Football Governance Bill [HL]

Lord Moynihan Excerpts

Committee stage
Monday 16th December 2024 Lords Chamber

Finally, Amendment 114 would require the regulator to publish a “statement of the outcomes” that the independent football regulator expects the clubs to achieve for them to meet the threshold requirements under Clause 18. Again, this is an important point regarding clarity. Only by being clear about what is expected of clubs will the regulator be effective in getting clubs to meet these requirements. So, again, this is a simple and constructive amendment and I hope the Minister will consider putting this duty in the Bill. She will have heard—and been struck by, as I was—the unanimity across the Benches of the Committee on this, so I hope she will look on these amendments favourably.

[Lord Moynihan (Con)]

My Lords, I will speak to my Amendment 119A in this group. Noble Lords will recall that, on many occasions, I have been active on the appointments made by the DCMS, in particular when it came to the consumer protection Bill in your Lordships’ House and the non-declaration of the CEO of Seatwave, which was an online European ticketing marketplace that was then to be sold to Ticketmaster. The announcement of the individual concerned to the DCMS board made no mention of that, and nor was there any declaration in the House, despite the fact that Seatwave was subject to very significant criticisms about ticket touting and the impact on consumers.

I took an interest over the weekend to look in more detail at some of the appointments that have been made, to satisfy myself and the Committee that they were wholly independent of government. Could the Minister provide the Committee, in due course, with a comprehensive answer on the process that has been followed to date for each and every appointment to the senior levels of the shadow football regulator, including when and how the legal requirements for Civil Service recruitment have been implemented, namely that selections must be based on merit and on fair and open competition? Departments and agencies can develop their own recruitment approaches, but how has the governance code on public appointments been followed, including integrity, merit, openness, diversity and assurance? Who has been on the appointment boards and how many appointments have been made from outside DCMS officials?

What would help the Committee to understand the question of the degree of true independence of the proposed football regulator is to know how many of the Bill team and the paid advisers to the DCMS are going on from government to join the shadow regulator and, in due course, the full regulator. Are the shadow regulator contracts in any way tied to appointments to jobs with the full regulator? If so, how many and whose?

My probing amendment does not question in any sense the integrity or competence of the candidates concerned. But I went on LinkedIn this weekend and had the opportunity to read, as a result of a connection on LinkedIn, that one of the most senior appointments made was based, in part no doubt, on the outstanding work that was done by that individual on football governance while doing their PhD. I will give one quote from that—and, again, it is not in any way impugning the integrity or professionalism or the outstanding nature of this somewhat long PhD. With this quote, I was a bit concerned about whether the independence of the appointments was truly up to the standard we would wish to see:

“Granting an authority the power to legally regulate the football industry, compelling all English football clubs to comply with the established economic framework or risk being unable to use their football facilities, thereby prohibiting the club from playing in any football competition, either domestic or international, would transfer economic power back from the clubs and leagues to the regulatory authority, reversing the process initiated by the creation of the EPL in 1992”.


That is a fairly major statement that counterbalances the Premier League’s autonomy and would question the true independence of the proposed independent regulator.

I have not had the opportunity to read the whole thesis. I look forward to doing so, and to reading any other public documentation through LinkedIn. I think it is incredibly important that, if we are going to have an independent football regulator, that regulator has to be truly independent. All the appointments need to be made on merit, bringing in the very best people in regulation from across the country, and indeed possibly from abroad, to fulfil those important responsibilities and posts. I would be grateful if the Minister could give us the confidence that that is exactly what is being pursued.

[Baroness Twycross (Lab)]

I thank the noble Baroness, Lady Brady, and the noble Lords, Lord Moynihan and Lord Parkinson of Whitley Bay, for putting forward these amendments.

On Amendments 112, 113, 114, 115 and 117, in the name of the noble Baroness, Lady Brady, we clearly agree that producing guidance will be a really important part of the regulator’s work. It will help to clarify the practicalities of the legislation and ensure that clubs’ owners and competition organisers know what is expected of them and what to expect from the regulator. However, while I recognise the intent of the approach proposed, I disagree to some extent with the approach to guidance that the noble Baroness, Lady Brady, has suggested we take. Amendments 112, 113, 115 and 117 would require the regulator to produce guidance on all aspects of its functions. This is likely to be a disproportionate and needlessly burdensome requirement that would likely end up being more unhelpful than helpful.

There is little benefit in issuing guidance on issues that are self-explanatory or that do not have a direct impact on the industry. I will endeavour to find some examples of that type of guidance to meet some of the queries from noble Lords—for example, on every one of the regulator’s operational or administrative functions, excessive guidance would make it harder and more burdensome for clubs to understand and comply with the system, not easier, and National League clubs would potentially struggle to sift through reams of guidance to get to what was relevant to them. We expect that the regulator will publish guidance on all relevant parts of its regime, as appropriate. It is in everyone’s interests to maximise the industry’s understanding and compliance.

On Amendment 114, in the name of the noble Baroness, Lady Brady, the regulator is already required to publish guidance on how it will use discretionary licence conditions, including the outcomes it seeks to achieve. We believe that this requirement is sufficient, and it will be for the regulator to determine what that guidance should look like and how best to aid the industry without unduly burdening it.

I turn to Amendments 116 and 118, in the name of the noble Lord, Lord Parkinson. Amendment 116 would require the regulator to prepare and issue a code of practice for all competition organisers and licensed clubs. We do not believe that a code of practice for all clubs would allow for a proportionate, tailored approach to regulation, where what is required of a club should vary depending on the club’s specific circumstances. The regulator’s current approach of bespoke regulation will address the unique challenges and risks faced by clubs better than a list of one-size-fits-all recommended measures, and its guidance, as per Clause 12, should already help clubs to understand what is required of them and to comply.

On the points raised by the noble Baronesses, Lady Brady and Lady Evans of Bowes Park, on Amendment 118, the regulator is already required to consult such persons it considers appropriate when publishing guidance. We strongly expect that this will include the FA, competition organisers and regulated clubs, since those persons will all be directly relevant to and affected by that guidance. However, we have not taken the approach in this Bill of listing every person the regulator should consult for every piece of guidance issued. To do so would, in our view, be counter to the operationally independent and agile regulator that we are trying to establish.

There may be times when different levels of consultation are necessary, or with different stakeholders. The regulator is best placed to draw the line between comprehensive consultation and needless bureaucracy, and to ensure that the correct groups are consulted on a case-by-case basis. On the specific consultation requirements in the Bill, including on guidance, the regulator has a regulatory principle that it should co-operate and proactively and constructively engage with clubs, owners, officers and competition organisers. I hope that that gives the noble Baroness, Lady Brady, some confidence around the collaborative points she raised. This amendment would require the regulator to consult on minor revisions to guidance, needlessly creating an administrative burden for the regulator and those consulted.

Finally, Amendment 119, in the name of the noble Lord, Lord Parkinson, and Amendment 119A, in the name of the noble Lord, Lord Moynihan, relate to the Secretary of State guidance in Clause 13. Amendment 119 seeks to extend the period that the Secretary of State cannot amend guidance on the regulator’s functions from three to five years. While the regulator must have regard to the Secretary of State’s guidance, as an operationally independent body it will not be obliged to follow it. The industry and fans alike have been clear that they do not want to see excessive ongoing government involvement in football. That is why the Secretary of State may not revise this guidance any more frequently than every three years. The Secretary of State must consult both the regulator and anyone else they consider appropriate before publishing or revising any guidance, and must lay the guidance before Parliament. While I appreciate the concerns of undue influence, extending this to five years, when there may be an issue that needs clarificatory guidance before then, would be sub-optimal.

On Amendment 119A, I agree that the regulator should be independent and free from government influence. I do not have the level of detail that the noble Lord, Lord Moynihan, requested. However, I am confident that appointments will be made on merit. I will write to him with additional detail following the debate. Secretary of State guidance on this point would be unnecessary. The employees of the regulator will already be independent from the Government, like other regulators in the country. Independence has been at the heart of the regulator’s design, with it having sole discretion over its operational decisions. The aims of this amendment are therefore already achieved by the Bill’s current drafting.

I have noted the points from across the Committee on the amendments in this group and I am happy to discuss these further ahead of Report. However, for the reasons I have set out, I hope the noble Lords will not press their amendments.

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[Baroness Grey-Thompson (CB)]

My Lords, I rise briefly to speak to Amendment 128. We are getting to the crux of what this regulator should be about: making sure that there are sensible financial decisions, and that risks are mitigated so that they do not jeopardise clubs’ futures.

Clubs in the EFL are expected to lose around £450 million this season and are reliant on owners to fund the shortfall. If this funding is not forthcoming, it can lead to financial trauma. Only 66 of the 92 clubs that filed accounts for the 2021-22 season included data on wages and cash reserves. Nottingham Forest spent £58,606,000 on wages but had just £25,000 in cash reserves—five hours’ worth of reserves. Surely that cannot be acceptable.

[Lord Moynihan (Con)]

My Lords, I will speak to the amendments standing in my name in this group. I apologise to my noble friend Lord Maude if I address some of the plethora of regulations, conditions and verbiage concerned. I am proposing a number of amendments that I hope will facilitate and ease the position that the Government face in this context.

I turn to my Amendment 169A. It is unclear from my reading of the licensing section of the Bill whether the IFR is expected to produce a detailed and granular set of financial rules that would be applied in a blanket way to a large class of clubs or leagues; examples include the specific liquidity ratios, the debt-to-equity ratios, operating cash-flow metrics and size of financial buffers. Or will the IFR take an entirely bespoke approach, where every club will have DLCs—discretionary licence conditions—applied according to their own circumstances? That would drive a coach and horses through the competition organiser’s ability to provide a level playing field and maintain competitive balance. The third option is that the IFR could take an outcomes-based approach whereby it produces some high-level guidance with clear outcomes that clubs must achieve and league rules sitting underneath, giving effect to these principles and outcomes. For example, the IFR could have a series of outcomes relating to working capital, transitionally financed balance sheet health, resilience, protection of assets, et cetera. Leagues could colour in these outcomes into rules.

My own strong preference is for the third option. This amendment, which characterises the third option, is designed to create space for that conversation and, hopefully, allow the Minister to say that, where existing sustainability rules are in place and working, there will be an opportunity for that kind of league-led approach at all levels within an overall regulatory framework. Therefore, my recommendation is an outcome-focused, light-touch regulation, with step-in powers where issues are identified. That is why I have drafted Amendment 169A.

I turn to my Amendments 167A, 168A and 168B. The current test for attaching and varying a discretionary licence condition sets an extremely low bar for the IFR. For example, it seems to me that the test could be met in the case of a club that is already meeting the threshold requirement, on the basis that a discretionary licence condition somehow contributes to the club continuing to meet it.

The DLC test is even vaguer as regards the systemic financial resilience objective. The DLC needs only to advance that objective. While not necessarily the intention, this risks a very unpredictable, wide-ranging and open-ended power that could have a serious impact on club finances. It is also an issue that can be easily mitigated, while still allowing the IFR to meet its objectives. Again, I seek simplicity on behalf of the clubs. I am really concerned that here the detail is so great that it will swamp some clubs.

In the current drafting, potentially the only check on endless interventions, by way of DLCs relating to the systemic financial resilience objective, will be either the IFR’s discretion—in other words, the IFR deciding it has done enough for now—or the IFR being forced to have regard to avoiding adverse effects building up as a result of excessive intervention. Neither of those seems adequate to mitigate the significant risk to English football at all levels. I acknowledge that there is discretion for the IFR to not act in this way. However, I do not think there should be an option to do so, given the very significant risks to English football that would come with the powers being used in this way.

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[Lord Bassam of Brighton (Lab)]

I listened carefully to the noble Lord and, bizarrely, in preparing for the Bill, I looked at the accounts of a number of the small league clubs the noble Lord seeks to protect with this. They all have to have properly audited accounts. The clubs I looked at—they are in the National League, the National League South and the National League North—have turnovers that vary between roughly £10 million a year and £400,000 to £500,000. They are properly set-up companies that have to file reports with Companies House, et cetera, and they all go through an audit process. It seems to me that, in any event, they will supply to their auditors many of the things the noble Lord seeks and asks for. If they did not, they would not be complying with a proper audit.

[Lord Moynihan (Con)]

The noble Lord, Lord Bassam, has made some important points and, of course, everything I have said is based on the fact that those clubs will be following that. They are basic conditions that any organisation, not least a football club, should follow. All my amendments—I have studied them carefully—seek to make it easier to ensure that the clubs follow those procedures and that the uncertainties and vagaries in the current drafting of the Bill are clarified, making it easier and more efficient for clubs to meet their obligations as companies and football clubs in the professional leagues.

[Lord Pannick (CB)]

The noble Lord, Lord Parkinson, posed a number of questions about the operation of Part 3 in relation to licensing functions. I will add one further question, to which I do not necessarily expect an answer today. Pursuant to UEFA regulations and delegation from the FA, the Premier League currently licenses clubs for the purposes of their participation in UEFA club competitions. I declare an interest as a season ticket holder at Arsenal Football Club—I realise that some of the other clubs supported by noble Lords would not have an interest in this matter for various reasons. My question is: will this function of the Premier League be affected by Clause 15 or any of the other clauses in Part 3?

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[Lord Addington (LD)]

My Lords, going through this long list of amendments, I think that we can all agree that “miscellaneous” is a good description of this group. On what is a competition, I added my name to one of the amendments, but probably should have added my name to the one about heritage. Is it a ground part of the heritage, is it part of the structure, is it what is going on? I should have put my name to this and look forward to the Minister’s reply. If we do not include this, we are missing an important part of why this Bill is justifiable.

[Lord Moynihan (Con)]

My Lords, I support the probing amendment tabled by the noble Baroness, Lady Grey-Thompson, although not necessarily the wording of it or the outcome. It is related to something that the noble Baroness and I have worked on for a long time and which is covered in my miscellaneous Amendment 258A. It binds the noble Lord, Lord Bassam, and me to the same cause. There is still a major problem of abuse in the ticket market for football, not least for membership cards. Last season alone, in February one club had to cancel more than 30,000 membership cards. They were all in the hands of the touts. This is a massive problem now.

When we started to campaign to sort out the secondary ticket market, it was much smaller. Fifteen years ago there were some 120 professional touts. Now there are subscription groups which get together using bots to get hold of tickets, place those tickets on the secondary market and sell them illegally. Viagogo is, regrettably, used as a speculator—a ticketing lobby. From that, those tickets are sold abroad illegally with, quite often, information hidden behind the icons. This goes against the terms and conditions set by the clubs, which do a huge amount of work across football to make sure, especially at sold-out matches, that tickets do not get into the wrong hands.

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[Baroness Twycross (Lab)]

My noble friend raises an interesting point. The issue of the FA Cup replays would rightly be outside the scope of this regulator. The sporting calendar and the rules of specific competitions are matters for the football authorities to manage in consultation with the appropriate stakeholders. I am not sure whether that reassures my noble friend, but we can maybe have a longer discussion about it at another point.

On Amendment 242A from the noble Lord, Lord Moynihan—apologies if I am going over paragraphs that I have already covered—the intention behind this amendment is to make sure that clubs are not overburdened with requirements to notify the regulator of every event that ever happens. We do not want this either, nor is it in the regulator’s interest to receive a flood of unnecessary information. As the clause sets out, the notification requirement relates to material changes in circumstances. It will be up to the regulator to set out what it considers to be material in guidance, which we expect it will produce on this. The regulator will already have burdens in mind when setting its guidance and enforcing this duty on clubs, given public law principles and its regulatory principles. We want the regulator to receive the information and updates it needs to regulate effectively. By raising the bar for when clubs are required to notify the regulator of changes, the proposed amendment risks doing just that.

Amendment 248, from my noble friend Lord Mann, would introduce a new requirement for regulated clubs to register with the regulator all player contracts, transfer fees and other fees annually for the previous 12 months. I reassure my noble friend that, where this information is relevant for the regulator to understand a club’s finances, it can already obtain it. All clubs will be required to submit financial plans which detail, among other things, their revenues and expenses. These plans should capture details about player contracts and transactions where this information is relevant to the regulator understanding a club’s finances. Furthermore, the regulator has extensive information-gathering powers. Should it need greater oversight of the detail set out in this amendment, the regulator can already request this information, and it would not have to wait 12 months to get it. Therefore, I am confident that the Bill already delivers the intent of the amendment.

I am also grateful to the noble Baroness, Lady Grey-Thompson, and the noble Lord, Lord Moynihan, for Amendments 248A and 258A respectively, which focus on ticket prices. I understand that the noble Baroness intends to address the recent rise in clubs removing concession pricing on tickets and other such changes that have left some fans priced out of match attendance, and she highlighted concerns raised by fans from Reading. Fans are justifiably concerned, and I am exceptionally sympathetic to that. I am equally grateful for the attention by the noble Lord, Lord Moynihan, to ticketing and the issue of resale. These are huge issues that matter to fans, which is exactly why the Government have made it explicit that clubs must consult their fans on ticket pricing as part of their fan engagement. This also includes engagement on other operational issues, which is intended to capture many of the issues the noble Lord has made in his amendment. It is also important to note that any unauthorised resale of tickets for designated football matches is already addressed in the Criminal Justice and Public Order Act 1994. Many clubs take this exceptionally seriously and work with police and relevant authorities on it. However, the regulator should not be seen as a vehicle to fix all of football’s woes, especially those that are well within the gifts of clubs, leagues and the FA to address. On the noble Baroness’s amendment in particular, it would also not be appropriate for the Government to dictate prices or concession categories, and there is limited precedent for such an interventionist approach on commercial decisions.

[Lord Moynihan (Con)]

Before the Minister leaves that amendment, could she very kindly advise the Committee whether the Government intend to meet their expected deadline of a consultation exercise on the abuse of the secondary ticketing market by the end of this year?

[Baroness Twycross (Lab)]

If I may, I will clarify that in writing after this session to ensure I give the right response. I am not trying to avoid it; I will ensure I give the Committee a response.

Amendment 332 is from the noble Lord, Lord Markham, and the noble Lord, Lord Parkinson of Whitley Bay, also spoke to it. I appreciate that noble Lords may not welcome the use of delegated powers to amend the definition of “football season” in the Bill. However, to future-proof the Bill against any changes to the footballing calendar, we feel that the Secretary of State needs this power.

It is unlikely, but possible, that a specified competition might be organised in a unique way in the future, for which the current definition may not be suitable. For example, I am sure that noble Lords remember the impact of the 2022 World Cup on the domestic calendar. It is not beyond the realms of possibility that similar changes may occur in the future that impact the efficacy of this definition.

[Lord Moynihan (Con)]

I am now trying to be helpful, especially in the presence of the noble Lord, Lord Pannick, who will be able to opine on this suggestion. The reason why the Secretary of State has this power, as set out on page 46 of the memorandum to the Delegated Powers and Regulatory Reform Committee, is that a specific competition may be played over two calendar years. That is the current definition. If it were not to be played over two calendar years, we would not be able to proceed with the definition of “football season” set out in the Bill.

We have been looking for simplicity here. Instead of Clause 92(1) defining a “football season” as

“beginning with the day in a particular year on which the first match of any specified competition is played, and … ending with the day in the following year on which the final match of any specified competition is played”,

a simpler way would simply be to delete “in a particular year” and “in the following year”. Then we would all understand that we begin on the day on which the first match is played and end on the day on which the final match is played. We thus would not need secondary legislation through a draft affirmative resolution for the Secretary of State to come back to both Houses of Parliament, as this simple amendment could clarify it all and remove the Secretary of State from this onerous task.

[Baroness Twycross (Lab)]

I am not sure that the Secretary of State would find it onerous, because it is not intended to be used very often. However, the noble Lord makes an interesting point and I appreciate that he made it in the spirit of being helpful.

This is not a power for the Secretary of State to dictate to the industry what a season is; it is the opposite. The power as currently defined in the Bill will ensure that the definition can flex to changes in the industry. It will also be subject to the affirmative parliamentary procedure, so I hope noble Lords will rest assured that the House will be able to scrutinise any changes. I am happy to continue to discuss that further with noble Lords after Committee.