that, at the moment, those parachute payments are contractual agreements. Therefore, I think it is right to include the wording as it is in the Bill, which future-proofs any reformed process going forward. At the same time, it is clear that we respect the long-term financial sustainability of football clubs. It is a difficult conversation to have, because we all want to see more money going through the pyramid, but at the end of the day these are agreements between a club that is promoted and a club that is potentially relegated to ensure that they have that safety net if they are relegated. The Bill is correct, but the explanatory notes could be broadened to be a bit more future-proof.

[Damian Collins]

Does my hon. Friend agree that there is a slight danger, if we go down the path suggested by the amendment, of creating an even bigger gap between the big six and everyone else? We would basically be saying to the rest of the clubs, “The parachute payments are not for us: they are for you—the other 14 clubs in the Premier League. If you want them, you can pay for them and pay for the solidarity payments for the football league as well”, because that is effectively what would happen.

[Dame Tracey Crouch]

I completely agree with my hon. Friend. I always refer back to that point in the fan-led review, and we mulled over that issue at length. The truth is that we did not come to a conclusion ourselves, because it is so complex. We have made it clear in the chapter on financial distribution that we hope that there will be reform to the system, but this was back in 2021, for goodness’ sake. I want to bang everybody’s heads together and send them to bed without any tea, because we are dealing with the failure of the leagues to reach a solution, and I hope that the message they get from today’s sitting and the evidence sessions that we had last week is to go away and come up with another solution. The Bill sets out the process if there is no deal on that, and ultimately if there is no amendment to the Bill, let that be an inspiration to people to come together and find a solution.

Football Governance Bill (Fourth sitting)

Damian Collins Excerpts

Committee stage
Thursday 16th May 2024 Public Bill Committees

[Stuart Andrew]

On the hon. Lady’s points, the term “sustainability” is used in the purposes and not again in its objectives. Our advice from the Office of the Parliamentary Counsel said that “soundness” achieves the same thing, but we are talking about the remit over the entire pyramid. We feel that would overstretch the regulator, which is why we are focusing on the top five leagues.

I understand the points made by the hon. Member for Sheffield South East. On a recent podcast, I repeated the phrase, used by many, that replays are often the David and Goliath of English football. However, in terms of financial sustainability, I cannot imagine a single club relying on the off-chance that it may have a replay at some point as a sustainable business model for its individual club. As I say, that is why the regulator will focus tightly on what the business plans would be.

[Damian Collins (Folkestone and Hythe) (Con)]

Does my right hon. Friend agree that part of the tension here is that the FA is under pressure from UEFA to free up days in the football calendar? That means it is left in the invidious position where it either does that, or requires teams to play scratch sides to fulfil fixtures when they must otherwise manage their resources for competing fixtures as well. That is why we moved away from never-ending replays in the FA cup in the ’50s and ’60s to a far more limited scope for replays today.

[Stuart Andrew]

My hon. Friend has got it exactly right and articulated it extremely well. We recognise that that is the challenge football has with the obligations it must match with the likes of UEFA and so on. I thank my hon. Friend for his intervention, and with that I commend the clause to the Committee.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7 ordered to stand part of the Bill.

Clause 8

The IFR’s regulatory principles

--- Later in debate ---

[Stuart Andrew]

I recognise the intent behind the amendments, which is to add further groups to the list of persons the regulator should co-operate and proactively and constructively engage with. However, we do not think that is necessary, and we believe it would alter the intention and effect of the regulatory principle in question. We have always said that the regulator should take a participative approach to regulation, which means to co-operate constructively with the regulated industry where possible.

The principle’s original intention was to guide the regulator to take that approach, which might not otherwise have been implicit, since the natural instinct for regulators may be not to co-operate with the persons they are regulating. By contrast, for other groups such as fans and members of local communities, it is implicit that the regulator should engage with them where appropriate, not least because the sustainability objective of the regulator is in the very interests of fans. Indeed, fans and local communities are the key consumer group that the regulator is established to protect. They feature in the very purpose of the Bill in clause 1.

My concern is that to list every possible stakeholder that the regulator should engage with during the course of regulation would be a slippery slope that could impact on the effectiveness and, crucially, the speed of the regime. That is not the intention of this principle, nor is it necessary detail for the face of the Bill.

I absolutely recognise that players and fans have a huge role to play in football. It will be for the regulator to engage with those stakeholders during the appropriate process. That is why, absolutely, where collaboration is working well, we would expect the regulator to continue that. Having a comprehensive list might mean that we miss out a group that we would like the regulator to consult. It might also mean that the regulator then feels obliged to consult that entire list on everything, whether appropriate or not, clogging the regulator up, if we are not careful.

[Damian Collins]

I am following what the Minister is saying carefully. Does he believe that it would be appropriate for the regulator to require the clubs to engage effectively with their fans, as the Bill asks them to do, and to ensure the welfare of their players, and that the regulator should stipulate that the clubs set out how they will do that through their corporate governance statement, as part of the licensing regime? When we consider schedule 5, it might be appropriate to reference some of those points specifically in the Bill as part of the licensing condition.

[Stuart Andrew]

My hon. Friend makes some interesting points. We will come to those measures later. I am slightly nervous about having a prescriptive way of engaging with fans. Depending on which club it is, it might be that the way a club engages its fans absolutely meets what the fans want. They might recognise that it is a good working relationship, which achieves the objectives they want. What we want is a minimum standard. Perhaps that is what he is alluding to.

[Damian Collins]

I think my right hon. Friend is right. I would not suggest a prescriptive requirement, but simply a requirement for the club to state its policy.

[Stuart Andrew]

Absolutely, and we will come to that later in the Bill. I take on board the point made by the hon. Member for Barnsley East about the health regulator, for example. We do not need to tell that regulator to co-operate with the very people it is designed and obliged to protect the interests of, so we are following the same pattern here.

Football Governance Bill (First sitting)

Damian Collins Excerpts

Committee stage
Tuesday 14th May 2024 Public Bill Committees

[Ian Byrne (Liverpool, West Derby) (Lab)]

I sit on the management committee of the Spirit of Shankly football union for Liverpool football club.

[Damian Collins (Folkestone and Hythe) (Con)]

I am a trustee of The Sports Trust in Folkestone, which has previously received funding from the Football Foundation.

--- Later in debate ---

[The Chair]

Stephanie, if you have any other questions, I will bring you in a bit later. There are a lot of Members who have indicated that they want to ask questions.

[Damian Collins]

Q I have a question on the redistribution of money, which is one of the Football League’s principal concerns about the current model. From what you have said, is there not a danger that, despite redistributing more money into the Championship, those clubs will not necessarily get any better? They will probably just end up paying the players they have more than they do at the moment. Redistribution without some sort of control will just fuel inflation.

Kieran Maguire: When we had the introduction of solidarity payments from the Premier League to the EFL, which started to become index-linked to the growth in the Premier League broadcasting, exactly what you suggested tended to be the case. Any redistribution plan has to go hand in hand with a more nuanced and affirmative cost-control measure. Otherwise, you are simply transferring money from the wages of a footballer in the Premier League to the wages of a player in the Championship. I do not see how that benefits the game on a holistic basis.

Dr Christina Philippou: As we have seen, the cost-control issues are still there. The point is to try to fix that concern, rather than just to give more money to be spent poorly, which is not going to fix the problem. Fixing corporate governance and the cost controls will have a much better effect.

[Damian Collins]

Q Do you agree that one of the reasons why we need the regulator is that we need a body with statutory powers to investigate clubs and use real transparency of powers to see what is going on? A lot of clubs that have failed have been reckless, and often they have been trading outside the rules of the leagues they are playing in anyway, but they have just been able to hide that fact until it is too late.

Kieran Maguire: Historically, the authorities, given the mandate that they currently have from the clubs themselves, have tended to be looking in the rear-view mirror. Therefore, they are playing catch-up. One of the advantages of having an independent regulator would be the ability to do real-time investigations and also potentially either to offer advice or, in extreme circumstances, to look at some form of regime change that allows the appointment of trustees and advisers to assist clubs in precarious financial positions.

Dr Christina Philippou: That is the whole point of something like an advocacy-first approach: you can work with the clubs before you get to the problem. Before you get to administration or those serious financial problems that we are seeing, if there is real-time monitoring, if you see the problems ahead of time, and if we have some proper budgeting and corporate governance in football clubs, that should mitigate the problem to a large degree.

[Damian Collins]

Q Briefly, I want to ask about club owners and the business plans of club owners. On your podcast, Kieran, you have recently been talking about Everton in particular. Would you look at a situation like that and say that if this is going to work and make a difference, it is scenarios like that that should be avoided? The checks on new owners’ backgrounds and their proof of finance should be robust enough to stop clubs getting into that kind of mess.

Kieran Maguire: In an ideal world, yes. I do not think that the regulator can convert us into a zero-crisis environment. It is a case of turning down the dial. In the case of Everton, there was no doubt that money was spent in a similar way to what we saw with Roman Abramovich and Chelsea, and with Sheikh Mansour and Manchester City. There was an investment in talent and options in terms of infrastructure as well. The problem is that if you have any business that is living beyond its means, and is reliant on third-party or ownership funding, I think you have to very carefully monitor the ability of that funding to be maintained on a medium to long-term basis. We have seen, sadly in the case of Everton, that that does not appear to have been the case.

Dr Philippou: That is the importance of looking at the sources of funding, which is part of what is in the Bill, in relation to the owners and directors test.

[Mr Betts]

Q Do you think parachute payments, as they currently exist, cause problems or provide solutions?

Kieran Maguire: I think they do both. The intention of parachute payments when they were introduced, which was around 2006, was to address the possibility of clubs going into administration, because of the significant step-downs between the Premier League and the Championship. At the same time, it does mean that you have created a new benchmark in levels of spending that clubs in receipt of parachute payments can achieve, and therefore those clubs in the Championship that want to be competitive are incentivised to overspend, so I think we have a problem. Parachute payments are a clumsy solution to the bigger problem, which is the significant difference between the revenues of not just the Premier League and the Championship, but also between the Championship and League One.

--- Later in debate ---

[Stuart Andrew]

Q The regulator will have a duty to work with the leagues when they are exercising their regulatory functions and have regard to the existing rules within your leagues. How do you see that working in practice, and how are you reforming your own structures to ensure that regulation works effectively? You talked about unintended consequences, Richard—can I just push you to give the Committee a specific example of what those might be?

Richard Masters: It is unclear—a lot of this depends not on the technical drafting of the Bill, but the personality of the regulator, who we are yet to meet. Now the appointments have been made, it depends upon how the regulator and its powers are going to be utilised. For example, if the regulator wishes to put financial controls on virtually all the 116 clubs that it wants to license, I believe that will stop investment into football squads and football in general, and will slow down the growth of English football. That is the principal unintended consequence I would be concerned about.

Mark Ives: On unintended consequences, there are a couple of things, particularly when you consider the size of the National League clubs and how they are staffed. The Bill is written in a way that sets out what it intends; it does not give how it is going to achieve those aims. As far as the clubs are concerned, there is massive uncertainty.

As we see it, one of the unintended consequences is the drain on the resources of those clubs because of the duplication of work and the over-bureaucracy that there may be. For example, we already have a licensing system. Our system includes our football finance regulations, which have been activated since 2013. It is worth noting that we are talking about improving the sustainability of our clubs—but the National League, which is the only division that I can talk about, has not had a club going into administration since 2013, since it brought in its financial regulations. That is not a bad record. Our concern is the duplication of that licensing scheme. As the Minister rightly says, there is a referral back to the league regulations. We had hoped that that would go further and put the onus on the league, on the competition, to be the first to react. If that does not work, then the regulator steps in—rather than create a lot of duplication of work for our clubs, as we see it.

The other issue is costs. The Bill is intended to ensure financial sustainability. Yet the concern of this is that, as with all regulators, the people who pick up that bill are those who are being regulated. I am not sure that the clubs fully understand that. When you are at the bottom level of what is being regulated, the fear is the quantum of those costs. If you have a challenge that goes to judicial review from one of the National League clubs, I suspect that the financial cost on that is not going to be too great. However, if one of the top clubs in the Premier League challenges the regulator, the costs on that are going to be really significant. Those costs get passed on to those being regulated, and they could run into millions of pounds, when the cost of those are being borne by clubs at the National League level. In our view the Bill is not strong enough in clarifying what proportionality means. We have been given assurances: we have had some good meetings with the Department for Culture, Media and Sport, with the Minister and the Secretary of State, where assurances are that it will be proportionate. However, we do not understand what “proportionate” is. So, one of the unintended consequences is the financial and human resource burden on our clubs.

Rick Parry: It is incumbent on us to work with the regulator to make sure that this works for the good of the game. We see big pluses in terms of the regulator bringing independence, transparency and consistency across leagues, which is a bit of a disaster area at the moment. We view it positively: everything we have found so far in terms of engagement with DCMS and in terms of the shadow body that is the regulator is that all these concerns can be addressed. It is going to be a tougher environment, but football needs a tougher environment. We have had 30 years to get this right and we have failed.

Richard Masters: Just to answer your question about what plans the bodies are making to adjust to the regulatory world, we will all have to adjust to the new environment that is coming. I am very happy to do so. Like Rick, we are already meeting with the shadow regulatory team on a regular basis and have had good conversations about how it might work in practice. In reality, I think the performance of the regulator can be managed. We will meet that obligation head on and ensure that they get all the information they need, and we will respond at all times.

The issue that we are most concerned about is what impact that might have on the wider system—beyond the very positive objectives of the regulator to give fans a stronger voice—to improve the sustainability of the pyramid and individual clubs, and to avoid some of the issues we have had in the past. We agree with all that, but it is important to make sure it does not impact on the very good success story that we have at the moment.

Mark Ives: Can I echo that and clarify some points about where we stand on the regulator? From day one, and from when Tracey started the fan-led review, we met the review and we were asked whether we wanted to be part of the regulator. We said yes we did, on the understanding that it would not be too onerous for our clubs, and we would keep a mind on the costs. So we are mindful of that. We embraced the regulator. Our position was always that if there is a regulator, we thought it should be the FA, but for well-documented reasons, we know why that cannot happen. So we move on and embrace the regulator as it is.

Our challenges are not about having a regulator; they are about understanding and clarifying how the regulator will work. We embrace it and we will work with it. We have had some very productive meetings with DCMS and discussions all the way through. All we are trying to do is make sure that it is not too onerous and too costly for our clubs, because we have to protect the interests of those clubs, and they need clarity.

[Damian Collins]

Q Richard Masters, at the beginning you raised some concerns about the checks on new owners. You said you wanted a process that was governed by objectivity and certainty—I think those were the words you used. A lot of people would look at the live example of Everton and 777 Partners and say that that does not look like a situation that is being governed by objectivity and certainty, and that it is the kind of case where the regulator may well have taken a different view from the Premier League and may well have rejected the takeover. Given your concerns about the regulator in this regard, and given that, after eight months, 777 has still not met the criteria that the Premier League has set, I would be interested to know why the Premier League has not rejected it.

Richard Masters: Let me be clear about what the Premier League’s role in this is. As regulator, it is to perform the test. It is not to decide who the current owner wants to sell this club to. That is his decision. At the moment, he wants to continue to have discussions with 777 about it. The Premier League has made very clear the conditions that have to be met by 777 if it wishes to become the owner of Everton. At the moment, obviously, because the takeover has not been confirmed, I will leave it to the Committee to make its own conclusions about where we are with that.

Rick and Mark have talked about some of the benefits of the regulatory ownership test, in the sense that they will get access to more information that we can have, because we are not a statutory body. So we can only get the information that we are provided with and we have strong investigatory powers.

The other thing that Mark talked about was speed. I accept that takeovers that carry on for a very long time are not good for fan certainty. That is why we have a very big team of people who do nothing else in this. All I would say is that over time, particularly in the Premier League, takeovers are becoming increasingly complex. It is not a small undertaking on the part of the regulator to take this burden on. That is why we want to remain involved with it as well. This is very complicated, and we need to make sure that all those decisions are correct, even if that means taking a little more time to make sure that a decision is correct.

[Damian Collins]

Q It would seem that there is a real role for the regulator here, because the regulator could make this a lot simpler by saying, “You demonstrate the proof of funds and where you’re raising those funds from, and until you can do that, the answer is going to be no. You can come to us when you’re ready.”

Richard Masters: It may be that they could come to conclusions quicker. I would imagine that that is possibly correct in that circumstance, but obviously, I cannot imagine what the situation would be like if we had a regulator in the current example that you raise. Obviously, I know a bit more about the background to it all. I cannot say too much about it, but I do think there are some benefits to the regulator working in tandem with leagues on this particular topic. That is true.

[Damian Collins]

Q How would you respond if you were overruled? What would be the effect if the regulator took a different view from you?

Richard Masters: Maybe a bit like “The X Factor”, you need two green ticks to get in. That is it, and in terms of the Premier League operating its own test, in the unlikely event that the regulator said yes and we said no, that person could not take over that club, and vice versa.

[Matt Rodda]

Q This question is for Rick Parry. Where a potential owner has a track record of being associated with clubs overseas that have got into difficulties, do you believe the Bill has enough powers to prevent that in future?

Rick Parry: I think so. I do not think there is any reason to be doubtful at this moment, and within football we have been refining the tests that we apply over time. A decade ago, I think the tests were probably inadequate and overly simplistic. We have definitely refined them. We take a closer look at people’s track records, and I am not fearful that the regulator will be unable to do the same.

--- Later in debate ---

[Ian Byrne]

Q I am happy to get that on the record. I welcome what you said about the ticket prices potentially being included in one of the clauses. I do not think we mentioned kick-off times, which can be changed at the drop of a hat, meaning that hotel bookings have to be cancelled and travel expenses cannot be returned. That is a hugely important element in lots of anger from football supporters. How do we ensure that this is included in the regulatory oversight?

Kevin Miles: Again, what I do not want to do is put a whole shopping list of items into the Bill, because I think that is problematic. We would support some clear direction in the guidance notes about what should be required from clubs. You have identified another important issue. It is a complicated issue, and it is not likely to be solved on a club-by-club basis. However, the idea that we could face a situation where a club declines to discuss with its fan advisory board as part of its fan engagement process an issue as important and impactful as supporters being able to turn up to the games and support their team—which is so important to so many people—seems to me to be absurd. It is common sense that those issues should be part of the discussion, and it is sad to think that there are clubs that do not approach it with common sense and want to discuss it. I think it should be required.

[Damian Collins]

Q Clubs have to produce a corporate governance report annually as part of their licensing agreement. Do you think there is scope there for the clubs to be required by the regulator to set out in that report what their policies for fan engagement are, and then the regulator would have the right to audit them on that?

Kevin Miles: Yes. One of the ideas that we are quite keen on is that, as part of the corporate governance code, there could be a requirement of clubs to have independent directors. In many other aspects of corporate governance codes, there is a particular responsibility on independent directors. Independent non-executive directors do have consideration for the views of other stakeholders in the work of a company. The idea that an INED in a football club could be required by a governance code to have particular responsibility for making sure that fans’ views are taken into consideration would be a very useful addition.

[Damian Collins]

Q I have one other question. One of the biggest concerns for fans is when a club leaves its ground. That can be an extreme case, as in years ago with MK Dons and Wimbledon, which is probably something that could not happen again now. We have seen cases where you have a dispute between the ground owner—a third-party private company—and the club. We saw that problem with Coventry City a few years ago. That was a clear example of where the club says, “We can’t afford to pay the rent that the landlord wants to charge us. We think it’s extortionate”, and they have no option other than to move on. Under the Bill as drafted, if the club made a compelling case to say that sustainability required moving away from the ground, the regulator would sanction it even if the fans were against. Do we need a better mechanism in place to try to resolve these issues and get a fair settlement on rents for clubs to play in grounds, with a view to avoiding their having to move and enabling them to carry on and play where they are?

Kevin Miles: Yes, I think that that is one of the few gaps in the Bill. On the heritage items around playing name, shirt colours, club badge and that sort of thing, there are clear FA rules, and it was clear that the fan voice on those issues will be very important. The FA’s heritage rules do not cover grounds. They have found that difficult to tackle from the point of view of their rules. But the idea that the fan view on some of these issues should not be taken into consideration is an omission. We appreciate that there are other issues involved in staging a relocation. There are big economic issues et cetera. We are not necessarily saying that fans should have a veto over a business decision, but certainly they should have a level of consultation and input into that process.

As an aside, I think we should clearly define the UK-based supporters. It is entirely possible that with some of the clubs these days, given their international fanbase, you could find a huge majority of the football club’s supporter base in Shanghai quite ambivalent about whether the stadium moves 40 miles down the road. There would be a very different feeling among the people who have an extra 40 miles to travel to their home game. So I think it should be the UK supporter base that is consulted in those cases. That consultation should be enshrined.

[The Chair]

We move from the fans’ views to the person who started all this with the fan-led review—Tracey.

Football Governance Bill (Second sitting)

Damian Collins Excerpts

Committee stage
Tuesday 14th May 2024 Public Bill Committees

[Shaun Bailey (West Bromwich West) (Con)]

Q I want to touch more on the point about the proportionality of the Bill. I am looking at the part 5 duties. Do you think that this strikes a balance between regulating clubs like yours and making sure there is a framework, and allowing you to run your clubs in the way you need to? Darryl, if we take Solihull Moors as an example, you are a club that has come out of a merger, effectively, with other clubs and you have had to be agile in how you have done that. If you look at the journey you guys have been on, how do you think that you would have been impacted if this framework had been in place at the time?

Darryl Eales: The interesting thing for me is that the Bill does nail a few points that are very, very important from my perspective. The stadium and the club should be umbilically linked. There should be, for every club, something that prevents owners from separating out the ownership. In our division this year, Gateshead did not make the play-offs, because they did not have tenure of their ground. To me, that seems to be fundamental. Where I echo Steve is that I think there are an awful lot of information requirements in the Bill. When I talk about proportionality, the reality of life at our level is that it will be us doing those things, and without being too rude, I have better things to do with my life than fill in forms.

[Damian Collins (Folkestone and Hythe) (Con)]

Q I was interested in what you said about artificial pitches, Mr Thompson, because in my constituency I have Folkestone Invicta, in the Isthmian League. From what I can see, the Bromley FC model is the sort of model, from a financial sustainability point of view, that a lot of clubs in tiers five, six and seven should be following, because you have not only community use, but paid use of the site every day of the week, rather than a match every fortnight. Do you think that this should be looked at as part of a sustainability issue rather than a football competition issue? Actually, the sustainability of clubs going up into the Football League might necessitate that they have those sorts of facilities, which they monetise throughout the year, and their removal is not just a flat cost but something that compromises their commercial performance across the board.

Steve Thompson: Sutton United are a prime example from a couple of years ago. They went up and had to dig up their pitch. It was very much part of their community and their academy structure. Bromley are in the slightly fortunate position in that they have some land behind the stadium, where they are going to transfer the artificial pitch to, but it will still cost them several hundred thousand pounds. The annoying thing is that Sutton played Arsenal in the FA cup a couple of years back, and Arsenal, who are in the Premier League, happily and readily played on Sutton’s artificial pitch when they were at the National League side—no complaints. Every year, EFL clubs in the FA cup will play on artificial pitches, so that does not seem logical.

There are some arguments about how good the football is on such pitches and things like that, but the majority of young players at the top level now are coming through the EPPP—elite player performance plan—academies, and they all play on artificial pitches. It does not make sense. We have had this happen to four clubs in the past few years, and it is stopping other clubs that have the ambition to be promoted considering putting down an artificial pitch. That might help their community and their academies, but they think, “We can’t do that, because we can’t afford to put it in and then dig it up again.” Supporters are almost turning around and asking, “What’s your ambition?” The ambition of most clubs is to win their league, whatever league they are in, and to go forward.

That brings up another thing about academies at our level, and making certain that clubs at our level get the proper compensation for players that they have developed. At the moment, there is not that—National League clubs are not allowed to register a 16-year-old. Such things are not addressed in the Bill. Whether they should be, I do not know.

[Damian Collins]

Q Obviously, the principal job of the regulator will be financial sustainability. Briefly, do you think one of the issues that we have is this? We have inherited a structure for how football is organised that puts clubs into certain divisions. You could say that there are financial issues at almost every step, as we go up and down, and that clubs in the bottom half of League One and in League Two probably have more in common with the National League clubs than they have with those in the Championship. Do you think there should be common rules that reflect clubs that are effectively community clubs? They will probably never be Premier League clubs, but they need a different kind of model of sustainability.

Steve Thompson: Since 2001, when the second promotion place was introduced, some clubs have gone up and down, but before the end of this season just gone, 40 different clubs will have been promoted, and 29 of them are still in the Football League and one is in the Premier League—Luton Town. For teams that are struggling in the Football League, when they get relegated, the National League is a fantastic league for them to reorganise and to come back. There has been a number of them: Stockport and Wrexham, to name two. The football pyramid needs the National League. We have developed lots of players on loan from the Premier League, the Championship and other Football League clubs, and we are there to help support clubs.

Darryl Eales: To pick up on what Steve said, for me, the distribution of economics is completely inequitable between the two leagues above us and our league—so much so that other than the promotion from the Championship to the Premier League, the next most valuable promotion is from the National League to League Two, which I think drives Steve’s point, but we are entitled to only two promotion places. Fans, when I talk to them—from every club—say, “We don’t understand this.”

[Damian Collins]

Q It is inherent in what you said that the financial sustainability rules in the National League are more effective than those in Leagues One and Two.

Steve Thompson: We were the first league to introduce reporting to His Majesty’s Revenue and Customs. About 20 or 25 years ago, a lot of football clubs were basically using HMRC as a bank, and HMRC was reluctant to take football clubs to court. The National League—the Football League has followed us—introduced the rule that HMRC reports to the league if a club is behind with its HMRC or VAT payments, and the league will immediately put them on a registration embargo, which concentrates people’s minds. Since then, we have not had a problem, because when a manager comes and says, “I want to sign a new player,” and you say, “You can’t, because you haven’t paid HMRC,” they look a bit silly. We have quarterly reporting to our league and an annual licence with the FA. That is why I worry that this will just be another layer of bureaucracy.

--- Later in debate ---

[Matt Rodda (Reading East) (Lab)]

Q You have spoken so eloquently. I am looking at this from the perspective of my local club Reading, which has had very serious problems with the current owner. The previous owner was absolutely wonderful in creating a positive culture. My question is: how do we find more owners with the right intentions and motivation, and help them to play a bigger role?

Sharon Brittan: I completely agree with that. Even in the five years that I have been involved, I have seen better owners coming into the game because the EFL has changed the rules. You cannot having a bankrupt owning a football club, and you cannot have somebody who has been struck off; the rules are much more stringent. I do not want to talk about the numbers, and I do not like talking about them, but the problem we have is that in five years we have put a huge amount of money into the football club. Any sensible businessperson probably would not do that, because they would look at it and say that it does not make any financial sense.

Ian Mather: In direct answer to your question, I would say that it is the numbers. If an owner can look at a football club and think, “Broadly, if I run that club properly and well, with the income I get from running a football club and the sustainability payments from the Premier League, I can roughly break even. I may want to be ambitious and build a new stadium here, or improve the training ground, but broadly I can balance the books.” If you cannot balance the books, or worse, the books get more unbalanced each year, you are reducing the pool of people who can buy into being a football owner.

Sharon Brittan: I agree with Ian.

[Damian Collins]

Q I think I have to ask this, given everything you have said in your very compelling evidence. How has Ipswich Town managed to do what you called the “near impossible”?

Sharon Brittan: Isn’t it fabulous? That is what I love about football: the near impossible can happen.

Ian Mather: I would also answer it by saying that a North American pension fund has provided—

Sharon Brittan: I did not want to say that!

[Damian Collins]

Q You are saying that they had external investment that helped them to compete? Obviously, Luton has gone from League One to the Premier League, as has Brentford. What is the secret behind that? Is it the ownership money?

Sharon Brittan: The Premier League has allowed 13 of our precious 20 football clubs to be owned by Americans. Lose one more and they make the vote. How has that been allowed to happen? The Premier League stops the FA cup replays without even consulting us. How has that been allowed to happen? The Premier League is not fit for purpose, in my humble opinion.

[Damian Collins]

Q But the three clubs I mentioned—Brentford, Luton and Ipswich—is it simply about owners putting in enough money to be able to compete, and without it they cannot? Is that really what has happened?

Sharon Brittan: If this Bill goes through, I would love to fast-forward three years and see where Bolton Wanderers are. Then, you guys can see where a football club gets to when it is run properly in the right way, with the right people doing the right job in an honest, transparent and reasonably sustainable way. There is money, and obviously that helps.

Ian Mather: It is largely to do with money.

Sharon Brittan: But that is their good fortune.

Ian Mather: And Luton has come down again. You need money to drive success, and there is quite a clear correlation between league position and how much money you have, which explains why Cambridge United keep on cheating relegation. We are roughly around where we should be, and it is about the money.

Sharon Brittan: I am looking to get longevity of success; I am not looking to bounce around the pyramid. To get longevity of success, you have to create a culture that people buy into, so that they stay on the journey with you. So far, it looks like we are delivering, but we will see. I think that there are so many unscrupulous things that happen in football. Let us try to prevent those things from happening so that we can enjoy the game and the jeopardy.

[Damian Collins]

Q I wish you well—I think you said the Premier League in three years for Bolton? I think that was the target you set yourself there for people.

Sharon Brittan: Please do not quote me as saying that! If we get rid of the parachute payments, that might be possible. Thank you—I am really appreciative.

[The Chair]

Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank our witnesses on behalf of the Committee.

--- Later in debate ---

[Damian Collins]

Q I want to ask Steve Parish first, and then I would welcome your comments, Tony. Steve, you referred to the danger of domination by the big clubs—I think you rightly alluded to the fact that in some ways the Premier League is a two-tier league. Is that not made worse by, effectively, a competition that sets its own rules and organises itself?

Within the Premier League board, you have all those big clubs. Would it be more effective to allow some of the enforcement and supervision of the league’s rules to be done by an independent regulator that is, if you like, separate from the politics of football? It is set up by Government, it is not open to being lobbied or cajoled, and it is not making decisions on the regulation of clubs that it has to trade off against other decisions that are taken by Premier League clubs about how they organise the affairs of their league.

Steve Parish: If the Bill looked at the whole of football, that might be the case, but we are looking at it in a very myopic way. We are not looking at all the European revenue, the growing scope creep of European fixtures, the increase in the size of UEFA club competitions, or the gerrymandering of coefficients, so that even if we qualified, we would not get anywhere near as much money as a club that has been in the league three years previously. Within the Premier League itself, the top clubs have got—what is it?—four times our income. That is probably going to head towards five or six times our income.

The Bill, very narrowly, looks only at the Premier League media money. Actually, the Premier League is the most egalitarian by distribution in Europe by far. Where it is heading to right now is 1.8:1. Although that is worse for Tony and me, this is still by far the fairest league in Europe: in Germany, the ratio is about 3:1—the top club to the bottom club. So actually, in terms of distributing the revenue that it gets, the Premier League has done a very good job of making it fair and maintaining competitive balance.

The problem is that such huge revenue is now pouring into these clubs from European competition, and from the commercial deals that that gives them, that it is creating a massive distortion. What I fear this Bill will create is a permanent top six or top seven and then a kind of washing machine of clubs that will rotate between the two divisions below. That may well be what some people want as a vision for football. It is not mine. Mine, like Sharon’s, is to try to get into the Premier League and stay there. I accept it comes with jeopardy every year. I accept there are three relegation places. I accept that everybody is trying to stay in the league and it is highly competitive. But the aim, I think, of most clubs is to try to stay there, ladder up and improve.

[Damian Collins]

Q Tony, do you have anything to add to that?

Tony Bloom: Obviously I have had many years in the Championship and League One, and we have had many discussions there. The relationships between the Football League and the Premier League, I think, have got a lot worse since there was talk about regulating football. Overall, although there have been difficulties over the years, it has worked very well. But ever since the Football League has realised that there is going to be a regulator and, “If we can’t get a deal, there may be something from that,” things have not worked out so well, so I think there are, again, unintended consequences.

I think it is much better for football—the Football League, the Premier League, the National League and the FA—to work things out itself. Without it being perfect, I think the fact there have been three liquidations since 1992, despite the fact that, as you say, so many clubs are in financial distress—most clubs lose a lot of money every single year—is a very good result. You can look at other businesses. I know we do not want to compare businesses to sport; it is a completely different stratosphere. But I do worry about what will happen if you put in lots of extra regulation and lots of extra cost for the clubs, even though I am sure the Premier League will pay the vast majority of the regulator bill. I am just worried about future investors. That is absolutely critical.

[Damian Collins]

Q If we passed an amendment to the Bill that made parachute payments illegal and they were scrapped, how would that affect your preparations for next season?

Tony Bloom: I think it would be disastrous for the Premier League. The Premier League has done an amazing job to make it far and away the strongest domestic league in the world, and that is where we want it to stay. It is so important for this country. If that was to happen, then outside the biggest five or six clubs, which may think their chance of relegation is tiny, the clubs could not invest the money in players. And then what would you have?

In countries like France, with Paris, and also with Juventus and Munich, there is domination between the top one or two clubs and there is frequently only one winner in the league. The middle and bottom clubs would not be able to invest, and the differential between the top clubs and the middle and bottom clubs would be so big that it would not be so competitive. Then people would not want to watch it; the broadcast money would not be there; and we would veer towards Spain, Italy, Germany and France. I think it would be an absolute disaster. Clubs could not invest because of the worry about relegation. As it is, with the parachute payments, clubs still have to sell players, typically. Often, they get into serious financial problems even with the parachutes.

[Mr Betts]

Q I have a couple of issues to put to both of you. You have said that everything works well. I think most people would be in disbelief at hearing that statement, because we all can see problems in football right the way through. Individual clubs have had them. There are problems right through the leagues in terms of funding and insolvency. Both your clubs nearly got to the point of extinction. Can you not see the need for regulation to stop grounds being sold away from clubs and to stop clubs going into administration repeatedly and facing those problems?

Steve Parish: The reality is that all around Europe and probably the world, football is a billionaire or millionaire-funded industry. That is the reality of it. It does not make money anywhere in the world. We are not unique: this is not a country where uniquely we lose money in football. It is not a business with a profit principle; it is a business with a winning principle. Whatever rules you put in place, people’s desire to win will always trump their desire to make money. So the problem is that if you restrict our league so much that we are taken out of that game, you very quickly could make us very uncompetitive in terms of a European landscape.

--- Later in debate ---

[Stephanie Peacock]

Q Competition arrangements, such as the FA cup fixtures, do not fall within the scope of the Bill. Do you think that is the right choice, and why? Feel free to take this opportunity to add anything on the changes to FA cup replays and why they happened the way they did.

David Newton: The short answer is no, we do not believe that competition format matters should be an aspect for the regulator to consider. In Dame Tracey’s report summaries, competition format was not part of that, and I think we feel that competition format matters should remain the province of the football authorities, whether that be ourselves or the leagues. There are specific football-related matters that should remain in our ambit, and this is certainly one of those we feel quite strongly about.

[Damian Collins]

Q One of the comments on the Football Bill is that it does not particularly mention players, and that the scope of the regulator is purely financial and about financial sustainability. The clubs also, as part of their licensing agreement with the regulator, have to produce a corporate governance report. Do you think the Football Association would have any objection if, as part of that governance report, the regulator asked clubs to demonstrate not only how they are financially sustainable but how they met all their other obligations?

Football clubs are not only licensed by the regulator. They are licensed by the Football Association as well. There are articles of association of the Football Association, which place responsibilities on all clubs. Do you think it would be good and proper due diligence for clubs to have to demonstrate through their corporate governance reporting how they meet all their obligations within football—to the FA, to their players and to the welfare standards they are expected to follow?

David Newton: It is an interesting point. It is not one that we have necessarily considered in detail. I do not see any reason why, in good corporate governance practice, you would not refer to your corporate governance standards with all employees, whether they be players or not. From that perspective, on the face of it, it would seem a reasonable assessment.

[Damian Collins]

Q Would you want some assurance that the job of the regulator in this regard might be to request the information and check up on the clubs, but not to have a role in setting the welfare standards, which would be the remit of the competition organisers and the FA?

David Newton: I guess it depends what you mean by checking up on the clubs. We have quite a strong structure of engagement with the players: the players’ union, and the Professional Football Negotiating and Consultative Committee, on which both leagues and we sit with the PFA to discuss on a quarterly basis every aspect of players’ employment by clubs. We would certainly consider that to be the appropriate avenue for those things to be dealt with. I would not necessarily advocate the regulator having formal step-in rights in respect of players as you have outlined, but reporting standards on employees I can see.

[Damian Collins]

Q That was perhaps not the best use of words. I meant if information was brought to the regulator, or if it had reasonable grounds to be concerned; its primary job would not be to check on those things, but it could relay that information back to you as the FA, which has investigatory powers of its own. It is more a question of whether, in principle, you think that those sorts of standards should be incorporated into the corporate governance standards that the regulator should set. That would simply be good practice.

David Newton: I guess it depends on what you mean by good standards. If you are talking about things like national minimum wage or employment rights, then absolutely, those things would be expected. In football, we have our own structures, as you say, for dealing with player-related disputes, or players not being paid—the leagues have very strong rules on that—so those things are dealt with in the structure. Sharing of information with the regulator will obviously be something that may come into focus, once it is up and running, because it is important that there is not duplication of requests for information and that those information requests are shared efficiently.

[Mr Betts]

Q It has been mentioned that the remit of the regulator and the legislation is on things that do not matter to the FA, but do to the fans, such as the FA Cup. One of the objectives of the regulator is to safeguard the heritage of English football. Do you not think that the FA Cup is part of that heritage?

David Newton: Absolutely, the FA Cup is an essential part of our football heritage. We reflect that and take the FA Cup extremely seriously. It is a fantastic competition. Everyone cares passionately about it within the FA, me as much as anyone else. Prior to Dame Tracey’s report, we had already established heritage assets in protection of club playing names. Since the report came out, we have also established rules in the FA on club crests and club colours, so we are very aware of heritage responsibilities in that respect.

--- Later in debate ---

[Dame Tracey Crouch]

Q Yes, the world of sport did not fall apart by having more women on boards. Going back to the game, when Charlton were relegated, one of the first things they did was ditch their women’s team. That is not unique; other clubs have done exactly the same. Should the club’s licensing requirements state that clubs have to continue their investment in the women’s game regardless of where they are in the leagues?

Jane Purdon: This is such a tough question, because that money has to come from somewhere, and what do you cut? Do you cut funding to your academy? It is so tough. The real answer is that we have to get women’s football independently standing on its own feet and turning a dollar in its own right.

[Damian Collins]

Q Following on from the previous question, I have asked different witnesses about the corporate governance statement that clubs are required to make. I think you touched on that. Do you think it would be appropriate for clubs to have to consider how they meet their wider obligations as part of that corporate governance statement? I think it would be relevant to the regulator if a club was seeking to meet its financial regulatory standards by trimming back on other things it should be doing.

Jane Purdon: I think transparency is a great thing, as is transparency in sport. If you have ever read the code for sports governance, it kind of flows through that. We said to the sport governing bodies who were not as well resourced as many football clubs, “Tell the world what you are doing. Even tell them when you don’t hit your targets and then explain what you are going to do, because it breeds trust.” Against that, we do need to be proportionate and make sure that we are not asking organisations to report for the sake of reporting, and that there is real value that comes from the onerous work that reporting involves.

[Damian Collins]

Q Would you have a problem if it was merely a requirement for clubs? Clubs have certain obligations they are expected to meet by their competition organisers or by the Football Association, and as part of corporate governance they have an explanatory statement about how they do that?

Jane Purdon: In the legislation there is provision to say how you are meeting this code of practice. I do not have a problem with that in theory. As with all these things, the devil is in the detail, but I think that is right. I have talked about not making it too onerous, but on the other hand it can be a very simple measure to engender trust, and fan trust as well.

[Damian Collins]

Q One final question. The commercial development of women’s football seems to be on an exciting path of growth. Where you have Premier League clubs that have men’s and women’s teams, do you think the club should be regulated—or do you think that they should be regulated separately because they are competing in different competitions?

Jane Purdon: As I say, Women in Football does not have a position on this, so I have to be quite careful. If I am brutally honest, my personal opinion—and this is not shared by all by Women in Football colleagues—is that I am not convinced by the intellectual case for an IFR at all, particularly financially. I would need to be persuaded on that one. Maybe it is something we need to think about going forward in the game, and look at the fact that the two teams, the two set-ups, sit in one legal entity. The plus side is when you have a club like Chelsea or Manchester City, which get it and back its women’s team and provide the spectacle in the women’s game that we are used to seeing in the men’s game, that is fabulous, but there is risk as well. Maybe how we manage that risk is something we need to take forward.

[Damian Collins]

Q I suppose ultimately, however it is done, we would want the same standards to apply to everyone. Clubs that have a men’s team and a women’s team should be regulated in the same way as clubs that just have a women’s team.

Jane Purdon: There is a proportionality. One of the other bodies I chair is PGAAC—the Professional Game Academy Audit Company—which is the academy quality assurance body. It is a joint venture between the FA, the Premier League and the EFL, and there is proportionality in what we do. We quality-assure all the academies, and we have just started doing the girls’ game as well. We are not taking what we apply to Manchester City to what we apply to a League Two community organisation that happens to run a girl’s elite training centre. It has to be proportionate and you have to make sure that you are adding value all the way.

In fairness, for full disclosure, I have spoken to people in the women’s game who disagree and say that if this if this is coming in for the men’s game, it ought to come in for the women’s game. I look at things like the owners and officers test, which we have written to the Committee about, because we think there are real problems in the drafting. I think that is going to be incredibly onerous for clubs. If you then put that into the women’s clubs as well, many of them who are running on much lower resources, it is an unintended consequence of bureaucracy to what end.

[Robin Millar]

Q I am an MP from north Wales. The Football Association of Wales told me that girls drop out of football at teen age. That is the big cliff edge, and it is principally to do with facilities that are available, as it is a time when that is particularly important. What do you think are the biggest barriers to women participating in football?

Jane Purdon: By the way, hearing where you are from, may I sound a note of congratulations to Wrexham FC? I saw it had an attendance of 9,500 for one of its women’s games—wonderful.

What are the barriers? We need the role models. We have those. Our Lionesses are wonderful. We need infrastructure. We need more, more, more, more, more. It is as simple as that. We need more pitches, we need more people, we need more coaches. I sometimes say to people if you want to know what needs to happen in future, take a walk around your town and count up all the football pitches you come across—the ones down the park, the ones in the school, the ones for the professional football club. Now double that. If we are serious about opening up football to the other half of the population, it will look something like that. So, yes: more, more, more.

There has to be some rate of organic growth in this. We cannot do everything at once. Many of the people looking at this, the people at NewCo, the people at the FA and, in fairness, the Sport Minister, have taken a good interest in this. There is good work happening, but we have a long way to go.

Digital Markets, Competition and Consumers Bill

Damian Collins Excerpts

Consideration of Lords amendments
Tuesday 30th April 2024 Commons Chamber

[Kevin Hollinrake]

I thank my right hon. and learned Friend for his intervention and his earlier engagement, when he made his position on that point clear. He is right to say that penalties can be significant—up to 10% of global turnover—so it is fair that we allow organisations to challenge penalties on the merits of the case, but maintain the ability to impose pro-competition interventions and conduct requirements on platforms. The amendments made in the other place risk undermining that careful balance. For example, amendments to revert the appeals standard for fines to judicial review principles, to which my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) referred, would remove a valuable safeguard on the significant new powers that the Bill gives the CMA, as would the removal of the requirement on the CMA to act proportionately. Meanwhile, amendments to the countervailing benefits exemption risk making the exemption less clear for stakeholders. Consequently, the Government have tabled a motion to disagree with those amendments.

[Damian Collins (Folkestone and Hythe) (Con)]

The point about a “proportionate” response is relevant. In the original drafting of the Bill, the word used was “appropriate.” The Government changed that to “proportionate” on Report in this House, and the Lords have sought to reverse that change. What does the Minister think was disproportionate, if you like, about the word “appropriate”? What about it struck the wrong balance? Ministers keep saying that they think things strike the right balance, but they never really explain why.

[Kevin Hollinrake]

We have engaged significantly, throughout the Bill’s passage and before it was introduced, with large tech and challenger tech. Our understanding is that all those cohorts are happy with where the Bill is today. Certainly, during that engagement, concerns were raised about the term “appropriate,” but the clear position that we expressed to those who raised that concern was, “Of course, there is a requirement on the CMA to act proportionately.” Putting that in the Bill does not undermine its basic principles. In fact, we understand from the situation in the European Court of Human Rights, and the property rights emanating from it, that all those things are baked in anyway, so we do not feel that the wording weakens the legislation at all, but it does strike the right balance between those two different courts.

--- Later in debate ---

I will draw my remarks to a close. I hope that this is the last time we see this Bill coming through this Chamber. As I say, we support the Bill, but it is not beyond improvement, even at this late stage. In our view, it could certainly be improved, were the Government simply to do the right thing and accept the amendments before us today.

[Damian Collins]

I will speak briefly on the question that I raised earlier in the debate about the change of language from “appropriate” to “proportionate” and follow on from the remarks of my hon. Friend the Member for Weston-super-Mare (John Penrose). On one level, what the Minister is saying now—similar to what the Minister in the House of Lords, Lord Camrose, said in the debates there—is that proportionality is implicit in the law anyway and that the rights an organisation would have under article 1 of the European convention on human rights would apply anyway. Ministers are saying that bringing this language into the Bill is therefore a tidying-up exercise that re-emphasises rights that people already have. On another level, Ministers are also saying that this change creates a better balance, which means that there will be some change in how things work. It is important at this point that the House is clear about what is intended with this change.

There is a concern that the change effectively opens up a full merits appeal basis, which we have been keen to avoid doing in all the debates on this Bill as it has gone through both Houses. The Government have rightly resisted calls from big tech companies to bring that in, because it is a recipe for multiple and lengthy litigations, just as with every single measure of tech regulation that exists as a whole. That is not the intention.

Let us say that a company may be guilty of overcharging in an app store, but the cost to the consumer is relatively low. Would an intervention from the CMA be proportionate? Overcharging in the mobile app market may exist, but ultimately companies are happy to pay it and it is a relatively small charge. Would a big intervention by the CMA be a proportionate response? There are so many competing priorities, and often the individual consumer cost of some of these measures would be low, but there is the business significance of a company self-preferencing a service to the exclusion of other companies from the market. The company might say, “There is no particular consumer detriment to this, because the price is relatively low”, but it drives strategic market status. We have already seen in the European Union with the Digital Markets Act that the companies are challenging the designation of strategic market status, and they are looking for grounds to challenge at every opportunity, and we must expect that they will do the same thing here as well. That is why we should be clear that we are clear about what we mean.

My hon. Friend the Member for Weston-super-Mare invited the Minister to say that effectively, in terms of enforcement and how the courts should interpret it, the change should not make any difference from the original drafting. He invites the Minister to say that we should not be concerned that moving from “appropriate” to “proportionate” is moving from saying that the regulator should do what is within its rights to do—it is appropriate because it has the power to do it and it has made an intervention based on that power—to saying, “Even if it was appropriate for it to do it, it should not have done it, because it was disproportionate.” What would the grounds for that disproportionality be?

It is really important that the guidance to the legislation makes clear what we should expect on how the CMA can determine to find what it believes are proportionate responses, with that not being easy to dismiss on the grounds that the cost to consumers may be relatively low or the impact limited to a certain area of business.

[Sir Jeremy Wright]

My hon. Friend is, as ever, making a good case. As he knows, I agree with him about the need for the Government to be clear about what these terms really mean. One thing that we are not talking about today but which is linked to the question of definitions is what we mean by “consumer benefit”. Does he agree that there may be a difference between benefit to the current consumer and a benefit to the future consumer and that we should be clear in the Bill, should we not, that “consumer benefit” includes future consumers as well as current ones?

[Damian Collins]

My right hon. and learned Friend makes an important point. We could have a digital service provided for free, self-preferenced by a big company, offering a new service to its customers—how could there be a consumer detriment in that? But a consequence of that could be constriction of the market and the driving out of other businesses. The mobile mapping market is a really good example: Google Maps and Apple Maps totally dominate a market that used to have multiple competing companies in it. Now it does not, and there could be future consumer detriment in that.

That is why it is important that this is an ex-ante regime, which anticipates not just the detriment that may exist now, but future consequences. That is such an important principle for digital markets, which have tended to see the consolidation of market power in the hands of a relatively small number of players, who often do not compete against each other directly but dominate certain sections of the market, be it through the mobile ad market, search and retail.

There are only in effect two app stores, and given the lack of interoperability, they are virtually monopolies. We see those things already, and the development of large language model systems and the massive acquisition of data required for AI to run them is consolidating that market largely into the hands of the five or six companies that have enough data to be effective operators within it. That means that, in the future digital market world, any challenger tech developer will have to access its market and customers through the services provided by a relatively small number of companies. That is important.

I would be grateful if the Minister said in winding up whether he believes that the Bill offers a better balance. Has that balance changed, or has it not, and it is just a question of language and interpretation of meaning? What does it mean? I hope we all agree that, through making this change, we are not seeking to open up the legislation to wider judicial challenge, with more ruling through the courts, more lengthy delays and costs to try to bring forward the CMA’s interventions.

[Barbara Keeley]

I rise to speak against the Government motion to disagree with Lords amendment 104. As we have already heard, the amendment seeks to safeguard fans from fraudulent abuse, which is rife in the secondary ticketing market. It is an important amendment on an issue that, as we have heard—it is worth saying again—has had much work invested in it by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) and her colleagues on the all-party parliamentary group on ticket abuse. It also had great attention in the music industry, which is loud in its support for tackling ticket touting. Anyone who has tried to buy a ticket for a popular concert knows the frustration of losing out on tickets, only then to see the same tickets at 10 times the price on the secondary market.

Touting goes deeper than mere frustrations: it prices fans out of attending music, cultural and sports events; it damages the relationship between venue, artist and fan; and it undermines confidence in our live music industry. Yet, despite the calls of major UK music industry bodies, including UK Music and Live music Industry Venues & Entertainment, the Government have consistently failed to act.

Last year, the Government rejected the recommendations of the Competition and Markets Authority to strengthen legislation and protect UK consumers from illegal practices in the secondary ticketing market. At the time, the CMA warned that unless there was reform, illegal reselling prices would become worse. Lords amendment 104 would implement the recommendations of the Competition and Markets Authority to provide safeguards for consumers. Those are basic protections, such as ensuring that a reseller cannot sell more tickets than they can legally purchase on the primary market, and ensuring that tickets cannot be sold without proof of purchase. It is deeply disappointing that the Government cannot commit even to those basic safeguards.

Under the Government’s watch, the situation has become much worse. In 2007, there were an estimated 150 full-time ticket touts in the UK. Now there are about 4,000 touts attacking ticket systems for UK events, using bots to harvest tickets in bulk. Instead of being used as a resale platform for fans who can no longer make it to an event, ticketing websites are increasingly being used by large-scale touts who harvest tickets on the primary platform—using bots to skip the queue—and sell them on at many times the original price, sometimes speculatively. Ordinary fans do not stand a chance against that; they are the ones who are losing out. The situation has become so bad that police forces in some areas are having to launch public awareness campaigns warning about ticket touts after hundreds of reports of ticket fraud.

Lloyds Banking Group was recently forced to issue a warning to its customers about the risk of buying resold tickets after 600 of its customers reported being scammed when they tried to buy resale tickets for Taylor Swift’s Eras tour. It has been estimated that resale for the UK leg of that tour alone has led to more than £1 million being lost to fraudsters so far. That is happening despite clear messaging from the promoters of the tour that resale tickets bought outside approved channels will be turned away at the door.

As I said earlier, the Government can claim that they are doing enough, and the Minister seems happy with that, but he should look again at those secondary ticketing sites, where he will see three tickets for Taylor Swift’s show on 21 June going for over £72,000. That obviously shows a completely malfunctioning, dysfunctional market.

The Minister cannot claim that the market is functioning for fans and artists—it is actually functioning for touts and the platforms they use. Lords amendment 104 is just one measure that would begin to counter the damage done by ticket touts. I am glad to say that Labour has now committed to going a step further.

Labour would significantly strengthen consumer rights legislation to restrict the resale of tickets at more than a small set percentage over the price the original purchaser paid for it, including fees. Labour would limit the number of tickets that individual resellers can list to the number that individuals can legitimately buy via the original platform. Labour would make platforms accountable for the accuracy of information about the tickets they list for sale, and would ensure that the Competition and Markets Authority has the powers it needs to take swift and decisive action against platforms and touts in order to protect consumers.

The Minister cannot keep sticking his head in the sand. As the Competition and Markets Authority warned in 2021, illegal reselling practices have become worse due to a lack of action. We are now getting to a situation where artists and venues are on the cusp of losing the ability to sell tickets to genuine fans at an affordable price, and working families are being priced out of seeing their favourite artists or their favourite sports team.

Music, culture and sports events must not just be for the elite—the people who can afford thousands of pounds. How can the Government and the Minister justify their opposition to Lords amendments that would keep open access for fans to sport, to arts and to culture? I hope that he will listen to Opposition Members and not press the motion to disagree with this reasonable and modest amendment.

Brain Injuries in Football

Damian Collins Excerpts

Wednesday 24th April 2024 Westminster Hall

[Damian Collins (Folkestone and Hythe) (Con)]

I beg to move,

That this House has considered brain injuries in football.

The fact that so many Members are present to seek to intervene or speak in this short debate shows the great interest in the topic. The subject of brain injuries in football and concussion, and brain injuries in sport as a whole, has received considerable attention in recent months, but it is an issue we have been familiar with for many years. My wife’s grandfather, George Richardson, who played professional football for Sheffield United and Hull City, died from a brain haemorrhage in 1968 aged just 56. It was widely believed in the family that it was a consequence of heading heavy footballs when playing as a striker in the football league in his youth.

In 1966, famous for the England World cup win, there was also the end of the first domestic season in which injury substitutions were allowed in English football. A report that I read in the Liverpool Echo from that year recorded that 772 injury substitutions had been made, of which more than 10% were made as a consequence of concussion or head injury. The vast majority were for leg injuries—understandable for football—but even then quite a high number of players were taken off for concussion. We can imagine the high bar there would have been at the time, given that understanding of the consequences of concussion and long-term health impacts were not as well understood.

Staying with 1966, five members of England’s World cup-winning team have subsequently died as a consequence of dementia or brain-related conditions. Recently, other well-known England and Scotland footballers, such as Jeff Astle, Gordon McQueen and Joe Kinnear, have also died from brain-related injuries. However, no longer is this just a matter of tragic stories being brought into the public domain of great loss and sympathy for the families concerned; it is now a matter of increasing scientific study, especially in Scotland, with the 2019 field study conducted by Doctor Willie Stewart of the cases of more than 7,000 former Scottish professional footballers, looking at their cause of death against a study of the general population involving 23,000 people.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I congratulate the hon. Gentleman on securing this debate. He makes an important point about that field study in Scotland. At the time some people dismissed it, because it was only one study, but what has changed in the intervening years is that there have been studies in other European countries. I would argue that the evidence is now overwhelming. It is not just the high-profile cases that he talked about; thousands of footballers are caught up in this and are in financial difficulty. What we really need, given this understanding, based on the scientific evidence, is to have this type of injury classed as an industrial injury by the Industrial Injuries Advisory Council.

--- Later in debate ---

[Damian Collins]

The right hon. Gentleman makes an incredibly important point.

I will dwell briefly on the main statistical outputs of that field study, because it is the best baseline that we have in the UK. The figures are stark. The study discovered that former footballers have a fivefold increase in Alzheimer’s disease, a fourfold increase in motor neurone disease and a twofold increase in Parkinson’s disease against the base level for the general population.

Further medical studies have identified, too, the medical condition of chronic traumatic encephalopathy, or CTE, which is linked to head trauma—head injury. It can be caused by a severe blow to the head, but also within the course of playing football. It causes a release within the brain that is made worse by repetitive injury. That is why the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) has a point about classifying this as a form of industrial injury caused by the circumstances of playing football. It can have prolonged and lasting effects. Players who have received concussion injuries on several occasions may be more likely to have severe trauma later on, even if it is recognised at the time.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing this subject forward. It has taken some time and I commend him for his zeal in making it happen. There have been advances and helpful discussions with the Irish Football Association. Does the hon. Member agree that the lessons learned have meant that changes must be made, including the pilot scheme that was introduced by the IFA in 2020 to allow substitutions for suspected concussion with no disadvantage to the teams? That means that players do not feel that they have to shake it off and can be medically wise. There are some things that can be done. For every debate that we bring forward, it is important to highlight the issues, but it is also important to highlight the possible solutions.

[Damian Collins]

I agree with the hon. Gentleman that concussion substitution would be a sensible measure. In Scotland, I believe there is a campaign for rugby called, “If in doubt, sit them out”, which recognises the danger of concussion injuries and allows a pause in play. Often the incentive within professional sport is to keep people playing as long as possible, and often the players want that themselves. However, there must be proper safety standards so that the right decision is made and the incident does not lead to lasting injury and trauma.

In the United States of America, the recognition of CTE as an injury caused by playing professional sport, particularly American football, is well recognised. The National Football League is providing hundreds of millions of dollars of support for players who are diagnosed as having CTE. There is recognition of the link between head injury and playing sport, and people are properly supported and compensated.

There are two challenges that we have to look at. First, how can we prevent unnecessary and lasting injury as a consequence of head and brain injuries in football and other sports? Secondly, how do we support people who, late in life, are suffering as a consequence of the injuries they sustained during their playing career? The question of compensation is one that families in particular have raised. While a £1 million fund has been created by the Premier League, administered by the Professional Football Association, the concern is that there is no guarantee beyond the first year of its operation, which we are still in, that the fund will continue—although we hope that it will. It needs to have proper resources and to be properly accessible to families.

I spoke recently to John Stiles, the son of former England footballer Nobby Stiles, who made it clear to me that in his father’s case, his care costs per year were over £100,000, and yet the cap for funding from the current fund is £60,000 a year. That would not have been enough. In that case, Nobby Stiles decided to sell his medals, including his World cup-winning medal, which helped pay for his retirement and his costs. However, not everyone is in that position. Many other footballers and their families can be in a position where they are required to sell the family home, although they were told that would not be the case when the fund was created. Some former players and their families have had to sell their homes.

[Duncan Baker (North Norfolk) (Con)]

Last week I raised on the Floor of the House the point about funding, because Chris Sutton, the former Celtic, Chelsea, Blackburn Rovers and—more importantly, being in Norfolk—Norwich City legend, is my constituent. Currently, support is in place from the PFA and the Premier League’s brain health fund, which has already paid out thousands to help families. That is positive, but a proper registered charity would be the way forward to ensure that the funding is in place. Does my hon. Friend think the Minister could help with putting the proper vehicle in place?

[Damian Collins]

I am sure that the Minister has heard the point my hon. Friend makes. I think the Minister’s convening power could be extremely helpful in this case. There needs to be a properly resourced fund that football pays into. There is enough money in football to provide compensation for players who clearly need it.

The cap on the fund means that it will not cover some care costs; it would not have done so in the case of Nobby Stiles, had it existed at that time. However, there have been other deaths of former players recently, such as Chris Nicholl, a former player for Aston Villa and Southampton, who died without his family receiving a penny of funding. Similarly, John McNamee, a former Newcastle player, died as a consequence of CTE and his family had to sell the family home to cover care costs. Real concerns are being raised by the families that, limited though these funds are, they are not universally accessible, and there is no guarantee they will exist in the future.

[Sir Gavin Williamson (South Staffordshire) (Con)]

I congratulate my hon. Friend on securing the debate. The points that have been made about the brain health fund are incredibly important. Does my hon. Friend agree that in addition to the Premier League and the Professional Footballers Association, the Football Association and the English Football League also have a part to play, and that it is by all partners and Government coming together that we can deliver much more for players today and into the future?

[Damian Collins]

I completely agree with my right hon. Friend. There has been criticism from the families about the fund. It was created voluntarily by them, but the EFL and the FA are not part of it, and they need to be. All the groups that represent professional football need to come together and provide that support fund.

I agree with the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) that we should look at classifying these as industrial injuries, but football does not need to wait for that classification; more could be done now to put those support elements in place. This is where I look to the Minister. I know that the issue has been raised with him before, and he has taken a keen interest in it. I believe the Government can play a role in bringing the parties together. There should be a recognition of the link. I know that the Department is supporting more research and convening a forum to decide where the areas of priority research should be. That will help us to understand how we can safeguard young sports players today and safeguard against brain injuries in the future.

More must be done now to recognise the existing link and accept a responsibility. There is a danger sometimes that people are concerned about legal liabilities; but we have known about this link for a while. In March 2024, Dan Roan of the BBC published a report showing that FA board minutes from 1983 recognised the concern about head and brain injuries and the causal link between those injuries and playing football, so let’s not pretend that this link was not known. Something needs to be done now.

Does the Minister think he can play a role bringing the FA and the English Football League together with the Premier League and the PFA to agree a package of financial support to make the available fund sustainable, to look at lifting the cap above £60,000 a year and to guarantee that no family will ever have to sell their home to pay for the care costs of a former footballer? Will football accept its responsibility to care for these heroes of the past, who incurred their injuries while providing entertainment and joy for millions of people and who have enriched other people who have made money out of the game?

Yesterday, on Second Reading of the Football Governance Bill, I raised the case for player welfare to be part of the remit of the regulator. I do not think the regulator’s job should be to write rules for football; it should be there to ensure that competition organisers and clubs adhere to the standards that have been set by the competitions with regard to athlete and player welfare. That would be consistent with the corporate governance responsibilities that the regulator sets. In terms of funding support for players’ care costs in later life, that could be another opportunity where the fines collected by the regulator could support both grassroots sport and legacy injuries related to football, particularly brain injuries. The fund could be used helpfully in that way. I do think there is enough money in football that primarily the professional football organisations themselves should set that standard.

Finally, as has been mentioned, the question of the rules that govern concussion and brain and head injuries in sport today is really important. I do not want to see things like heading the ball removed from football. It is a physical game and is enjoyed as such, but players should be aware of the risks they are running. There should be safety standards, such as concussion substitutions during matches or training, and ensuring that people sit out when they have had a head injury and are given a proper amount of time to recover. There should also be consideration as to whether unnecessary repetitive exercises in training that include heading the ball are really necessary if they cause damage. These things need to be properly understood. In some cases, more research may be needed. We should look at this on an ongoing basis.

As a starting point, let us recognise the link that exists and the genuine need of support that some former players and their families have now. Football already respects the fact that the connection does exist, but we need a proper agreement to resource this and make sure that the support is there and the fund continues. I ask the Minister, as the Football Governance Bill passes through the House, to consider the role that the regulator can play in ensuring that the welfare and safety standards we should expect from clubs and competition organisers are actually followed through.

--- Later in debate ---

[Stuart Andrew]

It was certainly a pleasure to respond to that debate, and I made a commitment to write to the Department, which I did. I was due to meet the Minister for Disabled People yesterday, but I had to spend all day in the Chamber for the Second Reading of the Football Governance Bill. That meeting will be rearranged, and I will be sure to raise the right hon. Gentleman’s request. I will come on to his point about industrial injuries shortly.

The safety, wellbeing and welfare of everyone who takes part in sport is paramount. I also know how important football clubs and players are to all our local communities. The recent examples of dementia-related deaths of former footballers are of great concern to Members across the House and to me as the Minister for sport. It is important to acknowledge that the vast majority of people play sport safely, but head injuries in sport do occur.

Player safety must be a major focus for sport, as we recently highlighted in our Government sport strategy, “Get Active”. More work is still needed to ensure that robust measures are in place to reduce that risk and improve the diagnosis and management of sport-related head injuries at all levels of sport. That should apply during not just matches but training, and there should be provision for both professional and amateur players, as hon. Members have mentioned.

The national governing bodies are rightly responsible for the regulation of their sport and for ensuring that appropriate measures are in place to protect participants from serious injuries. I am pleased to say that positive progress has been made across different sports in recent years. For example, home nation football associations have changed their guidelines to prevent under-11s from heading footballs during training in England, Scotland and Northern Ireland, and the FA is co-funding research with the Professional Footballers’ Association to build the evidence base relating to brain injuries in football. It is not just national governing bodies contributing to improvements in player safety; players’ associations such as the PFA also play a valuable role in supporting professional players and providing short and long-term support to those affected by sporting injuries.

[Damian Collins]

The Minister mentions that further work is being done by the FA, but is there any doubt in his mind or the Government’s about the link between brain injury and sporting injury?

[Stuart Andrew]

I will come on in a minute to research and to some of the things I want to take from the debate.

Hon. Members have mentioned the brain health team and the range of support for former players and their families, which of course includes assistance with claiming state support and benefits. I have discussed the work on player welfare with the PFA’s chief executive, including the football brain health fund for players affected by dementia, which was established last year with the aim of providing financial support for players. An initial amount of £1 million has been made available to provide discretionary financial support, as assessed by an independent panel, to improve quality of life.

I welcome the creation of the fund, the first of its kind in English football. I hope that it will provide support to those former players who need it most. The PFA has confirmed that further investment will be forthcoming, but I will seek further reassurances for that fund. I acknowledge that there is some scepticism from former footballers who have contacted me to express doubts about the fund’s effectiveness.

--- Later in debate ---

[Stuart Andrew]

I thank my right hon. Friend for his intervention. I have had letters from former footballers expressing concern about the fund, and I wrote just yesterday to the PFA to seek assurances that the fund is working. I recognise that there is wider work to be done, and I will be more than happy to convene a meeting or roundtable with all the interested bodies and reflect the comments that right hon. and hon. Members have made today. I will, of course, include FIFA.

[Damian Collins]

I am very glad to hear that. At that roundtable or a subsequent one, will the Minister also meet the families who are raising concerns about the practical operation of the funds and the difficulty of accessing them?

[Stuart Andrew]

I would be more than happy to do so. In fact, I suggest that it is probably sensible to do so before we do the roundtable, so that I can reflect what I hear from the families.

There has been some discussion of the industrial injuries disablement benefit. The Department for Work and Pensions provides specific support for that benefit and the Industrial Injuries Advisory Council is the independent scientific body that will make recommendations. I know that many Members feel strongly that the council should explore professional footballers’ access to the benefit. My understanding is that the council is currently considering any connection between neurodegenerative diseases such as dementia and the possible effects of repeated head injuries sustained during a career as a professional sportsperson. It needs to give further consideration to the evidence before it can make a decision and will publish its findings when the investigation is complete. It would be premature for me to speculate on how that will progress, but I will definitely raise the matter with the disability Minister.

[Stuart Andrew]

I will try to reflect the right hon. Gentleman’s comments as accurately as possible at my meeting with the disability Minister.

It is important to highlight that the Government are leading work on brain injuries in sport, and specifically on concussion. As part of that, my Department has worked with interested parties to develop the first ever single set of shared concussion guidelines for grassroots sports across the UK. The guidelines, which were published last April, were developed by a panel of UK and international experts in the field of sport-related concussion. They build on the world-leading work in Scotland that hon. Members have mentioned.

We are grateful for the support of Scottish, Welsh and Northern Irish colleagues in expanding the remit of the new guidelines to cover the whole UK and their full use for everyone involved in grassroots sport, from school age upwards: participants, coaches, volunteers and parents, as well as those working in education settings and healthcare professions. Through the guidelines, we want to encourage more people to enjoy the benefits of being active and playing sport. We hope that they will be a useful tool in reducing the risks associated with concussion. At all levels of sport, if someone is suspected of having concussion on the field of play, the overarching message, as my hon. Friend the Member for Folkestone and Hythe said, is “If in doubt, sit them out.”

Evidence-based research is an important component of ensuring that sport is made as safe as possible. My Department has therefore established a research forum to look at concussion in sport. That group brings together key academic experts with experience in traumatic brain injury, neurology and concussion to identify the priority research questions around sports concussion that still need to be addressed for the sporting sector. It is now formulating a report to identify the priority research questions, which is expected to be completed this year. Alongside that, our Department has established an advisory panel with the aim of identifying tech innovations that can help with concussion in sport.

Separately, the Department of Health and Social Care is formulating the Government’s new strategy on acquired brain injury, including dementia. Our Department is feeding into that process to ensure that those who play sport are represented in the gathering of evidence. We remain committed to working with the sector to make sport safe and enjoyable for everyone, including through technological solutions and the prevention of concussion.

[Damian Collins]

I thank the Minister for giving way one last time. Alongside the establishment of new guidelines based on research, which everyone welcomes, is the question of enforceability. There is a sad history in sport of anti-doping regulations and other welfare standards not being enforced properly because there is no external validation. Policies are often executed within team and club environments by the coaches and the medical staff who report to them, with no external supervision. Having an external actor to check that the right things are being done will be important to making the new guidelines effective.

[Stuart Andrew]

I heard my hon. Friend’s comments very clearly yesterday. The regulator we have established for football has a very tight scope—we needed to do that—but my hon. Friend raises some interesting points that I will take away and consider. I will certainly make the point, when we convene the roundtable with all the interested parties, that further work is needed in this area. Much good work is going on across Government, but I recognise that we need to do more.

I understand the strength of feeling about the issue and its effects on those who suffer from this terrible illness and on their families. We will continue to work with the sports sector, including the football authorities, to ensure that player safety is prioritised so that everyone can take part in sport safely. I thank my hon. Friend again for securing this debate, and I thank everyone present for their thoughtful contributions and their interest in the area. Once I have had the roundtable, I will be happy to update hon. Members on the outcomes of the discussion.

Question put and agreed to.

Digital Markets, Competition and Consumers Bill

Damian Collins Excerpts

2nd reading
Wednesday 17th May 2023 Commons Chamber

[Damian Collins (Folkestone and Hythe) (Con)]

My hon. Friend got through part 1 a bit quicker than I thought he would—I have a question relating to part 1. Clause 38 creates a final offer mechanism for dispute resolution. The news media industry has been waiting for this legislation for a long time but it is not expressly referenced in the Bill. Can he confirm that the news industry and other industries could benefit from this final offer mechanism?

[Kevin Hollinrake]

My hon. Friend makes a good point. I wish him the best of luck in the election this afternoon. It is for a very important Committee that will scrutinise this legislation. The final offer mechanism is innovative and represents a positive way forward, in that it will bring parties to the table and they will both have to make sensible offers relating to how they see a fair resolution. This will avoid them putting unrealistic claims on the table, and it could well help the news industry and many other sectors.

--- Later in debate ---

[Damian Collins (Folkestone and Hythe) (Con)]

I rise, as other Members have done, in support of the Bill. It is a very important piece of legislation that has been long discussed and much looked forward to. It is now safely on the Floor of the House and we wish it a safe passage as it goes through Parliament. The debate we are having is not dissimilar to debates being held in Parliaments around the world. In the United States Congress, there are very lively debates about what it calls anti-trust legislation in the tech sector. The European Union, as has been discussed, has already created its Digital Markets Act. In Australia, there has been a lot of concern about competition within digital markets and a lot of work to improve it.

I agree with other Members who have spoken so far that competition is often the best guarantee of higher standards for the consumer, lower prices and a more vibrant market economy. The reason we are concerned with regards to digital markets is that, in many of those strategic markets, there is evidence of a lack of competition—a lack of choice—that is restricting routes to business and will increase prices for customers. In his opening speech, the Minister rightly pointed to the market impact studies that the Competition and Markets Authority has done, looking at app stores and the mobile advertising market, which show a consumer detriment of over £6 billion. Those are just two market studies that the CMA has done and it is not surprising that that should be the case.

The app store market is important because most people, including most people in this Chamber, have a smart device that runs on one of two operating systems. There are two app stores, and most of what happens on those devices—not exclusively, but most of it—is not interoperable. There have already been investigations showing inconsistent pricing in the commission taken by those operating systems from app developers who sell through their devices. In a market such as that, it is not surprising that there might be constraints or evidence of overcharging, because there is simply nowhere else to go—there is no choice. When the ad tech market is dominated by two companies, Google and Meta, it is not surprising that there may be higher pricing in that market; there is certainly a great lack of transparency. Even some of the world’s biggest advertisers, such as Procter & Gamble, have raised concerns about this issue, but none of the advertisers themselves has enough market power within that market to challenge those incumbents.

[Bob Stewart (Beckenham) (Con)]

Does my hon. Friend agree that we should fully support what my right hon. Friend the Member for Wokingham (John Redwood) has suggested as a model for competition? Competition itself does require to be amended.

[Damian Collins]

I thank my right hon. Friend for his question, and my right hon. Friend the Member for Wokingham (John Redwood) made an excellent opening speech from the Back Benches. My concern is that in digital markets we have an imperfect market. We are at a point in time where the strategic nature of digital markets has developed to such an extent that people cannot not use these systems to reach their customers. For a business looking to sell online, yes, the world is its customer base, but it is using a relatively small number of tools to try to reach those customers, and those tools are controlled by a relatively small number of people. App-based businesses are selling through one of two operating systems. Someone buying ads is doing so largely from one of two companies that dominate the global market. If people are looking for cloud storage, they are probably buying it from Amazon or Google.

Booksellers are a good example. Many book publishers will say that, when they come to their contract renewal with a company such as Amazon, they can be offered very unfavourable terms, but such is the volume of their business that they put through that one retailer that, while in theory they could go elsewhere, in practice they cannot. No shareholder would understand why a business would just walk away from that particular market. In such situations, it is right that the regulator should have the power to say, “Are companies abusing their strategic market status? Is that leading to higher prices for consumers? Is that leading to unfair competition?”

Companies have been quick already to threaten denial of access to the market to people who challenge their status. The Australians have already created their news media bargaining code for the news industry, where the big Facebook-owned and Google-owned platforms have to pay compensation to the media industry for the distribution of its articles for free across their networks. That is now negotiated—there is a negotiation mechanism to make sure it happens. In response, Facebook threatened to withdraw news from the market. During a series of bushfires in Australia, Facebook cancelled all news distribution on its platforms. Such was the popular reaction, it withdrew and has now done these deals, but they would not have been done without the requirement for final agreement and independent arbitration. A book retailer cannot not do a deal with Amazon.

In terms of big app developers, there was a company called Vine. Many Members may be old enough to remember that app. Vine was a popular short-form video app, largely built on the back of the Facebook operating system and the Facebook Graph API. Facebook decided arbitrarily that Vine was requiring too much Facebook user data, and therefore might be a threat to Facebook itself, so it claimed Vine was in breach of its data policies and just kicked it off the platform. It did that for competitive reasons. In these digital markets, we see companies following an aggressive strategy. Where they see competitors, they look either to acquire them or to deny them access to the market and close them down. This is not unlike the debate that was had more than a century ago, particularly in America around the railways.

There was the big test case that President Theodore Roosevelt had against JP Morgan over his railway monopoly. We can imagine lobbyists for Morgan saying, “We may have a monopoly in the rail market, but the price is quite cheap. People do not spend very long on the trains, and you can always walk or use a horse and cart. It doesn’t really matter that we have this monopoly, because people can choose to travel in other ways.” Of course, Morgan’s railway monopoly gave him massive powers of self-preferencing when it came to moving coal and steel around and denying others access to the market. It gave him massive market power and the monopoly was broken up for that reason.

We should be concerned that, if we allow the major tech platforms to control access to the market and people’s ability to trade, that will lead to a constrained market and higher prices. The tech sector is looking to develop more all-encompassing systems, such as the metaverse for Meta, where people will have a VR experience where they can buy and sell and do everything, and we see smart devices now playing an increasingly central part in almost every service that we access. The amount we are charged to access those services and the ability to access that market are extremely important for having competitive markets in the future. That is why I think these elements are important.

In finishing, I will talk a bit about the news industry. We see how these new marketplaces are changing the distribution of traditional products so much that their business model may completely collapse. The collapse of regional journalism is because of the massive disruption of the localised ad market. It has taken advertising out of those products. It is not just transferred online; it is transferred to completely different methods of distribution.

Now, that is market economics. That is changing consumer behaviour and businesses must adapt to that. If a news publisher is being told, “Your product can be distributed for free through our systems,” but you get more ad money in the long run if you do not. The distributor collects the advertising revenue and the data, and the publisher benefits little. If the product is being used to attract users to the platform, but the platform monetises it and the publisher does not, that is an unfair and unbalanced level of competition that could have significant detriment in other areas. If journalism is hollowed out because it cannot access the market fairly for its products and services, journalism will die, and democracy and society will be the loser as a consequence.

We want competition to flourish. We want competition to be the best guarantee of high standards and lower prices, but we must recognise that digital markets involve a series of markets in which companies are not really competing against each other, because they create controlled monopolies or business environments with very limited access to competition. If we allow that to continue unchecked, it will be to the detriment of us all in the long run. That is why I welcome the Bill.

[Several hon. Members rose—]

Artificial Intelligence and the Labour Market

Damian Collins Excerpts

Wednesday 26th April 2023 Westminster Hall

[Damian Collins (Folkestone and Hythe) (Con)]

It is a pleasure to serve under your chairship this afternoon, Dame Maria, and I congratulate the hon. Member for Birkenhead (Mick Whitley), both on securing this very important debate and on his excellent speech.

Artificial intelligence is an enabling technology. It is driving the digital age, but it is based on a series of points of data that are gathered by computer systems and processed in order to make decisions. It still requires a huge amount of human intervention in determining what data will be drawn on and therefore what decisions should be made. Consequently, there has to be a level of human responsibility, as well.

We can see already from the development of AI that it is not just question of computer systems learning from existing patterns of behaviour; they are also effectively thinking for themselves. The development of AI in chess is a good example of that. Not only are AI systems learning to make the moves that a human would make, always selecting the perfect combination and, therefore, being much more successful. When given the command to win the game, AI systems have also developed ways of playing that are unique, that the human mind has not thought of or popularised, and that are yet more efficient at winning. That is very interesting for those interested in chess. Perhaps not everyone is interested in chess, but that shows the power of AI to make autonomous decisions, based on data and information it is given. Humans invented the game of chess, but AI can learn to play it in ways not thought of by humans.

The application of AI in the defence space is even more scary, as touched on by the hon. Member for Birkenhead. AI-enabled weapons systems can be aggressive, make decisions quickly and behave in unpredictable ways. The human strategist is not able to keep pace with them and we would require AI-driven defence systems to protect ourselves from them. It would be alarming to live in a world where aggressive technology driven by AI can be combatted only by AI, with no human intervention in the process. It is scary to think of a security situation, like the Cuban missile crisis in the 1960s, where the strategies are pursued solely by AI. Therefore, we will have to think as we do in other areas of warfare, where we have bans on certain types of chemical weapons. There are certain systems that are considered so potentially devastating that they will not be used—there are moratoriums on their use and deployment. When thinking about AI in the defence space, we may well have to consider what security to build into it as well. We also need to think about the responsibility of companies that develop AI systems just for their commercial interests. What responsibility lies on them for the systems that they have created?

The hon. Gentleman was right to say that this is like an industrial revolution. With industrial revolutions comes great change. People’s ways of living and working can be disrupted, and they are replaced by something new. We cannot yet say with certainty what that something new could be. There are concerns, which I will come to in a moment, about the regulation of AI. There could be amazing opportunities, too. One can imagine working or classroom environments where children could visit historical events. I asked someone who works in education development how long it could take before children studying the second world war could put on a headset, sit in a virtual House of Commons and watch Winston Churchill deliver one of his famous speeches, as if they were actually sitting there. We are talking about that sort of technology being possible within the next decade.

The applications for learning are immense. Astronauts who practise going to the international space station do so from metaverse-style, AI-driven virtual spaces, where they can train. At the same time as we think about the good things that it can do, we should also consider the fact that very bad spaces could be created. In our debates on the Online Safety Bill, we have been concerned about abusive online behaviour. What if such abusive behaviour took place in a video chatroom, a virtual space, that looks just as real as this room? Who would be responsible for that?

It is beholden on the companies that develop these new technologies and systems to have responsibility for the output of those systems. The onus should be on the companies to demonstrate that what they are developing is safe. That is why my right hon. Friend the Chancellor of the Exchequer was right to set out in the Budget statement last year that the Government would fund a new AI sandbox. We have seen AI sandboxes developed in the EU. In Washington state in the United States, AI sandboxes are used to research new facial recognition technologies, which is particularly sensitive. The onus should be on the developer. The role of the regulator should be to say, “There are certain guidelines you work within, and certain things we might consider unsafe or unethical. You develop your technologies and new systems and put them through a sandbox trial. You make it easy for the regulator to ask about the data you are drawing from, the decisions the system you have put in place is making, the outcomes it is creating and whether they are safe.”

We have already seen that learned behaviour through data can create unfair biases in systems. There was a case where Amazon used AI to sift through CVs for recruitment. The AI learned that it was largely men hired for the roles, and therefore discarded the CVs of women applying for the position because it assumed they would not be qualified. We should be concerned about biases built into data systems being exacerbated by AI.

Some people talk about AI as if it is a future technology—something coming—but it exists today. Every one of us experiences or interacts with AI in some way. The most obvious way for a lot of people is through the use of apps. The business model of social media apps is driven by recommendation, which is an AI-driven system. The system—Facebook, TikTok, Instagram or whatever it is—is data profiling the user and recommending content to keep them engaged, based on data, and it is AI driving those recommendation tools.

We have to be concerned about whether those systems create unfair practices and behaviours in the workplace. That is why the hon. Member for Birkenhead is right to raise this issue. If a gig economy worker—a taxi driver or a delivery courier—is paid only when they are in receipt of jobs on the app, does the app create a false incentive for them to be available for work all the time? Do they have to commit to being available to the app for most of the day, because if they do not it drives the work to people who have high recommendation scores because they are always available? Do people who cannot make themselves available all the time find that the amount they can earn is much less, if they do not get paid for waiting time when they use such apps? If that becomes the principal way in which a lot of tasks are driven, AI systems, which are built to be efficient and make it easy for people to access the labour market, could create biases that favour some workers over others. People with other jobs or family commitment, in particular, might not be able to make themselves available.

We should consider not just the way the technology works but the rights that citizens and workers have if their job is based on using those apps. The employer—the app developer—should treat the people who work for them as employees, rather than as just freelance agency workers who happen to be available at any particular time of the day. They have some sort of working relationship that should be honoured and respected.

The basic principle that we should apply when we think about the future of AI and its enormous potential to create growth and new jobs, and build fantastic new businesses, is that the rights that people enjoy today—their rights as citizens and employees—should be translated into the future world of technology. A worker should not lose their working rights simply because their relationship with their employer or their customer is through an app, and because that experience is shaped by the collection and processing of data. Ultimately, someone is doing that processing, and someone has created that system in order to make money from it. The people doing that need to be responsible for the technology they have created.

--- Later in debate ---

[Richard Thomson (Gordon) (SNP)]

It is a pleasure to serve under your chairship this afternoon, Dame Maria, and to take part in this particularly timely debate. I congratulate the hon. Member for Birkenhead (Mick Whitley) on securing it.

I begin by declaring a rather tenuous interest—a constituency interest of sorts—regarding the computing pioneer Alan Turing. The Turing family held the baronetcy of Foveran, which is a parish in my constituency between the north of Aberdeen and Ellon. Although there is no evidence that Alan Turing ever actually visited, it is a connection that the area clings to as fastly as it can.

Alan Turing, of course, developed what we now know as the Turing test—a test of a machine’s ability to exhibit intelligent behaviour equivalent to, or indistinguishable from, that of a human. One of the developments to come closest to that in recent times is, of course, ChatGPT, which several speakers have mentioned already. It is a natural-language processing tool driven by AI technology, which has the ability to generate text and interact with humans.

The hon. Member for Birkenhead was a bit braver than I was; I only toyed with the idea of using ChatGPT to produce some of my speech today. However, I was put off somewhat by a very good friend of mine, with an IT background, using the ChatGPT interface to produce a biography of me. He then shared it with his friendship group on Facebook.

I think it is fair to say that it shows up clearly that if ChatGPT does not know the answer to something, it will fill the gap by making up something that it thinks will sound plausible. In that sense, it is maybe no different from your average Cabinet Minister. However, that does mean that, in subject areas where the data on which it is drawing is rather scant, things can get quite interesting and inventive.

[Damian Collins]

The hon. Gentleman makes an incredibly important point. When AI systems such as that are asked questions that they do not know, rather than responding, “I don’t know,” they just make something up. A human is therefore required to understand whether what they are being showed is correct. The hon. Gentleman knows his own biography better than ChatGPT does, but someone else may not.

[Richard Thomson]

I thank the hon. Member for that intervention. He has perhaps read ahead towards the conclusion of my speech, but it is an interesting dichotomy. Obviously, I know my biography best, but there are people out there, not in the AI world—Wikipedia editors, for example—who think that they know my biography better than I do in some respects.

However, to give the example, the biography generated by AI said that I had been a director at the Scottish Environmental Protection Agency, and, prior to that, I had been a senior manager at the National Trust for Scotland. I had also apparently served in the Royal Air Force. None of that is true, but, on one level, it does make me want to meet this other Richard Thomson who exists out there. He has clearly had a far more interesting life than I have had to date.

Although that level of misinformation is relatively benign, it does show the dangers that can be presented by the manipulation of the information space, and I think that the increasing use and application of AI raises some significant and challenging ethical questions.

Any computing system is based on the premise of input, process and output. Therefore, great confidence is needed when it comes to the quality of information that goes in—on which the outputs are based—as well as the algorithms used to extrapolate from that information to create the output, the purpose for which the output is then used, the impact it goes on to have, and, indeed, the level of human oversight at the end.

In March, Goldman Sachs published a report indicating that AI could replace up to 300 million full-time equivalent jobs and a quarter of all the work tasks in the US and Europe. It found that some 46% of administrative tasks and even 44% in the legal professions could be automated. GPT-4 recently managed to pass the US Bar exam, which is perhaps less a sign of machine intelligence than of the fact that the US Bar exam is not a fantastic test of AI capabilities—although I am sure it is a fantastic test of lawyers in the States.

Our fear of disruptive technologies is age-old. Although it is true to say that generally what we have seen from that disruption is the creation of new jobs and the ability to allow new technologies to take on more laborious and repetitive tasks, it is still extremely disruptive. Some 60% of workers are currently in occupations that did not exist in 1940, but there is still a real danger, as there has been with other technologies, that AI depresses wages and displaces people faster than any new jobs can be created. That ought to be of real concern to us.

In terms of ethical considerations, there are large questions to be asked about the provenance of datasets and the output to which they can lead. As The Guardian reported recently:

“The…datasets used to train the latest generation of these AI systems, like those behind ChatGPT and Stable Diffusion, are likely to contain billions of images scraped from the internet, millions of pirated ebooks”

as well as all sorts of content created by others, who do not get reward for its use; the entire proceedings of 16 years of the European Parliament; or even the entirety of the proceedings that have ever taken place, and been recorded and digitised, in this place. The datasets can be drawn from a range of sources and they do not necessarily lead to balanced outputs.

ChatGPT has been banned from operating in Italy after the data protection regulator there expressed concerns that there was no legal basis to justify the collection and mass storage of the personal data needed to train GPT AI. Earlier this month, the Canadian privacy commissioner followed, with an investigation into OpenAI in response to a complaint that alleged that the collection, use and disclosure of personal information was happening without consent.

This technology brings huge ethical issues not just in the workplace but right across society, but questions need to be asked particularly when it comes to the workplace. For example, does it entrench existing inequalities? Does it create new inequalities? Does it treat people fairly? Does it respect the individual and their privacy? Is it used in a way that makes people more productive by helping them to be better at their jobs and work smarter, rather than simply forcing them—notionally, at least—to work harder? How can we be assured that at the end of it, a sentient, qualified, empowered person has proper oversight of the use to which the AI processes are being put? Finally, how can it be regulated as it needs to be—beneficially, in the interests of all?

The hon. Member for Birkenhead spoke about and distributed the TUC document “Dignity at work and the AI revolution”, which, from the short amount of time I have had to scrutinise it, looks like an excellent publication. There is certainly nothing in its recommendations that anyone should not be able to endorse when the time comes.

I conclude on a general point: as processes get smarter, we collectively need to make sure that, as a species, we do not consequentially get dumber. Advances in artificial intelligence and information processing do not take away the need for people to be able to process, understand, analyse and critically evaluate information for themselves.

--- Later in debate ---

[Kevin Hollinrake]

I have not actually posed that question, but perhaps I could later.

This is an important debate, and it is important that we look at the issue strategically. The Government and the Labour party probably have different approaches: the Labour party’s natural position on this kind of stuff is to regulate everything as much as possible, whereas we believe that free markets have had a tremendous effect on people’s lives right across the planet. Whether we look at education, tackling poverty or child mortality, many of the benefits in our society over the last 100 years have been delivered through the free market.

Our natural inclination is to support innovation but to be careful about its introduction and to look to mitigate any of its damaging effects, and that is what is set out in the national AI strategy. As we have seen, it has AI potential to become one of the most significant innovations in history—a technology like the steam engine, electricity or the internet. Indeed, my hon. Friend the Member for Folkestone and Hythe (Damian Collins) said exactly that: this is like a new industrial revolution, and I think it is a very exciting opportunity for the future. However, we also have key concerns, which have been highlighted by hon. Members today. Although the Government believe in the growth potential of these technologies, we also want to be clear that growth cannot come at the expense of the rights and protections of working people.

Only now, as the technology rapidly improves, are most of us beginning to understand the transformative potential of AI. However, the technology is already delivering fantastic social and economic benefits for real people. The UK’s tech sector is home to a third of Europe’s AI companies, and the UK AI sector is worth more than £15.6 billion. The UK is third in the world for AI investment, behind the US and China, and attracts twice as much venture capital investment as France and Germany combined. As impressive as they are, those statistics should be put into the context of the sector’s growth potential. Recent research predicts that the use of AI by UK businesses will more than double in the next 20 years, with more than 1.3 million UK businesses using AI by 2040.

The Government have been supporting the ethical adoption of AI technologies, with more than £2.5 billion of investment since 2015. We recently announced £100 million for the Foundation Models Taskforce to help build and adopt the next generation of safe AI, £110 million for our AI tech missions fund and £900 million to establish new supercomputer capabilities. These exascale computers were mentioned in the Budget by my right hon. Friend the Chancellor. These developments have incredible potential to bring forward new forms of clean energy, and indeed new materials that can deliver that clean energy, and to accelerate things such as medical treatment. There are exciting opportunities ahead.

If we want to become an AI superpower, it is crucial that we do all we can to create the right environment to harness the benefits of AI and remain at the forefront of technological developments. Our approach, laid out in the AI White Paper, is designed to be flexible. We are ensuring that we have a proportionate, pro-innovation regulatory regime for AI in the UK, which will build on the existing expertise of our world-leading sectoral regulators.

Our regulatory regime will function by articulating five key principles, which are absolutely key to this debate and tackle many of the points that have been made by hon. Members across the Chamber. Regulators should follow these five principles when regulating AI in their sectors: safety, security and robustness; transparency and explainability; fairness; accountability and governance; and contestability and redress. That feeds into the important points made by my hon. Friend the Member for Watford (Dean Russell), who held this ministerial position immediately prior to myself, about deception, scams and fraud. We can all see the potential for that, of course.

Clearly, right across the piece, we have regulators with responsibility in those five areas. Those regulators are there to regulate bona fide companies, which should do the right thing, although we have to make sure that they do. For instance, if somebody held a database with inappropriate data on it, the Information Commissioner’s Office could easily look at that, and it has significant financial penalties at its disposal, such as 4% of global turnover or a £17 million fine. My hon. Friend the Member for Watford made a plea for a Turing clause, which I am, of course, very happy to look at. I think he was referring to organisations that might not be bona fide, and might actually be looking to undertake nefarious activities in this area. I do not think we can regulate those people very effectively, because they are not going to comply with anybody’s regulations. The only way to deal with those people is to find them, catch them, prosecute them and lock them up.

[Damian Collins]

The Minister talks about safety, but does he agree that that has to be safety by design, and not just having response mechanisms built into the system so that a victim can appeal? I know he has looked at fraud a lot in the past, and there is a presumption that all will be done to combat fraud at its known source, rather than just providing redress to victims.

[Kevin Hollinrake]

That is absolutely right. We will not deal with everything in the world of AI in this respect, but there needs to be overarching responsibility for preventing fraud. That is something we have committed to bringing forward in another legislative vehicle—the Economic Crime and Corporate Transparency Bill, which is passing through Parliament now—but I agree with my hon. Friend that there should be a responsibility on organisations to prevent fraud and not simply deal with the after-effects.

Our proposed framework is aligned with and supplemented by a variety of tools for trustworthy AI, such as assurance techniques, voluntary guidance and technical standards. The Centre for Data Ethics and Innovation published its AI assurance road map in December 2021, and the AI Standards Hub—a world-leading collaboration led by the Alan Turing Institute with the National Physical Laboratory and the British Standards Institution—launched last October. The hub is intended to provide a co-ordinated contribution to standards development on issues such as transparency, security and uncertainty, with a view to helping organisations to demonstrate that AI is used safely and responsibly.

We are taking action to ensure that households, public services and businesses can trust this technology. Unless we build public trust, we will miss out on many of the benefits on offer. The reality is that AI, as with other general-purpose technologies, has the potential to be a net creator of jobs. I fully understand the points raised by the hon. Member for Birkenhead—of course, we do not want to see swathes of people put out of work because of this technology. I hasten to add that that has never been the case with other technologies. There have been many concerns over the ages about how new technologies will affect jobs, but they tend to create other jobs in different sectors. The World Economic Forum estimates that robotics, automation and artificial intelligence will displace 85 million jobs globally by 2025, but create 97 million new jobs in different sectors, which I will discuss in a second. I think the hon. Member for Birkenhead asked in his speech whether I would be willing to meet him to discuss these points; I am always very happy to do that, if we can convene at another time.

The hon. Member also raised the point about how AI in the workplace has the potential to liberate the workforce from monotonous tasks such as inputting data or scanning through documents for a single piece of information. I will address the bigger concerns he has around that, but in the public sector it would leave teachers with more time to teach, clinicians with more time to spend with patients and police officers with more time on the beat, rather than being behind a desk.

As was raised in a salient point by my hon. Friend the Member for Folkestone and Hythe, AI also has tremendous potential in defence and national security. That is absolutely critical. It was interesting that leading people in the world of technology, led by Elon Musk, recently wrote a letter asking for a six-month pause while we look at how we can properly moderate the impacts of AI. I am not sure that that is a good idea, because I am not sure China and Russia would play that game. It is important that we stay ahead of the curve, for exactly the reasons pointed out by my hon. Friend.

[Damian Collins]

The Minister is exactly right. That initiative also suggests that AI is not yet here but, actually, the issues we have discussed today exist already. We can look at them already; we do not need a six-month pause to do that.

[Kevin Hollinrake]

That is absolutely right. There is an opportunity but also a potential threat. It is important that we continue to invest, and it is great that the UK is ahead of the game in its investment, behind only the US and China, which are obviously much bigger economies.

The key thing is that we take action on skills, skilling up our workforce in the UK to take advantage of the potential of AI. Clearly, a good computing education is at the heart of that. We have overhauled the outdated information and communications technology curriculum and replaced it with computing, and invested £84 million in the National Centre for Computing Education to inspire the next generation of computer scientists. Our national skills fund offers to do just that, with free level 3 qualifications for adults and skills bootcamps in digital courses, including coding, AI and cyber-security, available across England.

On that point, as well as the opportunities in AI, we need to look at the new opportunities in the new economy. Some jobs will be displaced, so we need to ensure that we are skilling up our workforce for other opportunities in our new economy, be it data science or green jobs with the green jobs taskforce. Recently, in Hull, there were 3,000 new jobs in the wind turbine sector with a starting salary of £32,000, which illustrates the potential for green jobs in our economy. So although jobs might be displaced, others, hopefully better-paid jobs will replace them. We want a higher-wage, higher-skilled economy.

The Government are also supporting 16 centres for doctoral training, backed by an initial £100 million, delivering 1,000 PhDs. We expanded that programme with a further £117 million at the recent launch of the Government’s science and technology framework. Last year, we invested an additional £17 million in AI and data science postgraduate conversion courses and scholarships to increase the diversity of the tech workforce, on top of the £13 million that has been invested in the programme since 2019-20. We also invested £46 million to support the Turing AI fellowships to attract the best and brightest AI talent to work in the UK.

The point about protections for workers’ rights was raised by many Members in the debate, not least the hon. Members for Gordon (Richard Thomson) and for Birkenhead; the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders); and my hon. Friends the Members for Folkestone and Hythe and for Watford. It is important to see the Government’s position on workers’ rights here. We are bolstering workers’ rights, raising the national living wage, with the highest increase on record—a near 10% increase—and six private Members’ Bills that increase workers’ rights, including on flexible working and other issues. There is also the Employment (Allocation of Tips) Bill, which is the favourite Bill of my hon. Friend the Member for Watford, who was its sponsor prior to becoming the Minister.

On the concerns many raised about workplace monitoring, we are committed to protecting workers. A number of laws are already in place that apply to the use of AI and data-driven technology in the workplace, including in decision making, which was raised by the hon. Member for Ellesmere Port and Neston. The Equality Act 2010 already requires employers and service providers not to discriminate against employees, job applicants and customers. That includes discrimination through actions taken as a result of an algorithm or a similar artificial intelligence mechanism. Tackling discrimination in AI is a major strand of the Equality and Human Rights Commission’s three-year strategy. Existing data protection legislation protects workers where personal data is involved, and that is one aspect of existing regulation on the development of AI systems and other technologies.

Reforms as part of the Data Protection and Digital Information Bill will cast article 22 of the UK GDPR as a right to specific safeguards, rather than as a general prohibition on solely automated decision making. These rights ensure that data subjects are informed about, and can seek human review of, significant decisions that are taken about them solely through automated means, which was a point raised by the shadow Minister. Employment law also offers protections. The Employment Rights Act 1996 provides that employees with two years of continuous service are protected from unfair dismissal, which would encompass circumstances where employees’ article 8 and UK GDPR rights have been breached in the algorithm decision-making process that led to the dismissal.

Of course, all good employers—by their very nature—should use human judgment. The best way we can help employers in any workplace is to have a strong jobs market where employers have to compete for employees. That is the kind of market we have delivered in this economy, despite some of the difficulties that surround it.

I once again thank the hon. Member for Birkenhead for tabling this timely and important debate. To be clear again, we have a strong ambition for the UK to become a science and technology superpower, and AI is a key part of that. However, the Government recognise the concerns around these technologies and appreciate that, as with all new technologies, trust has to be built. We will continue to build our understanding of how the employment rights framework operates in an era of increasing AI use. AI has the potential to make an incredibly positive contribution to creating a high-wage, high-skill and high-productivity economy. I very much look forward to seeing the further benefits as matters progress.