Football Governance Bill [HL]

Lord Goodman of Wycombe Excerpts

Committee stage
Wednesday 15th January 2025 Lords Chamber

Moved by

[Lord Goodman of Wycombe]

341: After Clause 99, insert the following new Clause—
“Duration and review(1) This Act expires at the end of the period of five years beginning with the day on which section 5 comes into force (“the initial period”), subject to the provisions of this section and section (Renewal and dissolution provisions).(2) The Secretary of State must establish an independent review panel (“the Panel”) no later than 15 months before the end of the initial period.(3) The Panel must—(a) carry out a review of—(i) the effectiveness of this Act, (ii) whether the IFR has remained within its statutory purposes, and(iii) whether the objectives of the Act could be achieved through less interventionist means,(b) prepare a report of the review, and(c) lay a copy of the report before Parliament, no later than 12 months before the end of the initial period.(4) The Panel must consist of—(a) at least one person with expertise in competition law,(b) at least one person with expertise in regulatory policy,(c) at least one person with expertise in football administration, and(d) at least one person with expertise in business regulation.(5) Where there is a change in the person holding the office of Secretary of State after the establishment of the Panel but before the report is laid before Parliament—(a) the new Secretary of State may by written notice dissolve the existing Panel,(b) where the Panel is dissolved under paragraph (a), the new Secretary of State must—(i) establish a new Panel within 28 days,(ii) ensure the new Panel meets the requirements of subsection (4), and(iii) extend the period for the laying of the report by up to three months if necessary to allow the new Panel to complete its work,(c) the new Panel may—(i) consider any work undertaken by the previous Panel,(ii) adopt any findings of the previous Panel that it considers appropriate, or(iii) conduct an entirely new review.(6) The new Secretary of State may only exercise the power under subsection (5) once in relation to the review required by subsection (3).(7) The report under subsection (3) must include—(a) an assessment of whether the IFR has—(i) achieved its objectives under section 6,(ii) remained within the scope of its original purposes as set out in section 1,(iii) avoided expanding its regulatory reach beyond its core functions,(iv) maintained proportionate intervention in the football industry,(b) an assessment of—(i) the regulatory burden imposed by the Act,(ii) the costs of compliance for regulated entities,(iii) whether the objectives could be achieved through less intrusive means,(c) an analysis of any instance where the IFR has—(i) exceeded its statutory powers,(ii) created additional regulatory requirements beyond those explicitly authorised by the Act,(iii) expanded its interpretation of its objectives beyond their original scope,(d) a specific assessment of whether market conditions still justify statutory regulation, and(e) a recommendation as to whether the Act should be—(i) allowed to expire,(ii) renewed for a further period with specific restrictions, or(iii) renewed without modification.”

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[Lord Goodman of Wycombe (Con)]

My Lords, Amendments 341 and 342 have sunset provisions. I declare my interest as set out in the register as a senior fellow at Policy Exchange. I am mindful, of course, that this is the final debate on amendments this evening on this very substantial Bill of 100 clauses and 12 schedules, and we are near the end of seven sessions in Committee. I note what my noble friend Lord Moynihan said at the very start of these proceedings: it is rare for a Bill to have 340 amendments tabled even before it has commenced. I make the point in the presence of the Government Chief Whip that many of those amendments were tabled by the other side.

In that spirit of agreement, we can all agree that this is a very significant Bill. I am going to try to further that spirit and seek some consensus as I discuss these sunset provisions. We will see how I get on, mindful that in Committee it is unusual to push amendments to the vote but very usual to try to explore issues.

I begin by restating another view on which we surely all agree: as my noble friend Lady Brady has said many times, football is its own ecosystem with its own rules, governing bodies, leagues and codes of practice, into which the Government are about to appoint—as the previous Conservative Government wished to create before them—a new state-licensed regulator, without a licence from which teams in the pyramid will be unable to play in specified competitions. It is an arrangement of great interest to UEFA and FIFA; I will put it no higher than that at this point, following some of the debates we have had this evening.

I hope that it is also a statement of the obvious and not at all controversial to point out that regulators are in themselves controversial. On this side of the House, we tend to hear—as I have heard from my noble friends, and I am of course much of the same mind—that regulators are subject to mission creep and lobby capture. My noble friend Lord Jackson said earlier this evening that they are subject to Parkinson’s law.

I am not going to repeat those arguments because they have been exhausted at length, but I hope noble Lords will forgive me if I pray in aid someone who has recently made them quite forcefully. I am quoting from a BBC report. This person said that

“the regulators, the blockers and bureaucrats”

are part of “an alliance of naysayers”, which means that

“we can’t get things done in our country”.

The person who intervened in this way was of course no one less than the Prime Minister. I follow my noble friend Lord Hayward, who pointed out that it is disappointing to hear that the shadow regulator will not be included in the meeting with the Chancellor tomorrow. None the less, I was encouraged by what the Minister said about growth in her responses to an earlier debate. She will of course be aware that many of my noble friends have moved amendments seeking to put a growth objective in the Bill.

Regulators are also controversial, not only because in the view of some people they do too much and in the view of others they do too little. It is a frequent theme of noble Lords and of people in the other place that regulators do things in the wrong way. I defy any Member of this House to look at reports of committees of this House or the Public Accounts Committee into Ofwat, Ofgem, Ofcom and all these other regulators and assert that those committees are never critical of what those regulators do—they are often very critical indeed.

Consider the range and depth of the issues that the new regulator will be asked to consider. I will list 10 points that fans may possibly say after the regulator has come into existence and has bedded down for a while. Is it possible to imagine and believe that fans would say the following?

First, my club says it cannot buy the players it wants, or may have to sell players, because of the financial constraints the regulator has put in place.

Secondly, my club claims it cannot afford the levy and will have to sell players or raise ticket prices.

Thirdly, my club says it cannot afford the interest on unpaid levies and, again, it will have to sell players or raise ticket prices.

Fourthly—this is a theme that has come up a lot in these debates—the regulator will not let my club spend to get promoted as so many clubs have before.

Fifthly, the regulator has taken my club’s parachute payments into account in its calculations, but not the parachute payments of our local derby rivals. If that circumstance arises, I cannot imagine that it will go down very well.

Sixthly, my club, which plays in the Football League, says it is not getting enough money from the Premier League.

Seventhly, my club, which is a Premier League club, says it is now being forced to distribute too much down the pyramid and this is financially unsustainable.

Eighthly, the regulator is doing far too much on DEI. Alternatively—do you know what?—the regulator is doing far too little on DEI; it should enforce these provisions more rigidly.

Ninthly, the regulator should push my club much harder on ticket price consultation.

Tenthly, and most obviously, the regulator is not consulting sufficiently on any of these provisions.

Those are just 10 points; I could go on, but I will not. I have not even mentioned the words “significant influence”, which have been such a feature of these debates. There is a whole series of questions that fans might raise.

The regulator might sometimes be right and might sometimes be wrong, but one of the questions that we have to ask—it has been circulated in today’s debate and was referred to by the noble Baroness, Lady Taylor of Bolton, and the noble Lord, Lord Addington, on his Front Bench—is about parliamentary scrutiny. How will the regulator sufficiently be scrutinised? How can he be held to account by Parliament? The question is especially pertinent because we do not know what the remit of the regulator will look like in a few years.

In these debates, it has been suggested that the remit of the regulator should be increased and widened to include: the two top leagues in women’s football, National Leagues North and South, bodies that negotiate TV rights, player welfare, fan safety, net zero, climate change, modern slavery—we had a very interesting debate about that—DEI more broadly, and corporate governance and practice. I put it to noble Lords that it is not impossible that, in the other place, the remit of the regulator may be extended—or it may be extended soon in future years—which makes these scrutiny concerns even more pressing.

Let us ask ourselves what scrutiny Parliament will be able to undertake on the regulator. There will be an annual report. There will be the “state of the game” report, which we have debated at considerable length. I suppose that the DCMS Committee in another place can haul the regulator in. None the less, there is what has been described as a “lacuna in scrutiny” in relation to regulators. That is a direct quote from a report called Who Watches the Watchdogs?, which the noble Baroness, Lady Taylor, will recognise because it was produced by her Industry and Regulators Select Committee, which weighed the merits and demerits of setting up a new structure.

I mentioned Policy Exchange earlier because of the report alluded to by my noble friend Lord Jackson, The Rise of the Regulators, written by my colleagues James Vitali and Zachary Marsh. It focuses on what it calls the “democratic deficit”. Although finding an answer to this problem of the democratic deficit is a bit beyond my pay grade, I put it to the Committee that the sunset clause that I am proposing would have the effect, as well as being a sunset clause, of increasing scrutiny in a way that would be helpful. The amendment proposes an independent panel that would, within 15 months of the regulator being established, review how the regulator is getting on. This independent panel would contain at least one person with experience of competition law, at least one person with experience in regulatory policy, at least one person with expertise in football administration and at least one person with expertise in business regulation. The panel would review the regulator and ask whether the regulator had acted, within the scope of the original provisions, proportionately and reasonably in relation to cases of compliance and the regulatory burden, and would examine whether its objectives could be achieved by less intrusive means. The panel would then recommend whether the regulator expires, works further for a period with restrictions, or simply goes ahead as it is doing when the panel meets, without any further restrictions.

I make no apology for pressing the merits of sunset clauses. It would be a good thing for all new regulations to be subject to them. I have to confess to the Committee that it is very unlikely that the panel I am suggesting would recommend that the regulator expire. I will tell you why. It is because the panel would be selected by the Secretary of State, who I am addressing through the person of the Minister on the Front Bench. It is most unlikely that the Secretary of State would appoint a panel that would abolish the regulator. Frankly, this is not a perfect provision, but I am seeking consensus and trying to find a proposal that the Government might not consider automatically repugnant.

One should note, in relation to this new panel and any recommendation that it would make, that Parliament would take the final decision. If the panel decided in its view that the regulator should continue, Parliament would have a say in the final decision. If the panel recommended that the regulator be scrapped altogether, it could not do that without the consent of Parliament. There is an extra layer of parliamentary scrutiny. I am grateful to the Minister for writing to Peers on this side of the House about a sunset clause last year. However, I say very briefly that her arguments against it were somewhat misconceived, because they were basically predicated on arguing that, for some reason, the leagues would have reason for acting in bad faith and frustrating the regulator.

I reject that for a number of reasons, not least because it would be the independent panel, with members appointed by the Secretary of State, that would make the final decision. If the panel thought that the clubs or the leagues were being unreasonable, it would side with the regulator, not the leagues. It is perhaps also worth pointing out in parentheses that the clubs, the leagues and so on are going to be under considerable legal obligation as a result of this Bill and would not want to chance their arm lightly.

The Minister also argues in her letter that the sunset clause would incentivise the regulator to look for short-term solutions to long-term problems. Again, I find that hard to see, because the panel making the judgment would want to find the solutions that were best for football. If the regulator were suddenly making short-term decisions at the expense of long-term ones, I should expect the panel to be very critical of that.

Finally, before I take my seat, I say that this is Committee and these are probing amendments. There is a good case for a sunset clause, but it may be that other Members of the House will have other ideas of how parliamentary scrutiny might be strengthened other than by a clause. If they have those ideas, it would be useful to hear them. With that thought in mind, I beg to move.

[Lord Norton of Louth (Con)]

My Lords, I must begin by correcting my noble friend earlier who said we are all football fans. I have no interest in football, but I do have an interest in the legislative process.

In 2004, the Constitution Committee of your Lordships’ House published its report on Parliament and the Legislative Process. I was chair of the committee and indeed the drafter of the report. We recommended changes to the legislative process, including the introduction of post-legislative review. We proposed that Acts be reviewed within three years of their commencement or six years following enactment, whichever was the sooner. In 2008, the Government accepted the case for post-legislative review, committing to Acts being reviewed by departments three to five years after enactment.

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[Baroness Twycross (Lab)]

I am grateful to all noble Lords for staying the course to debate this group. I am not going to use any footballing metaphors, because I think we have exhausted them during the Committee and clearly this is the final group. I want to stress that I am really happy to continue to meet noble Lords before Report to make sure that we can talk through concerns that they have raised ahead of the next stage in the progress of the legislation through your Lordships’ House.

I thank the noble Lord, Lord Goodman of Wycombe, for tabling these amendments, which have allowed a debate about what kind of scrutiny we might need for a new regulator of this type. I am also grateful to the noble Lord, Lord Norton of Louth, for waiting so late to contribute, particularly given his complete lack of interest in football. There is a real value in hearing from people who are interested in regulation and what makes good legislation when we look at something where there is a risk that noble Lords—or anyone looking at the legislation—might approach it from the perspective of themselves as a fan, rather than what we need to have, which is good legislation, a good regulator and effective regulation.

I am also grateful to my noble friend Lady Taylor of Bolton for her contribution. Her expertise has been recognised by other noble Lords as well. I am keen to reflect on these contributions and the points raised by the noble Lords, Lord Pannick and Lord Addington, ahead of Report. I will take the points about scrutiny and accountability away for further consideration. I will go through a number of points—unfortunately, I am going to keep noble Lords a little longer—but I want to reflect properly on the points that have been raised.

Going back to the amendments tabled by the noble Lord, Lord Goodman, unfortunately, while we completely agree that the efficacy of the regulator should be monitored and evaluated—and I am happy to discuss this point further with the noble Lord—I cannot stress enough how strongly we disagree with the use of a sunset clause in this context. I agree with my noble friend Lady Taylor that these amendments would create a perverse incentive for the regulated industry to deliberately act in bad faith from the outset in the hope that the regulator fails to achieve its objectives and is therefore scrapped. We do not want, through the design of the legislation, to encourage or risk encouraging any non-compliance or vexatious behaviour by clubs and competition organisers who might be setting out with the intention of frustrating the regulator. We want to create the right conditions so that clubs act in a sustainable way, and we feel that the approach adopted is the right one.

On the other points raised by the noble Lord, Lord Goodman, surely, we want a regime that creates incentives for clubs to comply and improve sustainability. Under the amendment, the panel would make the decision, but there would still be an incentive for industry to show that the regime is not working. I also had concerns about the noble Lord saying that this would not be a problem because the Secretary of State would appoint the panel. If the Secretary of State can appoint a panel, knowing that it is not going to act against what the Secretary of State might have already decided, that is not a good panel. Therefore, with respect, I cannot agree with the noble Lord’s comments.

Giving the regulator a deadline of five years would also create the incentive for it to become more interventionist. Knowing it will be judged on whether it was meeting its objectives within a fixed period, the regulator could feel compelled to pursue more severe short-term solutions; this would be an undesirable unintended consequence. In addition to introducing these perverse incentives on both sides, a sunset clause would create inherent uncertainty in the market, as default expiry of the legislation in five years’ time, unless regulations are made to the contrary, would leave the industry and investors unclear on what basis they should plan for the future. We do not want to leave the Government or Parliament open to persistent lobbying to trigger the sunset clause.

The noble Lord, Lord Goodman, raised the important issue of accountability. This is already built in through the “state of the game” report and the annual report. However, I do recognise the point made by the noble Lord, Lord Markham, that these are produced by the regulator, albeit that the “state of the game” report will be based on data from the industry. While I understand the noble Lord’s concerns, the Government believe that the current measures already ensure sufficient scrutiny of the regulator and that it can be held to account if necessary—for example, through the DCMS’s role as sponsor and the requirement for an annual report to be laid before Parliament.

Parliament’s Select Committees can also conduct inquiries into any aspect of the work of the regulator once it is established and take evidence on such matters. The Government believe, given the aforementioned risks associated with the sunset clause, that it would not be an effective way to ensure accountability. For the reasons I have set out, I hope the noble Lord will withdraw his amendment.

[Lord Goodman of Wycombe (Con)]

My Lords, I am very grateful to all those who have spoken in this appropriately sober debate, especially to my noble—and non-footballing—friend Lord Norton for coming in and sharing his expertise with us. I suppose it is scarcely surprising that those noble Lords who are sceptical of state regulation favour the sunset clause, and those who are supportive of it are not. The Minister did not fully answer the argument I put to her. I find it hard to see why a panel appointed by her, which could be trusted to be fair-minded rather than biased one way or the other, would deliberately frustrate the regulator if that panel of experts thought the regulator was right. But these are matters to which we may be able to return on Report.

In the interim, I will simply make two points. First, it is very encouraging to see that there is agreement throughout the Committee that there needs to be more effective post-legislative scrutiny. This point was made briefly but very forcefully by the noble Lord, Lord Pannick. My challenge to the noble Baroness, Lady Taylor, is this: if noble Lords do not like the sunset clause as a means of post-legislative scrutiny, let us come up with something else specific, rather than simply issue the general wish that things can somehow be made better.

Finally, a noble Lord said, “Fans want this”. Once again, I say that something like 33 million people watch football. Some of them will be unaware that this is coming down the tracks. I predict that many fans will find themselves in the position of the noble Lord, Lord Birt. I suspect that he has sat through more of this Committee than I have—and I have sat through a great deal of it—very quietly assessing what is going on. He is pro the principle of independent regulation, as licensed by the state, whereas I and many of my noble friends are either sceptical or opposed. But he has recognised, as we have dug more deeply into the weeds of this matter, that it is problematic.

I am sure we will return to these problems on Report. In the meantime, I beg leave to withdraw my amendment.

Amendment 341 withdrawn.