Football Governance Bill [HL]

Lord Markham Excerpts

Report stage
Monday 17th March 2025 Lords Chamber

[Lord Addington (LD)]

My Lords, this is rather an odd one. Apparently, we are in favour of equality but not in favour of doing much about it. A reporting strategy on what we are doing to improve equality and diversity does not strike me as terribly onerous. Indeed, if we are doing something that comes under the “expletive silly” category, we will know if it is reported. I suggest that we are trying to build a little monster here—build it up so as to have something to knock down. There are real battles to fight; let us wait for those.

[Lord Markham (Con)]

I shall speak to Amendment 34 in my name and that of my noble friend Lord Parkinson. This was the subject of much debate in Committee, where there was a united feeling that we want clubs that are well run, with good governance, and that are sustainable. Wherever possible, we want a regulator to be light touch.

My amendment would encourage the use of independent non-executive directors to help in that regard and put it in the code of practice. I freely admit that having independent non-executive directors is not a guarantee of good governance, but most of us would agree that having impartial experts as part of a board is generally a good and sensible thing to do in any organisation. Members on all sides of the House supported this in Committee. I know that the Government are generally supportive of this proposal, and I look forward to hearing the Minister’s views on how we can best help to make it happen. I believe that this would be a sensible move towards good governance.

[Lord Bassam of Brighton (Lab)]

My Lords, I should like to counter some of the nonsense that we have heard from the noble Baroness, Lady Fox, and from the noble Lord, Lord Jackson of Peterborough, who moved the amendment against equality, diversity and inclusion.

The EFL, which represents 72 of the clubs affected by the Football Governance Bill simply says this:

“Our equality code of practice is already mandatory for member clubs, and this approach is a logical extension of existing arrangements that will ensure high standards are maintained”.


That says a lot. If you go to any football ground on most weekends, as I try to do, you will find messages of persuasion and inclusion to ensure that football plays its part in guaranteeing that the game becomes more inclusive and that its workforce is diverse.

During the early debates in Committee, I suggested that the business of football, outside the players on the pitch, could do with looking at this issue some more, because the workforce more broadly is not as diverse as it should be, certainly at senior management levels and director level. We need to encourage that better, and in some ways the amendment proposed by the noble Lord, Lord Markham, about independent football directors, may play a role in that as well, because that provides some flexibility within the senior echelons of management.

Only 4% of managers in the professional game are from non-white backgrounds. Given that some 45% of the workforce—the players on the pitch—are black or from a minority group, something is clearly not working in how the business is developing, and we should do all that we can to address that. I agree with the noble Lord, Lord Pannick: this is a non-sensible amendment that we should rigorously oppose.

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[Baroness Twycross (Lab)]

My Lords, I rise to speak to a package of government amendments: Amendments 51, 78, 86 and 88. I will speak to other amendments in this group in my closing remarks. The government amendments follow constructive discussions with the noble Lord, Lord Markham, who proposed an upper limit on interest that can be charged by the regulator on missed levy payments. Our amendments will impose a limit of the Bank of England base plus 5%. We believe this strikes the right balance between deterring non-payment and preventing undue burden. It also provides greater internal consistency within the Bill; the rate used for this upper limit is the same applied to missed financial penalty payments. With this amendment the regulator will maintain the discretion to set the interest for missed levy payments and could therefore set it lower than this cap or disapply it entirely. I hope this satisfies the noble Lord’s concerns on this issue, and I beg to move.

[Lord Markham (Con)]

My Lords, Amendment 52 seeks to reverse one of the more surprising changes to the Bill. The previous Conservative version stated that the regulator must consult on all changes to the levy rules. This seemed fair and proportionate. If the regulator is to change how it charges the levy or how much it wishes to charge, it seems pretty reasonable that those who will bear the burden of that charge are consulted.

The changes introduced by the Government provide that the regulator does not have to consult if it considers those changes to be minor. The issue is that the definition of “minor” is to be determined by the regulator. What would happen if the regulator tries to claim that somehow a change is “minor”, but other interested parties do not agree? Is there not the possibility here for the regulator to skirt around important consultations by simply claiming that the changes it is proposing are not significant enough to warrant discussion? The problem here is that this could create endless discussions about what warrants being termed “minor”. Surely it would be far simpler for the regulator just to consult on all changes, as was the case in the previous Bill.

Separately, it is welcome that the Government have accepted the principle that interest charged by the regulator on unpaid levy charges should be capped by the legislation. This was an amendment that my noble friend Lord Parkinson and I tabled in Committee. At the time, the Minister said that

“setting the rate of interest charged on non-payment of the levy is an operational decision for the regulator, which needs the flexibility to charge interest at a rate that deters non-payment”.—[Official Report, 18/12/24; col. 337.]

We disagreed with this assessment at the time. Although it is right that some flexibility is needed, it is not right that the regulator should be the one that sees fit to charge whatever it thinks is right. I am therefore very pleased that the Minister has changed her mind on that matter and brought a government amendment to this effect.

[Lord Goddard of Stockport (LD)]

My Lords, I will speak to my Amendments 55 and 56. I received a satisfactory reply on the four amendments from the previous group, which I submitted to the Government and the Minister. I also submitted Amendments 55 and 56, but I did not quite get such a full support for them, so I think it is worth explaining to the House what they are—plus a slight history lesson.

The Minister’s statement in the debate on 16 December 2024 set down the clear intent that the regulator should have primacy ahead of all competition organisers:

“I want also to stress that the regulator will not stop the leagues imposing their own competition rules so long as they do not conflict with the regulator’s regime”.—[Official Report, 16/12/24; col. 40.]


The then Government’s consultation response document noted:

“The Regulator will set the legal baseline for regulation in areas within its remit. There may be scope for industry bodies to layer on top, but the Regulator would coordinate with these bodies to ensure that any additional rules were supportive of the regulatory approach and objectives. This means that industry bodies will need to be receptive to working with the Regulator to potentially streamline and adapt their existing rules, to allow for a coherent regulatory landscape that minimises burdens on clubs”.


However, this is not reflected in Clause 55(6), which requires only that the competition organisers “consult” with the regulator. That is not what was previously said.

Through discussions on the Bill, we have seen that the level of co-operation of competition organisers has varied, so it is not satisfactory to rely on their good will to resolve regulatory conflicts. Indeed, recent Premier League consultations have resulted in a legal spat with the Professional Footballers’ Association, the EFL, the Government and FIFA, and various disputes with the Premier League executive. The proposed amendments aim to ensure that the regulatory system is clear and coherent and avoids the confusing overregulation of rules. The IFR can act as an important safeguard.

We have seen a number of recent legal cases that have demonstrated deep flaws in some of the competition organisers’ approach. For example, the Premier League lost a case to Leicester City, where Leicester was held to be a member of neither the Premier League nor the EFL, due to poor and contradictory drafting of Premier League rules. That was a report from the Appeal Board.

Of even greater concern, the Premier League rules on associated party transactions were found to have been illegally introduced to advantage one set of clubs over another, and to have abused a dominant market position. As a result, three years of those rules were held to be void, as though they never existed, and there are more damages claims to come. These rules came about because of rushed processes. The panel noted that they had not been subject to proper analysis or examination before introduction:

“There does not appear to have been any discussion or analysis as to how such an exclusion would affect the effectiveness of the PSR, and the principle of sustainability of club finance which underlies the PSR”—


the profit and sustainability rules in competitions. That was from a judgment in favour of Manchester City, which additionally found that:

“Nor was there any evidence that the PL had in fact carried out any analysis as to the impact of the shareholder exclusion on different clubs and to seek to justify such an exclusion”.


Many of these difficulties have come about because of the inherent conflict in the regulated entities—the clubs—being the ones that set the rules. Clearly, the independent regulator will be able to act on that. It will act effectively to regulate the financial sustainability of English football and undermine its entitlement.

The proposed amendment is targeted at financial and business regulations; it leaves sporting regulations completely untouched. It is of no benefit to anyone in the game for there to be rushed, ill thought-through or illegal market regulations, from whatever source. It will benefit all to ensure that the IFR can act with quality checks on future attempts by competition organisers when they attempt economic market regulation. The Premier League has clearly demonstrated that it is not good at economic market regulation; in doing so, it has ended up costing the Premier League and its constituent clubs tens of millions of pounds in legal fees and dislocated activities.

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[Baroness Twycross (Lab)]

I am sorry that the noble Lord finds my answer inadequate. I am happy to give further reassurance to noble Lords by asking the shadow regulator for some examples of what type of change it may see as minor.

[Lord Markham (Con)]

I thank the Minister for her comments, but I think it is the feeling of a number of noble Lords, particularly the noble Lord, Lord Pannick, and my noble friend Lord Hayward, that it cannot be right in principle that the regulator gets to be judge and jury on what is or is not consequential, particularly as it does not have the full knowledge that the clubs might have. The regulator might think it is minor, but it might make a real difference to the clubs. Therefore, at this point, we are minded to test the opinion of the House when we come to Amendment 52.

Amendment 51 agreed.

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Moved by

[Lord Markham]

57: Clause 56, page 45, line 32, leave out subsection (2) and insert—
“(2) In this Part, revenue received by a specified competition organiser is “relevant revenue” if—(a) it is revenue received as a result of the sale or acquisition of rights to exploit the broadcasting of football matches included in a competition organised by the specified competition organiser, and(b) it is not revenue that the specified competition organiser distributes to a club by virtue of a team operated by the club being relegated from a competition organised by the specified competition organiser.”Member’s explanatory statement
This amendment, and the other amendments to clause 62 in the name of Lord Parkinson of Whitley Bay, prohibit parachute payments from being included in the distributions of revenue resolution procedure.

[Lord Markham (Con)]

My Lords, Amendment 57 is in my name and that of my noble friend Lord Parkinson, and I will speak also to Amendment 70. In Committee, we talked at some length about the importance of parachute payments, with my noble friend Lady Brady really bringing home how important they are to clubs. For promoted clubs that know that there is a big threat of being relegated for the next season, they give them the confidence to invest in new players and build the strength of the club. They are able to make that financial commitment only because they have the security of parachute payments behind them. Likewise, any clubs in the bottom half of the table, when we get to this stage of the year, are looking over their shoulders: were it not for parachute payments they would not be looking to make investments in the January window but thinking more about selling rather than recruiting players.

As mentioned on previous occasions, the fundamental reason that the Premier League is the most popular and richest league in the world is because every game is competitive. If we look at other leagues, whether it be in Italy, Spain, Germany or France, we tend to find two or three good teams and a lot of other teams which are, if it is not too unkind to say so, also-rans. A lot of games, as a result of that, are just not competitive in the same way, whereas we know that in the Premier League, every single game is competitive and capable of a surprise. That is because the bottom clubs invest in players to make it competitive, knowing that they have that safety net there. It is that that ultimately brings in the big bucks, in terms of the rights bids that fund the whole game: broadcasters around the world want to know that they will have good games week in, week out, and that is what parachute payments allow.

It is probably put best by Paul Barber, the well-respected Brighton & Hove CEO and deputy chairman: the relative comfort that parachute payments provide to Premier League clubs, especially those newly promoted, means that owners are more willing to commit funds, knowing that if the worst happens and relegation occurs, clubs have support to adjust to a very different reality.

I am aware that the Bill does not require the regulator to consider parachute payments. I know the Minister has made this point before, and we understand it, but the fact does not negate the risks. That is not to say that the current system of parachute payments is not without faults—no one is saying it is perfect—but it is true that every major league club has a similar parachute-type mechanism in some shape or form. That is why we feel the need to ensure that parachute payments are not part of the regulator’s remit, as in the original Bill put forward by the Conservative Government. It is very important.

On the tiny chance that the Minister does not accept Amendment 57, I have also tabled Amendment 70 as a compromise. Amendment 70 states that if the regulator does include parachute payments within the scope of revenue distribution, a final proposal cannot abolish them entirely. The intent is to give a greater degree of certainty that parachute payments will not be disregarded in their entirety. It acknowledges the regulator’s right to consider them if it believes it is necessary, while also ensuring some level of security.

Competition organisers would be able to propose a reduction in parachute payments if they so wish, but could not do away with them altogether. This is fundamentally important to clubs, which often invest with three-, four- or five-year business plans. That is of course exactly what we would want reputable, well-run clubs to do. We want them to invest on the back of a certain set of circumstances and economic conditions and not expect some major parts of that—namely, the parachute payments—to be potentially withdrawn mid-way through.

I believe that this is in keeping with the Government’s stated intentions and I know the Minister does not envisage parachute payments to be abolished. If that is the intent, why not give us greater guarantee of the fact by putting it in the Bill? Although I would prefer parachute payments not to be considered at all, I am under no illusions as to the parliamentary arithmetic. Therefore, in the likely event that they are to be included in the Bill, we have tabled Amendment 70 as a sensible and measured compromise that does not deviate from the Government’s stated policy.

On the small chance that the Minister does not accept my Amendment 57, I hope that she will find herself able to accept the compromise that we have put forward in Amendment 70. I strongly urge her to look favourably on such an amendment in the spirit of consensus, which I know noble Lords in this House respect. If she is able to accept Amendment 70 or give an undertaking for Third Reading, I will not divide the House on Amendment 57 but, unfortunately, if she does not accept what we think is a very sensible compromise, we will have no option but to divide. I beg to move.

[Lord Addington (LD)]

My Lords, it might be convenient to give our opinion on this matter, which is very straightforward. Parachute payments are a system that is in place for today and not set in stone. This is an ongoing process, and the situation will change with the Bill. There is the suggestion that parachute payments are a great drop down and land with a heavy thump. Hopefully, we will raise the ground up a bit or have some cushioning in place. Having one system built in for ever goes against the purpose of the Bill.

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[Baroness Twycross (Lab)]

I thank the noble Lords, Lord Parkinson of Whitley Bay and Lord Markham, for tabling these amendments, and the noble Lord, Lord Markham, for speaking to them.

As discussed in Committee, the Government fully acknowledge that parachute payments are a significant part of football’s financial landscape. As the noble Lord, Lord Addington, made clear, this is part of the current landscape. However, it is precisely because of this importance that the regulator must be able to consider them as relevant revenue for the purposes of the backstop, especially if they are proven to be destabilising. How else could the regulator possibly make a fully informed and effective decision without a complete picture of football’s finances?

Amendments 57, 75, 76 and 84 all attempt to remove parachute payments from consideration under the backstop. They also remove the power for the Secretary of State to amend the definition of relevant revenue, preventing them ever being included in the definition of relevant revenue in the future.

In our view, these amendments are fundamentally short-sighted. I hear the concerns from the noble Baroness, Lady Brady, but we heard a very different alternative view from my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton and the noble Lord, Lord Goddard of Stockport. Clearly, it is disputed within your Lordships’ House. If the effects of parachute payments are risking the sustainability of the wider pyramid, the regulator must have a lever to address the issue.

These amendments make the definition of relevant revenue less flexible, less able to address the changing landscape of football’s finances and, overall, less effective. The current power in the Bill allowing the Secretary of State to amend the definition of relevant revenue is balanced, requiring substantial consultation with the relevant leagues. Removing this instead leaves us with a static definition that is likely to become outdated over time. For the reasons I have set out, I ask the noble Lords not to press these amendments.

[Lord Markham (Con)]

I thank the Minister and all noble Lords for their comments. It has become clear in this heavily truncated debate, but taking on the major points that we spoke about in Committee, that all noble Lords care passionately about what we are trying to do here, and that between us we are all trying to find what we think will be the best solution for football overall.

My concern and the concern of my noble friends and many others is that if you damage the competitiveness of a lot of those Premier League games, it will result in less money being paid in media rights to the Premier League, which will mean less money to all the clubs in the pyramid. That is the real danger that we are talking about here.

To directly address the points made by the noble Lord, Lord Bassam, around the closed-shop nature of the Premier League, only five clubs have been in the Premier League for the whole of its existence, so that is not a closed shop, and 55% of all the clubs have been in the Premier League at some point.

Although the Minister’s comments were not unexpected, I believe that the previous version of the Bill that was presented by the then Conservative Government was better than the one before us today, and one of the major reasons for that is the changes around parachute payments.

I regret that, although the Minister understands the importance of all the amendments, she is not minded to accept our Amendment 70 as a genuine attempt to reach compromise and consensus on this issue. That means that the regulator can still, if it considers it correct, abolish those parachute payments in their entirety, which I truly believe would have a significant impact on the game and damage all 92 clubs. As a result, I am afraid that I am not satisfied by Minister’s response and, as I indicated earlier, I would like to test the opinion of the House on Amendment 57.

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[Lord Markham (Con)]

Over many days and probably 300-plus amendments we have discussed many points, but in my opinion this is probably the most important and significant of them all. Unlike any other regulator, this set of clauses gives this regulator the power to take money from one part of the organisation and give to another. You do not see a regulator being able to take from Severn Trent and give to Thames in the water industry, or from Barclays to NatWest in the banking space. Without doubt, this is the most important thing that we are talking about here: giving power to a regulator that is unheard of in any other domain.

I must admit that I was taken aback by the Government’s suggestion. Again, in all this there is no doubt that everyone is trying to get the best approach and that we all sincerely want what is best for football, but I hear the point made by the noble Lord, Lord Birt, that the pendulum mechanism really is untried in this domain. There is a real risk of gaming and, as mentioned, Russian roulette.

Instead, as an alternative, we have here a very thoughtful approach—maybe not put forward by a Pelé, a Bobby Charlton or a Messi, but put forward by a former BBC director-general who dealt with many media sports rights; a former Lord Chief Justice; a former head of Ofcom; a former head of the Civil Service; a former Archbishop of York; a distinguished economist; and a distinguished and sometimes expensive sports lawyer. I think we would all agree that we probably have a Pelé, a Messi and a Charlton of this subject matter before us today, and that we would be very wise to take on board all the comments, knowledge and vast experience that they bring.

That is why for me the key question was put by my noble friend Lord Hayward: whether the Minister is willing to consider this further. I know that she has spent a lot of time on this subject, as have the Secretary of State and other Ministers, and we are grateful for that, but it is worthy of further time, given the importance of what is before us today. I request that this be brought back as a commitment at Third Reading.

I am nervous that we will just get an undertaking that this will be considered, because of course it still needs to go through the other place, and we know that the other place has a large government majority without the benefit of the learned Cross-Bench Peers we have heard from today. I will listen carefully to the Minister’s words and the response to them from the noble Lord, Lord Birt, but I note that any Peer is able to divide the House. From our side, if we do not feel we have the undertaking that this will be brought back at Third Reading, we will seriously consider dividing the House.

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[Baroness Twycross (Lab)]

The only commitment I will give is the one I have in my speech. We do not think it is possible to reach an agreement before the conclusion of Report or Third Reading in the Lords. Our current position is that while we are sympathetic to the intent of the amendments, they differ significantly from the existing drafting.

As I started to say, we kept the model chosen by the previous Government. This model is intended to create the right incentives. A number of noble Lords, including my noble friend Lady Taylor, spoke of the intention behind the current model. The final offer mechanism is designed specifically to address unequal negotiations between parties with power imbalances such as those that naturally arise in the football industry. The noble Lord, Lord Addington, said it was designed for people not to get there. It is actually designed not to be used.

The process as it stands in the existing legislation heavily incentivises reasonable proposals, since an unreasonable proposal has a very high chance of rejection when compared to a more sensible competing offer. We must maintain this incentive—

[Lord Markham (Con)]

My Lords—

[Baroness Twycross (Lab)]

If I may, I will get through the points and finish; I am happy to give way if I do not answer the noble Lord’s point.

Our objective is to ensure that the backstop effectively pushes leagues to co-operate—the point that I think my noble friend Lady Taylor of Bolton was driving at. This was, and remains, the rationale for the existing drafting and model adapted by the previous Government, and in the Bill brought back by this Government to your Lordships’ House.

Alongside this, we want to ensure that the model is light touch—to echo a point made by the noble Lord, Lord Pannick—low cost, flexible and has a clear process. In considering strengthening the model, we must also ensure due consideration, and that appropriate engagement with the relevant stakeholders takes place.

We recognise the intent of the proposed amendments in supporting these objectives, including how the process is triggered, how mediation is conducted and how a final decision is made, including the criteria for a decision. I know that the noble Lords’ proposals have the best interests of football at heart and are based on the huge amount of experience of all those who have signed the amendments. The department will continue working to ensure that the backstop delivers the right balance and the right result for football. This is our shared goal.

I understand that the noble Lord may still wish to divide the House, given that I cannot give a firm commitment at this stage or commit to bringing something back before Third Reading. But throughout the Bill’s passage and consideration of amendments in the Commons, we are very happy to engage with the noble Lord, Lord Birt, and noble Lords who have signed up to his amendments, as well as with other noble Lords with an interest in this area, with the hope of reaching a more amenable compromise before Royal Assent. With that in mind, I ask the noble Lord to withdraw the amendment.

[Lord Markham (Con)]

If I may, I will make what I hope is a helpful suggestion. The Minister mentioned the lack of time ahead of Third Reading. It is my understanding that it is within the Government’s power to delay Third Reading in order to give sufficient time for this. Given that one of the previous amendments said that we would not put forward measures that would have an impact during a season, and given that we all accept that this legislation will not be passed before the beginning of the new season, there is no practical difference in terms of timing and what that will mean. We have a real opportunity here, which will not have any timing impact on football but will give us the opportunity to seek the better way mentioned before.

[Baroness Twycross (Lab)]

There are currently no plans to move the timing of Third Reading in your Lordships’ House, but I commit to ongoing discussions with the noble Lord, Lord Birt, and others, who have been extremely considerate in the time they spent discussing their concerns about the current model with me, the Bill team and others. We wish to continue those discussions in the spirit I described previously.

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Moved by

[Lord Markham]

60: Clause 57, page 47, line 32, leave out “five years” and insert “the applicable period (see subsections (7) and (8))”

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[Lord Markham (Con)]

My Lords, I must admit that this group of amendments feels a bit “after the Lord Mayor’s Show”. I rise to move Amendment 60 in my name and that of my noble friend Lord Parkinson of Whitley Bay. This amendment reintroduces the ability of a competition organiser to contract out of the backstop. This was in the previous version of the Bill, introduced by the last Government. It permitted the leagues the opportunity to come to a mutual agreement to opt out of the backstop mechanism for a longer period of time. To me, this seems entirely sensible, because of course the whole point of a backstop agreement is for it to be a backstop. Clearly, if the leagues have already reached an agreement—and clearly both want to opt out of it all—by definition you do not need a backstop, because an agreement has been reached. So my question is: why should the leagues not be allowed to do that?

Our Amendments 60 and 61 would also remove the short-termism introduced in this version of the Bill, allowing for a flexibly and mutually agreed opt-out mechanism that would be longer term—beyond the five years, if need be—to create the stability required for long-term partnerships. Again, it is commonly known that clubs, leagues and commercial organisations can often decide and come to better deals over a longer- term period, because often the people paying the money are prepared to pay more to get the certainty that a longer period of time gives. So allowing a period such as 10 years instead of five can often lead to mutually beneficial outcomes.

Again, I do not know why we would want to be prescriptive in all this and not allow competition organisers—in this case the Premier League and the EFL—to have the flexibility to come mutually to those agreements. Clearly, they will do so only if they think it is in the interests of both parties, so I do not know why we would wish to deny them the opportunity to reach such a long-term partnership agreement. To me, that is what we should all be about: trying to encourage co-operation between the leagues, instead of being prescriptive, setting out things they cannot do and saying, “No, we’re not going to let you reach an agreement between yourselves”. For those reasons, we propose our amendments, which hopefully are very sensible. I will listen with interest to the Minister’s response.

[Baroness Brady (Con)]

My Lords, I rise to speak to a number of amendments in my name in this group, but first I lend my support to the amendment tabled by my noble friend Lord Parkinson, which would allow the parties to contract for longer than a five-year period. I remain surprised that the Government believe that two consenting parties should be actively disincentivised from ever contracting for the long term by the automatic availability of a dispute mechanism. This cannot be about fairness, transparency or sustainability; it is about turning the backstop into a ratchet, ensuring that no long-term agreement between the Premier League and the EFL, no matter how mutually beneficial, can ever provide genuine stability or be truly relied on.

The EFL, in its briefing for today, says that it would oppose these amendments because they would

“incentivise a larger league to try to coerce a smaller league into a longer agreement that suits its strategic objective over those of the other league, using its financial muscle”.

In one sense, that is right. Basic commercial logic means that the Premier League would be prepared to pay more, to be more ambitious, to do things like selling the EFL’s international rights, which it has asked us to do, and to offer a fixed percentage of pooled revenues, which is the EFL’s big idea, if it enabled long-term certainty. The same basic logic suggests that shorter-term deals will therefore be less ambitious, result in less of a partnership, deliver less regulatory certainty, offer less in subsidy and therefore be less beneficial to both sides. Let us be in no doubt as to the EFL’s positioning. The Government’s support for its agenda is delivering for the EFL clubs in communities and constituencies across the country.

My Amendment 73 introduces what I would call a new “funder assurance principle” into the backstop process. Unless there were compelling reasons not to, this principle would require the regulator to select the Premier League’s proposal if—and only if—that proposal fully meets the IFR’s objectives. This is not about giving the Premier League what it wants; in this scenario, the league would be giving away billions of pounds of revenue in a forced redistribution process. No one could describe that as a win for the Premier League. This principle creates powerful incentives for the league to continue to step up to the plate, but it does so while offering some security and certainty, reducing the intolerable risk of a disruptive, damaging and extreme proposal being selected. That is what is so difficult—legally, financially and political—about the crude and binary backstop process.

My Amendment 74, which could be seen as an alternative position, would place property rights at the heart of the decision criteria. It would simply require the regulator to recognise, and have particular regard to, the fact that mandating the distribution of revenue constitutes an interference with property rights. This is not a controversial principle; it is the cornerstone of our legal system. It is, in fact, language taken directly from the Secretary of State’s ECHR memorandum to the Bill.

I hope that, given how extraordinary this backstop process is, the Minister will not object to putting the most ordinary of safeguards as a statement of existing law into the Bill. It is surely important for the IFR to be reminded of the public law principles that it must have in mind when taking property from one party and transferring it to another.

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[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Parkinson of Whitley Bay, and the noble Baroness, Lady Brady, for tabling these amendments, and the noble Lord, Lord Markham, for speaking to this group.

On Amendments 60 and 61 in the name of the noble Lord, Lord Parkinson, the five-year timeframe is critical to the effective functioning of the backstop. A set timeframe gives the industry certainty that the regulator can intervene to end the deadlock between the leagues if they cannot agree for an extended period. In addition to this, due to the imbalance in bargaining power between the parties in this case, we do not want to allow a situation in which a league could be coerced into a much longer agreement that essentially renders the backstop unusable.

On Amendment 69 in the name of the noble Baroness, Lady Brady, Clause 61(5) is intended to function as a protection for the interests of relegated clubs, ensuring that final proposals take into account the disproportionate impact that removing or reducing parachute payments will have on them. The amendment would broaden the provision out so that final proposals consider the financial sustainability of all effective clubs, not only relegated clubs, but that change is unnecessary. Final proposals must already address the financial soundness of clubs and the financial resilience of English football as a whole. To be chosen, a proposal must advance the regulator’s objective. Of course, parachute payments may affect the overall balance of leagues, but relegated clubs are the most directly affected. That is why they need the specific protection that the current clause offers.

On Amendment 71, as the House will know from our debates over the past months, the sustainability of English football is at the heart of the Bill. I understand the noble Baroness’s intent, but the sustainability of English football and advancing the regulator’s objective are already explicitly at the heart of the backstop. Clause 7 already requires that, as far as reasonably practicable, the regulator must exercise all its statutory functions in a way that is compatible with the purpose of the Bill. Of course that includes the backstop, and it would not be appropriate to require leagues to set out how their clubs would spend the disputed funds, nor to implicitly require the regulator to approve exactly how clubs spend funds. That would be overly prescriptive and disproportionate.

As I have set out before, concerns surrounding potentially reckless spending by clubs are already addressed in the financial regulation provisions in the Bill. These measures will ensure that clubs have appropriate resources and controls in place to manage their financial risk. For example, clubs will be required to provide up-to-date financial plans, backed by appropriate financial resources, which will be stress tested. This is the most appropriate way to address how clubs spend their money.

The noble Baroness’s Amendment 73 would require the funder’s proposal to be chosen by default, as long as it met a minimum level of consistency with the principles in Clause 62. However, the fundamental aim of the backstop process is to bring balance to a negotiation between two parties where one has significantly more bargaining power than the other. That means impartiality is key and no party can, or should, be favoured.

On Amendment 74, we understand the concerns regarding property rights, and I take this opportunity to reassure the House. The provisions relating to distributions allow for interference with property rights, but that interference is lawful; it is proportionate and in accordance with the law. Most importantly, any interference would also be in the public interest. The backstop can be used only in limited circumstances where a clear issue has been identified. For a proposal to be chosen, it has to be in line with the regulator’s objectives; there is, therefore, no situation where the proposal chosen is not in the public interest. This is set out in more detail in the ECHR memorandum that accompanies the Bill. We are confident that the current drafting of the Bill, as well as the requirements of the Human Rights Act, ensure that property rights must be respected.

I move on to the government amendments in this group, Amendments 68 and 89. We have listened to the concerns raised by the noble Baroness, Lady Brady, and fellow Peers that it is imperative that financial sustainability of relegated clubs is protected under the backstop. We argued in Committee that this protection was already implicit in the Bill, but these amendments put it beyond doubt. If the backstop is used to resolve questions relating to parachute payments, the leagues must address the sustainability of relegated clubs’ finances in their final proposals. We hope that that clarity will ease the concerns of clubs that face relegation.

With regard to Amendment 62, we want to ensure that our policy intention is clear. The backstop is intended to be a last-resort power, only to be used if another regulatory intervention would not achieve the same result. We have therefore tabled an amendment adding a requirement to the list outlined in Clause 59(2) covering the considerations that the regulator must take into account before triggering the backstop process. This new requirement ensures that the regulator must consider whether any of its other functions would achieve a similar result before approving an application to trigger the backstop process. This change demonstrates clearly that the backstop will be used only if other regulatory interventions would not solve the problem.

Amendment 63 requires the regulator to outline any findings in its most recent “state of the game” report that it considers relevant to the question or questions for resolution. The regulator must outline this in its notice to trigger the backstop process. We have always been clear that we expect that the “state of the game” report will play a crucial role in the decision-making process for the backstop. However, by tabling this amendment we have made this commitment explicit in legislation. This will give clarity to the leagues as to how the findings of the report could shape the backstop process. It will also provide reassurance in the Bill that the “state of the game” report will be published before the backstop process can be triggered. The findings of the “state of the game” report will be crucial evidence to inform the regulator’s decisions, including those made as part of the backstop process.

Finally, on Amendment 66, we acknowledge the concerns raised by Peers, most notably the noble Lords, Lord Birt and Lord Burns, both in your Lordships’ House and in meetings since Committee, that the current drafting of the Bill has a hard deadline that puts an automatic end to the mediation phase. While it is important that the backstop process comes to a timely conclusion, we understand the concern that parties may be timed out due to the statutory deadline for the mediation phase being triggered. To be clear, we do not want the mediation phase to come to an arbitrary conclusion if further useful discussion could take place. The Government would strongly prefer an industry-led solution, and we hope the mediation phase will facilitate this, so we have tabled an amendment to allow the mediator to request a single extension of the mediation process, up to 28 more days. This will allow for productive discussion without extending the process unreasonably.

For these reasons, I urge the noble Lord to withdraw his amendment, and I ask for your Lordships’ House’s support on the government amendments in this group.

[Lord Markham (Con)]

First, I thank the Minister for the points that she has made, and particularly the government amendments, which show in a number of places that the Government have been listening to the points raised in Committee. We are grateful, as all those things help to progress and make it a better Bill.

At the same time, it is a shame that the Minister is unable to accept Amendment 60. It still seems strange to me that, when the Premier League and the English Football League have mutually reached an agreement, we are saying that they are not allowed to do it—because the word “backstop” implies that a backstop should come in force only when the Premier League and the English Football League have not agreed. Here we are saying that we are going to set preconditions on what the EFL and the Premier League are able to agree. That all remains strange to me, and a mystery as to why the Government should not be supportive of allowing the Premier League and the English Football League to come to an agreement.

I turn to Amendments 69 and 71, spoken to by my noble friend Lady Brady. It seems entirely reasonable to ask clubs to put down what they plan to spend the money on. Again, it seems entirely reasonable that, when we are talking about wanting to ensure sustainability, the clubs receiving or making the bids for large amounts of money as part of redistribution should need to make a case that the things that they intend to spend the money on are towards a long-term sustainable model in terms of investment in the club and the infrastructure of the facilities there. Again, it seems strange to me that it is not something that the Government or the Minister would say was entirely in keeping with the intention of what we want to try to do on this. As a result, I believe that the Bill would be better off for the inclusion of these amendments, but I regrettably withdraw my amendment at this stage.

Amendment 60 withdrawn.