Football Governance Bill [HL]

Lord Hayward Excerpts

Committee stage
Wednesday 4th December 2024 Lords Chamber

[Lord Addington (LD)]

My Lords, the difference between “may” and “must”—or may and shall—is a pretty old parliamentary debate, but the noble Baroness has something here. I read through the amendments and thought, “It’s pretty clear. How could they stay if they’d done these things?” It will be interesting to hear the Minister’s response. I know that “may” probably means “must” in certain circumstances, but if we could just have it clarified, we might get through this very quickly. It is very worth while having it clarified in this case.

[Lord Hayward (Con)]

My Lords, I understand the point that both the noble Lord, Lord Addington, and the noble Baroness, Lady Taylor, are making, but I am always hesitant to say that something “must” happen. I speak here as someone who spent many years as a personnel/human resources director, acting as the final stage of appeal in disciplinary matters. As the noble Lord implied, I know that there is a debate in legal fields, because nowadays lawyers generally do not like being bound by something that tells them that they “must” act in a certain way.

It does not seem to be appropriate to insert “must”. The noble Baroness said that there would be a presumption—and I think so too. As the noble Lord said, these are very serious offences, but until one is confronted by a set of circumstances, I hesitate to bind anybody to a certain decision. There may be special circumstances where one is found guilty of only one of the categories and circumstances, so I am not convinced that “must” should be inserted in place of “may”.

[Lord Jackson of Peterborough (Con)]

My Lords, I want partly to echo what my noble friend Lord Hayward said. Given that the individuals concerned will be non-executive directors of a de facto non-departmental public body, they would be covered by the existing code of conduct for non-departmental public bodies, which I think dates from June 2019. It may have been updated by the previous Government; I do not think that the current Government have looked at it. Equally, they are governed by the Nolan principles, with which we are all very familiar—I am as familiar as anyone else, having been a special adviser and currently being a non-executive director of two non-departmental public bodies.

My point is about the restrictive nature of this wording. This is quite an unusual situation, where the individuals responsible for bringing disciplinary issues to the attention of the appropriate authorities in the independent football regulator will have no leeway whatever under this legislation. If it passes the threshold of criminal activity in civil law, legal representatives—the judiciary, magistrates and others—would have no leeway on this. Therefore, you would circumscribe the existing internal procedures.

Those of us who have a role in non-departmental public bodies know that there is a proper process. You would have a verbal warning. I also have a master’s degree in human resource management and have been an HR manager in my time—there are almost as many of us in this place as there are lawyers.

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[Baroness Taylor of Bolton (Lab)]

My Lords, I am grateful to the Minister for outlining the provisions that she thinks adequately cover this point. However, if discretion still exists on issues such as being guilty of serious misconduct, then I have a concern. I am not sure that there should be discretion in a case of a serious misconduct. Maybe the point she raised about conflicts of interest and that conflicting with other parts of the Bill covers it, but I have this fear that, if there is discretion, the chief executive of the independent football regulator might be put under pressure by others. That can be a serious concern in any organisation. In a sense, I think these amendments would protect people from having to use discretion. If somebody was found guilty of serious misconduct, that would elevate the issue again.

[Lord Hayward (Con)]

I am particularly interested in what the noble Baroness just said about the pressure being imposed on a chief executive. If, having looked at a case in detail and correctly in terms of procedure and the like, he then gives way to pressure from elsewhere —it may well be political pressure of one form or another—would you not call into question whether you have the right chief executive in the first place?

[Baroness Taylor of Bolton (Lab)]

Yes. That is why we need to protect the chief executive or anybody else by not giving them this kind of discretion, which might leave them open to any kind of pressure. I am not sure it would be political pressure; it is quite likely to be internal political pressure with a small “p”, rather than political in the way that we discuss things. I ask my noble friend to consider this a bit further because, given the categorisation, there is a potential problem. I know she has taken an interest in this so, on that basis, I will withdraw the amendment.

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[Lord Markham (Con)]

I thank my noble friend for introducing these amendments, which are also in my name. As in previous groups, he set out some of our concerns, particularly where there are media interests involved—by media interests we are speaking very much about involvement with media rights and, as we discussed earlier, inside information and conflicts.

Amendment 49 is all about the transparency of the process. The real value of an expert panel is that there are a lot of complicated issues. If anything, the last three days have shown us that this is a highly complex area and that we would be asking the expert panel to opine on a large range of issues. The strength of that panel will be its breadth.

One area of particular concern to me is the example I gave before about clubs which are in what you might call the start-up phase—for example, Brighton, as they were a few years ago, when they invested heavily in players as part of a well-reasoned plan to get promoted. I am concerned that a regulator, with its sustainability hat on, might say that that is not very sustainable.

However, I would expect and hope that the expert panel had a range of views. While some may be more of the button-down accountant-type who would have concerns about that, I would hope that others would be of a more entrepreneurial nature and would understand what these aspiring clubs were trying to do, and so give that balanced view. To me, that is exactly what a good expert panel should be doing. On transparency, being able to hear those minority views and take them into consideration overall is an important dimension to all of this.

We have plenty of good examples of this. In the Monetary Policy Committee you have so-called hawks and doves, and a lot of information is often gained by not just the majority view in the vote but the dissenting voices. You see similar things in Supreme Court rulings, where you have minority opinions. It is about trying to bring that sort of richness to this, so that we have a range of expert views, which we will all benefit from. That was very much the thinking behind Amendment 49. I look forward to the Minister’s views.

[Lord Hayward (Con)]

My Lords, I will make one or two comments in relation to this group of amendments. First, Amendment 42 seeks to set an upper limit. I strongly support that, whatever the number happens to be. Many years ago—not that many—I drafted the changes in legislation in relation to parliamentary boundaries for the Commons. Over the years, we had seen a steady drifting up, with ever-more Members of Parliament, as the Boundary Commission decided to duck a decision here or a decision there. Ultimately, we set a figure for the total number of Members of Parliament. I will not go into detail as to whether I think the figure is right now, but I had watched it drift ever upwards.

The debate about this House has included very heavily the question of the numbers that there should be in it. I am a strong believer that there should be a limit, and that the limit should be very substantially below where it is now. The numbers have just drifted up and up, because some people have appointed too many people into this House. I am therefore in favour of having a limit on the panel, because I can see the risks of not having one. I do not mind whether it is 20, or whatever it may happen to be, but I am in favour of some upper limit on any public panel in these circumstances.

I am not going to comment on the next two amendments, on the basis that I have done so already in previous conversations, but I will refer to Amendment 49. I agree strongly with the principles outlined in it. We are talking about a public body here. We are saying that the football clubs, which are regulated and licensed, must be open to comment from their fans. If the football clubs must be open to comment and scrutiny from their fans then surely the regulator and the expert panels must also be open to that same public scrutiny. It is not acceptable for people who are on that sort of panel to hide behind an overall decision. It would therefore be important to go down this sort of route.

I made an intervention on the noble Baroness, Lady Taylor. I do not think I misinterpreted what she said earlier—I apologise if I did, because she is not here at the moment. When I asked her about strong or weak chief executives, she expressed concern that the wrong chief executive might be in the position. If there is, and he is leading a weak panel, then people could hide behind it. I am strongly in favour of a public display of decision-making in that process.

I would not necessarily agree that the amendment has perfect wording. For example, in proposed new sub-paragraph (2)(d), whether or not you have “the reasons why” is another matter. However, one category that is not in here is the question of timescale, which has come up in other elements of our discussion. It must be right that, throughout the process of regulation, there should be timescales imposed. It is all too easy for people to drift on decisions, whatever they happen to be, and put them back and back.

We are talking here, as we have identified, about a very competitive industry, competing not only in the football world but in other worlds as well. To maintain the position of our competitive pre-eminence within that field, we need to ensure throughout that regulators abide by timescales. I therefore suggest that, on Report, not only in this amendment but elsewhere, there should be timescales involved, as well as the other classifications that are identified.

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Finally, has the Minister given any thought to scrutiny or oversight of the financial ramifications we are being invited to support tonight by means of the DCMS Select Committee, the Treasury Select Committee or the Public Accounts Committee? Given the very wide powers in this part of the Bill, there needs to be appropriate scrutiny of the dispensing of very significant amounts of public money. We are told that, at the top end, the worst-case scenario could be £140 million over the course of a Parliament. We need to get the wording right and protect taxpayers’ interests.

[Lord Hayward (Con)]

My Lords, I will correct my noble friend on one point in his introductory speech. He talked about the cost burden falling on the taxpayer. This is a Bill where the burden does not fall on the taxpayer; it falls on the football clubs. At each step, however many there may be, depending on debates on hybridity and the rest, we must remember who will finish up paying for this. It is a group of football clubs, their fans, their staff and their players.

I raised the question in Committee:

“The Government need to be honest before this legislation passes, and to identify the probable burden for each of the small clubs”.—[Official Report, 2/12/24; col. 996.]


The Minister committed to write to me in response, and she has done so. Earlier, I intervened on my noble friend Lord Jackson and cited a particular instance, the head bullet point in the Minister’s response whose heading is:

“Exact cost of the Regulator”.


I did not ask for the exact cost; I asked for a probable cost. With respect to my noble friend Lady Brady, my target throughout this has been the small clubs—the Wycombes, the Wigans and those sorts of clubs. They are not as well resourced as those in the Premier League and do not have international competitions that they may or may not be in. It is crucial that the small clubs have some idea of what they are going to be asked for.

According to the letter, the impact assessment, to which I have referred previously,

“provides a reasonable estimate of these costs”.

If it is “a reasonable estimate”, it will probably be possible to work out reasonably what the costs to the small clubs are. The Minister has used the word “proportionate” on different occasions. The calculation could be done only on revenue, turnover or staff. It is improbable that it will be staff; it will therefore be revenue or turnover. If you have a fixed number of clubs and already know the revenue and turnover of each of them, you can work out what the costs will probably be. I will continue to press throughout Committee and Report until we get an indication of what the costs are. It is not as if they are not available.

I am sorry that the noble Baroness, Lady Taylor, is not here. On this occasion, I have done not a word count but a page count. The impact assessment is 76 pages long and, on a conservative assessment, 29 pages provide projections of costs and benefits. I could have extended it more substantially than 29 pages, but on a small conservative estimate there are whole pages of graphs with options and alternatives. The noble Lord, Lord Jackson, referred just now to £140 million. That is not the top option but the “reasonable estimate”, to use the words of the Minister. It could be much higher.

If there is an analysis of potential costs on 29 pages of the impact assessment, it is a very short step to do a calculation of the impact on each club. When I say it is a short step, it is in the impact assessment itself, but I am asking for the costs to the clubs. Page 58 starts progress down that route. It says:

“Costs to the National League (organising body)”.


In other words, it has already gone part of the way there. On the next page, we read:

“Costs to National League clubs”,


and there are several paragraphs thereafter. So, the Government have already gone down the route of looking at the potential costs not only to the National League but to National League clubs.

If the previous Government felt that it was possible to ask an opinion poll company, Ipsos MORI, which I cited the other day, to do research on potential regional benefits and contributions that people might perceive from having a regulator, it should be possible for this Government to do research on what people might pay—to come back to my point about the revenue and turnover of these clubs, all they have to do is turn to Deloitte. Is that a company that we have never heard of? No. Deloitte is cited in the impact assessment on different pages. It talks about Deloitte’s research into football clubs on the back page:

“Deloitte analysis of club finances”.


That is all that has to be done.

The Government are so keen to display their research in terms of finances and costs that they have not only produced an impact assessment but “impact assessment key points”. What is the first title? “Cost methodology”. We are talking about something which the Government have gone a long way down already in the necessary assessments.

I will not challenge the figures—I may do so on another occasion. Taking the figures that are available, it is a very short step for the Government to say, “This is what it will cost for clubs of these sizes to operate and pay for the levy”. But I would add one important caveat, and it may be one of the two reasons why the Government do not want to identify the sums involved.

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[Lord Moynihan of Chelsea (Con)]

I thank the noble Baroness, Lady Brady, and the noble Lord, Lord Mann, for his intervention. He seemed to think I was talking about Premier League clubs. I was not. I was saying that the Minister had said that she did not want to specify in the Bill which clubs were going to be regulated, so the club does not know whether it will be regulated, and it certainly does not know how much it will cost it. The noble Lord might shake his head, but that is a fairly obvious point. We do not know who will pay. We also do not know what it will cost. I believe the noble Lord, Lord Hayward, talked about an estimate of £10 million—I beg your pardon; it was the noble Lord, Lord Markham.

[Lord Hayward (Con)]

If I might clarify for my noble friend: the noble Baroness, Lady Brady, referred to £10 million; I was quoting from the impact assessment, which says that £140 million over 10 years is the mid-point the Government are operating to.

[Lord Moynihan of Chelsea (Con)]

I beg the noble Baroness’s pardon for not attributing the £10 million figure to her. The fact is that we know that is ludicrous, because the cost of other regulators is way more than that.

I will make some headway. What will it cost overall? We do not know what the overall cost will be or what it will cost individual clubs. To talk a little bit more about that, imagine you are a local entrepreneur. There is a club in a little bit of trouble. They come to you and say, “You always wanted to own a football club. Why don’t you take over our club and then you can have one of those back-to-back league promotion successes that you’ve dreamed about and you’ll be famous in your community?”. You say, “Well, I’ve got a few bob. I don’t know how much, but yeah, okay, I’ll consider it”. It is one of those clubs that a noble Lord opposite talked about on Monday. I think the numbers cited were a turnover of £2 million and seven employees. You are invited to take over this club and bung in some of your money. You may not have a lot, but you may think you have enough. Then you say, “What’s going to happen?” My concern is that when you are told there is going to be a regulator that will tell you who to have on your board and all that, you will say, “Forget about that; as an entrepreneur, I don’t play that particular game”. But let us say you swallow that. Then you say, “How much is this regulator going to cost me?” The answer: “Dunno mate”. You ask, “Well, what could it be?” The answer: “Dunno”. So you turn your back and go off to sponsor the local cricket club or something like that. It does not work if you are not absolutely clear about what the cost will be.

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[Baroness Twycross (Lab)]

My Lords, I thank the noble Lords, Lord Jackson of Peterborough and Lord Markham, for these amendments. Before I go through them and respond to the debate, I stress that I will make sure that all letters that have been sent to Members in the course of the Bill so far are placed in the Library as soon as possible, if that has not already taken place.

Ensuring that there are appropriate financial processes and limits in place for the regulator is extremely important, and I welcome this opportunity to discuss the matter in more detail. Amendment 50, in the name of the noble Lord, Lord Jackson of Peterborough, would entirely remove the ability of the Secretary of State to provide the regulator with financial assistance where appropriate. The Government acknowledge that the intent behind this amendment is to ensure that the regulator provides value for money for football fans, Parliament and the wider football industry. The regulator will be levy funded, and its regulatory principles include using its resources in the most efficient, expedient and economic way—this is what we expect.

The noble Lord, Lord Hayward, asked about costs to smaller clubs. It will be for the regulator to determine the methodology for the levy. However, the Bill requires it to take into consideration the financial resources of a club and the league a club plays in when determining how to distribute the levy charge across clubs. This should ensure a proportionate levy, where no club, big or small, will be asked to pay more than what is fair and affordable. I appreciate, however, that the noble Lord has not yet been satisfied by my response to this, and I look forward to discussing it with him in further detail when we meet.

[Lord Hayward (Con)]

I thank the noble Baroness for the offer to meet. Can I clarify that her implication is that all clubs in a division will be charged the same fee? I am not absolutely clear from what she said whether there will be a varied fee for different clubs in the same division, and this is not clear in the impact assessment either.

[Baroness Twycross (Lab)]

It is for each league a club plays in, but, as the noble Baroness, Lady Brady, made clear, there would be differences between the resources available to each club within a league. It is intended to make sure that each club has a proportionate levy placed on it, as well as taking into account which league a club might be playing in. So it is intended to be proportionate overall but also proportionate to the resources of an individual club.

The regulator’s budgets will be approved annually, and it will produce an annual report that will be laid before Parliament. However, on the points raised by the noble Lord, Lord Addington, exceptional and unforeseen adverse events may mean that it is necessary for the Secretary of State to provide financial assistance to the regulator. Paragraph 36 of Schedule 2 allows for this when considered appropriate. It also allows for the Secretary of State to cover any shortfall during the period between establishing the regulator and the levy being fully in effect—that was noted during the debate.

The noble Lord, Lord Jackson, asked how much the independent football regulator will cost and questioned whether the taxpayer would have to pay. To answer his question fully, I stress again that the regulator will be levy funded. However, there will be a period before clubs are licensed, and before the levy can be charged, when the Secretary of State will provide funding. These initial costs can all be recouped by the Exchequer once the regulator’s levy is up and running. We cannot know the exact cost of the regulator until the legislation has been passed and the organisational design has been finalised by the chair and the board. The noble Baroness, Lady Brady, noted that some of the additional potential purposes that noble Lords have discussed in relation to the regulator could scale up or scale down some of those costs, so it is not possible to have an exact figure at this stage.

On a power allowing the Secretary of State to cover any shortfall, there is an equivalent power for the Secretary of State to provide financial assistance to, for example, the Small Business Commissioner in the Enterprise Act 2016. Entirely removing the ability of the Secretary of State to provide this financial assistance could mean that the regulator is unable to continue to operate and fulfil its objectives, which would have significant knock-on impacts on the game.

On Amendment 171, in the name of the noble Lord, Lord Markham, it is important that clubs have appropriate non-financial resources in place. This will ensure that clubs are able to make good decisions about running the club, as well as meet relevant rules and regulations and report their finances accurately. The regulator will be able to attach discretionary licence conditions relating to non-financial resources in three areas: risk management, financial reporting and internal controls—and only in these three business-critical areas.

The term “internal controls” is explained in the Explanatory Notes. It refers to the system of policies and processes that a club has that allow it to operate in an effective, orderly and efficient manner. This includes controls to ensure complete, accurate reporting, compliance with rules and regulations, and financial management.

To confirm the assumption of the noble Lord, Lord Birt, on the matter of not duplicating with regard to audit, we would assume that existing audits would be used as part of this process.

These are all areas crucial to ensuring financial sustainability, and that is exactly why the regulator needs to be able to attach discretionary licence conditions relating to these areas to ensure that clubs do in fact have appropriate non-financial resources. It would not be appropriate to limit the regulator unnecessarily here to internal financial controls only. The regulator can attach licence conditions only if they advance one or more of its operational objectives. I reassure noble Lords that the regulator will not have free rein here; financial sustainability will still be at the heart of any licence conditions.

Finally, I thank the noble Lord, Lord Markham, for his Amendment 253. The Government completely agree that the regulator should not be able to borrow money. That is why it is already prevented from doing so in paragraph 35(2) of Schedule 2. There is no need for this restriction to be duplicated elsewhere in the Bill. Additionally, the regulator would currently use penalty receipts to fund litigation costs. The noble Lord’s amendment would prevent this. It would mean that litigation costs would have to be passed on to all clubs through the levy, as opposed—

[Lord Hayward (Con)]

Sorry, I was just waiting for the Minister to conclude her paragraph. Can I just ask her to clarify the intervention made by the noble Lord, Lord Mann? He said—I am paraphrasing and am happy if he corrects my phraseology—quite clearly to the Committee that figures have been given to clubs as to what they were likely to pay. Is that correct, or is the noble Baroness, Lady Brady, correct, having been present at all the meetings with the Ministers, that no figures have been given to any clubs?

[Lord Mann (Lab)]

Figures have been given by the Premier League to clubs and clubs have been happy to cite those figures.

[Baroness Twycross (Lab)]

To respond to that point, my understanding of what my noble friend Lord Mann said was that it related to the Premier League giving information to the clubs, rather than explicit information being given by the Government.

[Lord Hayward (Con)]

In which case, can the noble Lord, Lord Mann, provide the Committee with the details of the figures and the dates when they were provided?

[Baroness Twycross (Lab)]

I am not sure whether it is my responsibility as a Minister to ensure that that happens.