Football Governance Bill [HL]

Lord Pannick Excerpts

Committee stage
Monday 9th December 2024 Lords Chamber

[Lord Markham (Con)]

Is it fair that Federer, Djokovic and Murray earned so much in their time? Did Wimbledon not need all the players to take part for it to be so valuable? Is it fair that Verstappen has won the championship four or five times in a row and is earning far more than everyone else? That is about sporting competitiveness—or competitiveness in anything. It is not the role of a regulator to start to redistribute income; I believe fervently that we will then get the law of unintended consequences.

My noble friend Lady Brady talked about parachute payments. This weekend was a perfect example of why the Premier League is the most popular league in the world. Crystal Palace held Man City to a draw. Can you believe that Crystal Palace—fourth from the bottom, right on the edge of being relegated—would have invested that much in players if they knew that, if they got relegated, they would lose all that money and face almost financial ruin in the Championship without it? I do not think so. I think a regulator would have said, “Oh, Palace, it’s not very sustainable having all that money when you could go down”. That would fundamentally alter the competitiveness of those games. That is the value of the Premier League. People will tune in, because they know that it will not be a walkover between Palace and City in this example; they know that it will be a competitive game.

Countries all over the world are prepared to pay more money than anyone else to see these games because they are competitive. Take the Bundesliga or the Italian or Spanish leagues: there are two or three top clubs and then a lot of also-rans, so it is not competitive in the same way. That is the danger we face here. By allowing regulators to redistribute income, on the basis that it is not fair that the top clubs are getting more, you will alter the whole competitiveness of the structure. Again, we say that it is not fair, but is it fair that the Championship is the sixth wealthiest in the world, while the Premier League is the wealthiest? Why is that? First, it gets a lot of payments down from the Premier League as part of voluntary arrangements. Secondly, it is because of how the whole of football has been set up for clubs to be promoted: money is being invested to give them a chance.

We have all said many times that this is our number one industry worldwide—there is no doubt whatever about that. We then have the second tier, which is number six worldwide. There is nothing else like that, and I believe we are at risk of putting that whole system under threat if we meddle in these ways.

[Lord Pannick (CB)]

I declare an interest, having acted recently for Manchester City in relation to the charges by the Premier League. I put it to the noble Lord that the system he and the noble Baroness, Lady Brady, portray of Premier League clubs having the normal activity of a commercial company that can to do what it likes is simply incorrect. The Premier League itself imposes considerable restraints via financial fair play on what companies can spend and how they use their money. It does that because this is a sport, and the effectiveness of the sport depends on competitive constraints. What the regulator may or may not do is simply an aspect of that. The world that the noble Lord portrays simply does not exist.

[Lord Markham (Con)]

I thank the noble Lord. He makes a very strong point, which is that the current system of regulation for Premier League clubs, and the EFL doing it for its clubs, seeks absolutely to set up that competitive environment and those financial fair play rules. My point supports what the noble Lord said: there already is a system of checks and balances, which is working well and making sure that our English Premier League is the first in the world and the Championship is the sixth. Why do we need a regulator coming in between that?

I perfectly accept that there are certain things that the regulator is important for, such as the breakaway league, but is it really the best place to start to have financial distribution from one club to another? That is why I brought this amendment forward. We are fundamentally asking a regulator to do something that we have not asked any other regulator to do in the whole of the economic environment. I thank noble Lords for their interventions; they have added to the debate. I look forward to discussing this further.

Briefly, my other amendments, Amendments 126 and 130, again try to ensure that we do not get mission creep, that we are quite clear about the information the regulator should be asking for from the clubs, and that we cannot set up a regulator that is allowed to go on a complete fishing trip in a lot of these areas. The amendments would set out what information the regulator can ask for from clubs and what they should provide in their strategic business plans, so that we are all clear about that without an endless list that goes on and on. Again, I speak in the context not just of the large clubs; a lot of these are very small clubs, without a large amount of resource to reply to lots of information requests. We need to be quite clear about what we are asking the regulator to do.

I hope this has contributed to the debate. I hope noble Lords will reflect on the fact that we are asking the regulator to do more than we do in any other sector—in our most successful sector too—and whether that is wise.

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[Lord Parkinson of Whitley Bay (Con)]

My Lords, I speak to Amendments 51 and 52 in the name of my noble friend Lord Maude of Horsham—I am grateful to my noble friend Lord Hayward for moving Amendment 51 on his behalf—and to Amendment 57 in the name of my noble friend Lord Jackson of Peterborough, and then Amendments 71, 126 and 130 in the name of my noble friend Lord Markham. To those final three, I have also added my name.

The amendments in this group seek to restrict some of the wider powers granted to the new independent football regulator in the Bill as presently drafted. Amendments 51 and 52 would alter the fundamental objectives of the regulator. As drafted, the Bill states that the objectives of the regulator include

“to protect and promote the financial soundness of regulated clubs”,

and

“to protect and promote the financial resilience of English football”.

In essence, that is both a specific objective, directed at clubs themselves, and a general objective, which applies to English football as a whole. Leaving aside the important question of what constitutes English football—which we have already debated but not yet had much success in ascertaining—and indeed the question of what the Government mean by “financial soundness” and “financial resilience”, my noble friend Lord Maude of Horsham has sought through his amendments to probe the Government’s intention to set the regulator’s objective as being to protect and to promote. In place of those words, my noble friend proposes the alternative description,

“monitor and where necessary intervene”.

His amendment thus addresses the core question of how activist a regulator we want. I am grateful to my noble friend Lord Hannan of Kingsclere for underlining that point in his contribution. I look forward to the Minister’s response both to the amendments and to that that core argument. That is, I think, what Members of the Committee have been probing in this group.

Clearly, as drafted, the Bill sets the independent football regulator an active objective to protect and promote English football. That objective is necessarily continuous and seemingly proactive. It could be taken by the regulator to require constant involvement, giving rise once again to the concerns that the Committee has raised about excessive activity and mission creep. By contrast, a lighter-touch duty to monitor the financial soundness of clubs and the financial resilience of English football could allow clubs to get on with their ultimate objective of winning competitions without the overbearing and excessive involvement of this new regulator. I was struck that my noble friend’s amendment is explicit that the regulator’s objective would involve active intervention only “where necessary”. That is a helpful formulation and discipline when drafting legislation.

The question these amendments pose to the Committee, therefore, is whether we want an active, interventionist and potentially overbearing regulator, which might run the risk of getting in the way of our world-class football clubs; or a vigilant, diligent but ultimately careful regulator, which has a duty to stay its hand and intervene only when necessary. I have stretched from teeth to hands in extending the metaphor used by the noble Lord, Lord Addington; I agree that the regulator must have teeth and must be seen to have them. We would like to see those teeth bared from time to time, and to hear them gnashing but, like my noble friend Lord Hannan of Kingsclere, I would rather not see the scars from those teeth on world-class and highly successful businesses and clubs too often.

We have to strike the right balance to make sure that we have a regulator that commands the respect that it needs to, without biting too often and too damagingly. I look forward to hearing the Minister’s thoughts on where to draw the line, both in the legislation and the words that we have, and on what the Government hope the Bill will bring about for the regulator.

Amendment 57, tabled by my noble friend Lord Jackson of Peterborough, places a prohibition on the regulator from intervening in the internal financial affairs of regulated clubs. His amendment allows us to consider an important issue, on which a number of noble Lords touched. I know that my noble friend feels very strongly about the possibility of this regulator hampering the ability of clubs to operate as the successful businesses that they are at present, so I welcome his attempt to see whether there is a sensible way of placing some restrictions or limitations on the role that the regulator might play.

As I made clear from Second Reading onwards, we support the establishment of this regulator. We recognise that specific market failures have been raised and recognised, both by fans during the fan-led review and by the previous Government’s work, which helped to inform this Bill’s precursor. The ability of the regulator to have at least some role in regulating the finances of clubs will, I hope, allow it to attempt to address the problems that have been identified. However, we again want to make sure that it does not do so in a way that damages the successful businesses that they are.

Amendment 71 is in the name of my noble friend Lord Markham, and I put my name to it as well. It seeks to prevent the regulator from transferring funds from one private club to another. Mindful of the Government Chief Whip’s entreaties, I do not wish to repeat my noble friend’s argument, so I merely pose a question to the Minister: are there any circumstances in which she and the Government feel that a transfer would be appropriate? If there are no circumstances that she can envisage and set out, what are the problems with embracing my noble friend’s amendment?

I will also say something about my noble friend’s Amendment 126, which seeks to strike out Clause 16(3)(c). That provision of the Bill allows the regulator to require clubs to provide any “such other information”, as the regulator decides in its rules, when those clubs are applying for their provisional licences. Once again, those rules are not set out in the Bill, but are to be determined at a later date so, as clubs are planning their financial affairs for the near future and beginning their preparations for the licensing regime that will be ushered in once the Bill gains Royal Assent, they will not know what information they will be required to provide to the regulator. All we have in the Bill is a vague requirement that they must produce a “personnel statement” and a “strategic business plan”, but there is no further information here and paragraph (c) seems to allow the regulator to request anything that it may choose. That is a distinct lack of clarity for clubs, and I would be grateful for the Minister’s view on whether we can add to that clarity by being more precise.

Finally, Amendment 130, also in the name of my noble friend Lord Markham, would prevent the regulator from requiring information that is not specified in the Bill to be included in a club’s strategic business plan. The current drafting of the Bill grants the regulator a concerningly wide power to require clubs to include

“such other information as may be specified by the IFR in rules”.

This is yet another example of a lack of clarity in the Bill, and I am grateful to my noble friend for highlighting it. Where there is a lack of clarity regarding the regulator’s duties, there is uncertainty for the party that is to be regulated. It seems regrettable that the clubs should not get the clarity that they need about their duties under this part of the Bill but must wait until the regulator has published its rules in due course. Can the Minister give us a flavour of the kind of information requirements that the Government think that the regulator might be likely to include in its rules? Is that something that the Government have discussed with those who are preparing the regulator’s work in this area? Can she elaborate on this for the Committee’s understanding? I am grateful to her and to noble Lords who have spoken on this group.

[Lord Pannick (CB)]

My Lords, it is important to remember that Premier League clubs are already extensively regulated by the rules of the Premier League. The problem is that those rules are made by the 20 Premier League clubs themselves. They are also regulated, as all football is regulated, by UEFA. I gave the example a few moments ago of financial fair play. The virtue of the Government’s proposals surely is that the regulation will be by an independent person. That is what is required. The defects of all the proposed amendments in this group would be simply to confine the discretion of the independent regulator to respond to circumstances as they arise.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)]

My Lords, I thank the noble Lords, Lord Maude of Horsham, Lord Jackson of Peterborough and Lord Markham, for these amendments, and the noble Lord, Lord Hayward, for introducing this group. I particularly welcome the contribution of the noble Lord, Lord Pannick, which reminds us of why we are here.

Starting with Amendments 51 and 52, tabled by the noble Lord, Lord Maude of Horsham, I understand that their aim is to clarify that the regulator should only intervene where necessary and in response to substantial risks. I assure the noble Lord that this aim is already appropriately achieved by the Bill. As the noble Lord, Lord Addington, said—and apologies if I paraphrase this incorrectly—this is about ensuring a sound financial basis for football. It will be for the regulator to identify risks to a club’s financial soundness or the financial resilience of the system and to act accordingly. It would be disproportionate and unreasonable for the regulator to intervene where it did not think that the benefits of doing so would outweigh any costs imposed. The Explanatory Notes to this clause make clear that, in the advancement of its systemic financial resilience objective, the regulator

“will identify, monitor and if necessary take action to mitigate systemic risks in order to protect the aggregate financial sustainability and resilience of English football”.

However, we reject the notion that the regulator should be able to act only once risks have become so severe that they substantially threaten the system. The noble Lord, Lord Goddard of Stockport, mentioned the banking crisis; the amendment under discussion could be argued to be equivalent to a financial services regulator noticing sub-prime lending and credit default swap trading in 2007 but not being able to intervene until Lehman Brothers collapsed in 2008. Instead, the regulator should be able proactively to mitigate risks when they are identified. We believe that “protect and promote” appropriately conveys this, to ensure a future forward-looking regulator. However, I reassure your Lordships’ House that this does not mean that the regulator will be placing undue restrictions on clubs, pre-empting risks that have not yet materialised.

Turning to Amendment 57 in the name of the noble Lord, Lord Jackson of Peterborough, I am afraid that the noble Lord’s amendment is at odds with the aims and objective of the regulator. It undermines the very intention of a Bill that had the support of all three main political parties at the election less than three months ago. Indeed, the shadow Secretary of State in the other place has stated:

“I genuinely think that this is an excellent Bill”.—[Official Report, Commons, 23/5/24; col. 244.]


We are looking to set up a predominantly financial regulator. Stopping the regulator from taking any action relating to a club’s internal finances would defeat that purpose. The regulator’s statutory mandate is to deliver its objective; it will achieve these aims using only the powers given to it in statute, such as the licensing regime and the owners’ and directors’ test. The regulator would, therefore, not become involved in the club’s finances, unless it thought that the action would lead to it delivering its objectives. Its powers place clear limits on the extent to which it can require things of clubs.

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So I hope the noble Lord will understand that, from that perspective at least—going far beyond what the noble Lord, Lord Pannick, said about the benefits of light-touch regulation—I have deep reservations about state regulation, or even state-influenced regulation. I do not think I have ever seen a Bill that applies to sport with some 125 pages and 98 highly prescriptive clauses detailing the way in which a regulator would work, or indeed the powers granted to the Secretary of State to influence and control a sport. I simply say to the noble Lord that I have genuine concerns. If we have state-influenced and state-controlled regulation through secondary legislation, and also on the face of the Bill, we will be in danger of finding ourselves in conflict with the UEFA regulations that monitor its competitions, FIFA’s regulations and the International Olympic Committee’s regulations, should we wish to submit for entry a team, either men’s or women’s, to the Olympic Games. That is what concerns me; I have a genuine reservation about it.

[Lord Pannick (CB)]

I point out to the noble Lord that the whole point is that this regulator is independent. Obviously, it is influenced strongly by government decisions, but it is independent. Surely, many of the concerns that the noble Lord is expressing—as, indeed, is the noble Baroness, Lady Fox—are answered by the appointment of a sensible regulator who will act in a proportionate manner.

[Lord Moynihan (Con)]

I only wish I could say to the noble Lord that that is what we have in front of us. Had we had the opportunity to sit with him and explore each and every clause as we have gone through this, we might have been able to say so, but that is not the case. This is not light-touch regulation. This is not even regulation that you find in the Companies Act.

Let me give the noble Lord a quick example; I risk admonition for repeating a point that I made earlier, but I will make it very quickly indeed. When you give powers to the regulator to explore not just the controlling influence of a football club but those who “significantly” influence a football club, those are very different roles. You have “controlling” in the Premier League; you have “significant influence” in the Bill. Significant influence can reach back as far as the Crown Prince, who has significant influence over the PIF, which owns Newcastle, whereas, by definition in this Bill, he does not control that club, nor would the Premier League investigate him on that basis.

So it is reasonable to accept the noble Lord’s premise—I wish it were true that this is light-touch regulation—but, in reality, this is incredibly intrusive, highly detailed regulation. It goes further than the regulation I put in place in 1990 when I was the Minister responsible for water privatisation and we were setting up Ofwat. That was light-touch regulation in comparison with this extraordinarily detailed Bill. That is the most important point driving my concern about unintended consequences—what some people call the “mission creep” of regulation.

I turn to the amendments. Given that we are going to have a Bill for the reason that the noble Lord, Lord Blunkett, said—there is all-party support for having legislation of this kind—we may as well get it right. There is real merit in looking at the amendment from the noble Lord, Lord Blunkett—backed so eloquently, as ever, by the noble Baroness, Lady Grey-Thompson—which would

“ensure regulated clubs have a clear, appropriate governance structure with a board consisting of executive and non-executive directors enabling decisions to be taken collectively”.

I hope that it would not be just regulated clubs. I hope that all clubs in all sports would do that, because the benefits of having both executive and non-executive directors is well known to those of us in sport—not least in the British Olympic Association, which I had the privilege of chairing.

The noble Lord, Lord Mann, has widespread support in this House for the work he has done on anti-Semitism and anti-Semitism training. I am glad that he tabled his amendment, because it gives us an opportunity to thank him on behalf of sport and on behalf of football. That work has been absolutely critical; I say this not just as a fellow Leeds fan but because, across sport as a whole, it is vital that we put equality, inclusion and diversity right at the top of what we do.

We are expected to do that outside football. I have an interest to declare as the chair of Amey, which has some 13,000 people. Almost the first thing that I did as chairman was set up an ESG committee immediately beneath the board and chair it so that I could ensure inclusion and diversity were right at the heart of our policy and were in the DNA of everybody who worked in that organisation. I do not believe that that is different from sport and I do not believe that that is different from football.

So, if we are to have legislation—which, as noble Lords know, I regret—let us get this right and listen carefully to what the noble Lord, Lord Blunkett, said in the first 50% of his speech, and to the noble Lords, Lord Knight and Lord Mann. There is real merit in the Minister taking this away and thinking about what we would expect to see from the regulator in this context.

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[Lord Hayward (Con)]

I understand the concerns and am quite happy to take a conversation with any Member of the House outside this Chamber. I do not want to prolong the debate this afternoon. I have made my comments. I hope that the regulations we follow in relation to this regulator coincide with company legislation, because that seems to be the appropriate route to go down. I will no doubt continue at a later stage. I think it is important above all to send out a very clear message from this Chamber about what we believe we should achieve—not necessarily legislate—in relation to equality, inclusion and diversity.

[Lord Pannick (CB)]

My Lords, in opening this debate, the noble Lord, Lord Blunkett, expressed the hope that we would not take another hour dealing with this group of amendments. We have taken well over an hour. I find this debate very odd because we all seem to agree that equality, diversity and inclusion are of enormous importance in football. The noble Baroness, Lady Brady, rightly spoke of the great efforts that West Ham in particular has made and the great results. Many other clubs have done the same. I would be astonished if a Bill dealing with these matters did not require the independent regulator to look at equality, diversity and inclusion and to have broad powers across the scope of football to do so.

[Lord Hannan of Kingsclere (Con)]

My Lords, I assure the noble Lord, Lord Blunkett, who knows how much I respect him, that I have had no contact at any point with the Premier League, unless you count occasionally buying a ticket to one of the member clubs. Far from filibustering, my intervention on the previous round was the first time I had spoken since Second Reading, and I kept it to about four minutes. I opposed this Bill very strenuously when it was proposed in the previous Parliament. I am sure he will allow that it is not exactly the same Bill. It has been beefed up in various ways, and those ways need scrutiny.

One of the ways in which it has been beefed up, even short of the amendment from the noble Lord, Lord Bassam, is in strengthening the EDI provisions. I have to stand back and ask whether it is proper for a regulator to tell private clubs what kind of people should be their ticket holders. Is there not a basic principle of proportionality and property here that says it is in your interest to have as many ticket holders as you can, and it is in their interest, if they are interested, to come? Does that intersection of who wants to come and how much they are prepared to pay not represent the right place in a free society? We are not some autocracy where we impose values on free-standing organisations.

In our present mood we sacralise the values of EDI but tomorrow it may be something else, and that would be equally wrong because there is such a thing as freedom. There is such a thing as a private space, and that is an essential building block of a free society. The noble Lord, Lord Bassam—he will correctly me if I get this wrong—says it is shocking that only 4% of senior management positions are held by black people. According to the 2021 census, the proportion of black people in the UK is 4.0%. In other words, without any intervention, without anyone telling them what to do, we happen to have an exactly representative number. But even if that were not the case—even if, as the noble Lord, Lord Bassam, was saying, there is a much higher proportion of black players in Premier League clubs—surely that is meritocracy. Why would it be the business of government to try to bring that number into line with the population?

Football Governance Bill [HL]

Lord Pannick Excerpts

Committee stage
Monday 16th December 2024 Lords Chamber

We all know—it has been much debated in your Lordships’ House—that businesses require the maximum predictability and certainty. To expect major clubs to make long-term investments against the backdrop of a newly established regulator that may make decisions that almost certainly would be influenced by decisions made perhaps every year, or every few years, by the Government seems unwise in the extreme. I hope that the Minister will take this away and reflect with her colleagues in the department and ask whether it is wise to have this clause in the Bill—I certainly wish to probe whether it should be allowed to stand part of the Bill.

[Lord Pannick (CB)]

My Lords, I repeat my declaration of interest, having spent much of the past three months representing Manchester City Football Club against disciplinary charges brought by the Premier League.

I pay tribute to the noble Baroness, Lady Brady, who has long been a friend of mine. She has unrivalled experience of being employed by Birmingham City Football Club and, for many years, West Ham United Football Club, and has achieved great success at both those clubs. I respectfully suggest, though, that here she protests too much. Clause 11(2) contains a very important restriction on what a football governance statement may do. It

“may not contain any policies that are inconsistent with the purpose of this Act or with the IFR’s objectives”.

The second protection is in subsection (6):

“The Secretary of State must lay any football governance statement, or any revised statement, published under this section before Parliament”.


Those are very considerable protections.

We listen to concerns that companies that own football clubs need long-term planning, but surely any company is subject to changes of government policy over the years. There is no protection whatever against those and the consequences thereof. I see absolutely no reason why football clubs should be protected by more than the three-year period stated here.

[Lord Hayward (Con)]

My Lords, before I start my comments on this clause, I thank the Minister for meeting me last week to discuss a number of issues—they did not include this clause, but I appreciate the opportunity to discuss other issues with her. My concern about this clause comes from the very first words of the Bill, which say that it is to:

“Establish the Independent Football Regulator”—


an independent regulator, not one circumscribed by a government Statement as laid out in Clause 11.

I disagree with the noble Lord, Lord Maude, who said, if I heard him correctly, that this was unique. It is not. Sadly, my mind goes back to a previous occasion when the Government wanted to circumscribe an independent regulator. I remember the debate clearly, because the late and great Lord Judge made a massive contribution to it, scything through the then Government’s arguments about why they should have a Statement in relation to an independent regulator. The independent regulator to which I refer is encompassed in the Elections Act. The previous Government said, “Ah, we’ve got an Elections Act. We don’t really like what the Electoral Commission is doing, so we’ll put in a nice little clause which requires the Government to make a Statement”, which, in effect, circumscribed the Electoral Commission. What is fascinating about that set of circumstances, which Lord Judge and I—and the Liberal Democrats and the Labour Party—criticised comprehensively, is that the wording in Clause 11 is remarkably similar to that in Section 16 of the Elections Act. In fact, Clause 11(5) of the Bill is almost identical, word for word, to new Section 4A(7) of PPERA inserted by that section.

I said just now that people on other Benches spoke against the Government imposing some form of Statement on the Electoral Commission as

“‘not fit for purpose and inconsistent with the … role as an independent regulator’”.—[Official Report, 6/2/24; col. 1604.]

We are talking here about the same wording. Those were words from the Liberal Front Bench—the noble Lord, Lord Rennard. The Labour Front Bench, in the form of the noble Lord, Lord Khan, said that

“this statement is unnecessary and the Government have provided no evidence for why it is needed … There was cross-party agreement that the commission’s independence is vital”.—[Official Report, 6/2/24; col. 1602.]

I could go on quoting the noble Lords, Lord Khan and Lord Rennard, making the point that a regulator is independent if it is independent, not because it is circumscribed by a set of conditions as set out in Clause 11. I recommend anybody to look at the relevant amendments to the Elections Act 2022, where the wording is virtually identical. The Government then wanted to circumscribe the Electoral Commission. I would not be surprised if the officials discussing this Bill when it was in draft under the previous Government said, “Oh, we’ve got a good basic tenet; we’ve even got a set of words which we can lift, virtually verbatim, and it’ll circumscribe the independent regulator”.

I opposed the Government’s imposition of that statement in the Elections Act, because I believed it circumscribed what should have been an independent regulator. When the then Opposition forced a vote on it, I sat where the noble Lord, Lord Bassam, is now and abstained, because I refused to support the Government imposing on an independent regulator a provision which is virtually word for word that set out in Clause 11. I therefore strongly support the amendments and oppose this clause standing part of the Bill.

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[Baroness Evans of Bowes Park (Con)]

My Lords, I will speak briefly in favour of this group of amendments. I particularly support those that would introduce a requirement for the IFR to consult those affected as it produces guidance. Consultation with key interested and impacted parties, particularly the leagues, is critical.

The IFR is an entirely new regulator operating in an entirely new regulated space with no real international experience to draw on. As I highlighted at Second Reading:

“The Explanatory Notes themselves acknowledge that football ‘was previously not regulated by statutory provisions’, and explicitly state that ‘the new regime and the distributions provisions in particular are unique and unprecedented’”.—[Official Report, 13/11/24; col. 1850.]


A duty to consult on key areas, such as those set out by my noble friend Lady Brady, to ensure that unintended and potentially damaging consequences are avoided as the regulator begins its work and develops its guidance, is surely a no-brainer.

At our recent meeting with the shadow regulator, and in various responses from the Minister during Committee, the desire and expectation of the regulator to work in a collaborative and proportionate way have been repeatedly reiterated. Several amendments in this group simply put that consultative approach firmly and squarely on the face of the Bill. I hope the Minister can look favourably on them.

[Lord Pannick (CB)]

My Lords, I too hope very much that the Minister and the department will look favourably on these amendments, for the reasons given by the noble Baronesses, Lady Brady and Lady Evans. They seem to be absolutely essential for reasons of efficacy and to give confidence to those who will be regulated that they and others will be properly consulted. I would be very surprised to be told that the regulator would not intend to do so. If that is right, it is surely essential, as in other legislation, that this is put in the Bill so that there is no doubt about it and so that the confidence that is absolutely essential is promoted.

[Lord Addington (LD)]

My Lords, this amendment about the bodies that will be regulated has a fair bit of common sense behind it. I am sure the Government will have done great work on consultation and making sure there is communication between the bodies that will be being regulated and the new regulator. If the Minister can tell us how this is being done, some of my worries will be removed. Also, stating where that information will be provided would very much help. If not, it has to be in the Bill somewhere.

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[Lord Markham (Con)]

I hope noble Lords will see this as another constructive measure that is in keeping with many of the issues on which there has been broad consensus in the Committee. The principle behind the amendment is delegating regulatory functions to the competition organisers where they are considered best placed to discharge them.

Many noble Lords have said that the competition organisers already regulate their own competitions to a large degree. We are all aware of the fit and proper owner test and of financial fair play, to mention just a couple of areas. We would all agree that competition organisers have extensive experience in this space, having been doing it for a number of years. If they were discharging a lot of the functions and the regulator was also discharging them, there would be the danger of duplication. Again, I think most noble Lords want the regulator to be light touch and low cost, particularly as all the costs are coming out of the pockets of the clubs.

I hope that this will be seen as a sensible move. The regulator would be asked to look at each area of responsibility and to decide which of the competition organisers might be best placed to carry it out. If the regulator thinks that, in delegating some of those powers, the current Premier League or EFL owner tests are insufficient, there would be nothing to stop the regulator saying that, on top of competition organisers’ existing processes, it would like them to add X, Y and Z. That would be entirely appropriate and would give the competition organisers the opportunity to prove themselves.

Given that the regulator would have overall responsibility, it would always have the opportunity to take the powers back if it thought the competition organisers were not up to the job. Amending the Bill in this way would be seen as a sensible move. It would send a good signal to football that we want to work with it in setting up the new regulator. We have all heard the Minister say that she does not want to increase the burdens on the independent regulator—in fact, she made that point in responding to the last group—so here is a way to reduce the burden we put on the regulator and to delegate it to a local level, where others are felt best placed to carry out the functions in a collaborative way. I beg to move.

[Lord Pannick (CB)]

The noble Lord, Lord Markham, puts his case very powerfully but I for one am not persuaded, because the delegation of functions to competition organisers would frustrate the very purpose of independent regulation. The whole purpose is that regulation is done by the independent regulator. As I said in considering the previous group of amendments, it is of course vital that the regulator consults those affected and takes into account their concerns and expertise. But to delegate the responsibility to those who are being regulated, or to the competition organisers, would be an abdication of regulatory responsibility.

[Lord Maude of Horsham (Con)]

My Lords, I support the amendment of my noble friend Lord Markham and strongly disagree with the noble Lord, Lord Pannick. We constantly hear that the purpose of the Bill is for the regulator to be agile, to be as light touch as possible and not to impose unnecessary additional burdens on football. Every million pounds spent on the cost of running the regulator, as well as the additional compliance costs for football clubs themselves, means there is less of the pie to be distributed under the redistribution parts of the Bill.

Surely one of the key ways in which we can do our best to avoid that cost burden being excessive is to avoid duplication. The reality is that the competitions, the leagues, already exercise a self-regulatory function—not regulating themselves but regulating the clubs that are members of the leagues. That is in their nature: there are conditions of belonging to those leagues that they rightly enforce, and they are going to be obliged to carry on doing that anyway. It is possible that not all of them have done that perfectly, and that not all of them will continue to do it perfectly in the future, but it is also possible that the independent regulator will not do its job perfectly. We should consider that possibility at this stage of consideration of this really important Bill, given that many clubs—not just the Premier League clubs but right down through the pyramid—have concerns about the costs, imposition and impact that creating the regulator will involve. When we move on to the next group, we will be looking at the really big, crunchy part of the Bill that covers the regulator’s operating licensing powers.

If we are to be sensitive to these genuine concerns of football clubs—which, by and large, have been pretty successful over the decades—this is a good way of showing it. If this amendment is passed and accepted by the Government and goes into the Bill, none of it says that the powers have to be delegated to any particular competition organiser; but at least giving the possibility of avoiding this overburden of new regulation, cost and impositions on something which is already very successful would be a very good signal for the Government to send.

I hope the Minister when she responds to this amendment will not rule it out out of hand but will take it away and say that we should now be looking for ways to address some of these genuine concerns. This would be a very good way of doing it.

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[Lord Parkinson of Whitley Bay (Con)]

My Lords, I want to say a little about Amendment 124, which my noble friend Lord Markham has outlined and to which I have added my name. I am sorry that we have not yet fully convinced noble Lords across the Committee in favour of it, but it might be helpful to clear up some of the confusions which have arisen.

We are proposing delegating these duties not to clubs but to competition organisers. In doing so, we seek to avoid the sort of confusion that the noble and right reverend Lord, Lord Sentamu, has just highlighted about duplication in the regime. As noble Lords have pointed out, there are already football bodies which have a regulatory role—the Football Association, the Premier League, the English Football League and, indeed UEFA. They will retain many of those functions. As the noble Lord, Lord Pannick, knows well, Manchester City’s dispute with the Premier League is because of its powers to make some of the rules for the competition to which it relates. We are trying to avoid the duplication of regulatory functions. If an existing competition organiser has processes in place to carry out these functions effectively, why could the Secretary of State not direct the regulator to delegate them to these competition organisers and bring them closer to the clubs that are playing in that competition of their own free choice?

[Lord Pannick (CB)]

The noble Lord emphasises that the purpose of the amendment is to allow for delegation of powers to competition organisers, not to clubs. But the noble Lord will know that the Premier League, which is a competition organiser, simply consists of the will of the 20 clubs.

[Lord Parkinson of Whitley Bay (Con)]

The 20 clubs have competed to get into it. It is a changing 20, based on the ability of clubs to take part in that competition.

Similarly, it might be more appropriate for functions to be carried out by other competition organisers at other levels of football, if there are sufficient safeguards for them to do so in a way in which the Secretary of State feels is appropriate.

In our amendment, we have tried to reflect these safeguards to make sure that the same regulatory standards apply to the bodies to which functions are delegated. Subsection (2) of the new clause proposed in Amendment 124 says that a function can be delegated only if the regulator is satisfied that the competition organiser would discharge the function with the same degree of stringency as the regulator itself and that it would meet the objectives established by Clause 6 and discharge the function with regard to the negative outcomes as outlined in Clause 7(2).

We are where are because there are elements of football which have not been good at self-regulating in a way that has pleased fans. More than one political party has been concerned enough to bring this Bill before your Lordships’ House. Are we saying that we have reached a point of no return? If the competition organisers and other football organisations get their house in order and meet the standards set out in this Bill which the regulator is trying to do, will there never be a situation in which we will be able to delegate some of these functions back down to the level of competition organisers? This would mean a much more light-touch, organic form of regulation, which I think is what a lot of noble Lords in the Committee would like to see. That is the thinking behind the amendment and on which I would be interested in hearing an answer from the Minister.

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[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?

[Lord Wood of Anfield (Lab)]

My Lords, I will speak to my Amendments 168 and 169, which connect with some of the themes raised by the noble Lords, Lord Pannick and Lord Moynihan. One of the most sensitive areas of this regime is the imposition of discretionary licence conditions on clubs. The purpose of my Amendment 169 is to say that the regulator can introduce such conditions only after being satisfied that the conditions would

“not be met by the club complying with all rules, requirements and restrictions which … will be imposed by a competition organiser”.

Essentially, this does not go as far as full delegation to leagues such as the Premier League—I agree with the noble Lord, Lord Pannick, on the broad criticism of that—but would introduce in one specific area what might be thought of as a limited principle of subsidiarity for the imposition of discretionary licence conditions.

The main purpose is to ensure that the regulator observes the norm of good regulatory co-operation—with not just the Premier League but all the leagues—by looking first to the adequacy of league arrangements in response to specific problems that will be the most politically and competitively sensitive, before stepping in and intervening with club-specific conditions attached. Why? It is because subsidiarity is a good principle of regulation where it is not inconsistent with the application of the intent of the law; also, I believe that it will foster the habit of regulatory co-operation more generally—not just on discretionary licence conditions. It will avoid duplication and confusion in regimes, and it will equip the regulator with a bit more political protection when it comes to the charge of political interference, because it can say, “We’ve looked to the leagues to step in first before stepping in”.

In the case of the Premier League specifically—let us face it, that is where the rubber hits the road on this issue most of all—it gives it, first, a chance to maintain system-wide and league-wide governance integrity before club-specific rules arrive, rather than risking the intervention of the regulator, leading to fragmentation between clubs. Secondly, it allows differences in application, inside the Premier League, of the general IFR rules in ways that account for differences in risk, finance and strategy, which we have heard discussed many times in Committee.

An example is capital buffers. The regulator will want to require cash reserves, and in the case of the Premier League, you want to take account of those areas where there are genuine differences from lower league clubs—differences in player registration rights, meaning players are more liquid assets, for example. The Premier League could design league-wide rules that are sensitive to these different conditions. The amendment does not say that Premier League rules would trump regulator rules, but where there are concerns, the regulator would look first to the Premier League to modify league-wide rules that respond to the concerns before the regulator directly intervenes.

Another scenario might be an issue of liquidity management inside a Premier League club. This amendment would point to the regulator first looking to the Premier League to take steps such as enhancing its monitoring systems, developing new metrics, et cetera, before it goes to individual licence conditions. This, again, would ensure that the league could retain the integrity of league-wide rules, rather than Premier League clubs having individual regimes as and when they trip up over certain rules.

What if the regulator wanted to intervene with a specific club as a matter of urgency? It could still do this. What if the regulator thought Premier League rules were inadequate to the task and insisted on imposing a licence condition that cut across and undermined league rules? Ultimately, it could still do that too; in fact, it may think that was the right thing to do. But what the amendment would do is introduce a prior stage that looks to the leagues to make league-wide governance adjustment first. In the name of good regulation, that seems to me a sensible, limited amendment.

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[Lord Pannick (CB)]

Under Clause 22(6), the Secretary of State may make the regulations the noble Lord is concerned about only if requested in writing to do so by the IFR, so the Secretary of State does not have complete discretion. We would be creating a new system which may reveal defects and omissions in its operation, so surely it is sensible to have a power to amend it if defects become manifest.

[Lord Markham (Con)]

I thank the noble Lord. Of course, we want to have the flexibility to react to such situations. This issue comes up in various other contexts, such as government statements. There are lots of points where the Secretary of State can vary the approach. The question is: how do we get the checks and balances right? However, I think there is basic agreement on this issue, and I would like to hear the Minister’s views.

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[Lord Markham (Con)]

I shall speak to Amendments 125, 133 and 135. Hopefully, this will be a fairly uncontroversial, simple set of amendments, which try and set out clear expectations on timing.

I am very aware that, while there is uncertainty as to what the discretionary licensing regime may be, that has an unsettling effect on both clubs and potential investors into the sector. We would all agree that this is not something that we want. We want everyone to know what the rules of the game are, so they can either get on with doing whatever they need to do to apply to those licensing conditions and/or, if they are looking to invest in the game, so they can have that degree of certainty as to what the rules of the game are going to be, so as not to have that potential chilling effect on any new investment.

Amendment 125 tries to give the regulator a time limit of one month from the passage of the Act. I am very aware that there is a shadow regulator in place at the moment, so I hope that this is something that the shadow regulator is working on in the meantime. That is why I think that a one-month deadline is quite doable in that sense.

Related to that is Amendment 135, which says that once a club has put a discretionary licence application in, it will receive a reply from the regulator within one month. Again, I am very much assuming that these things are not a binary process. I would expect the club to be in liaison with the regulator as it put this application in and be receiving advice as it did so—so a one-month timeline at the end of that is quite relevant.

It is for us to set some expectations on the regulator in the Bill. In Clause 17(9), the regulator gets to set its own timing for it all, so it is quite appropriate that we are saying that, given the uncertainties placed on clubs, we expect these sorts of reasonable timeframes. Again, I am quite happy that we decide what those appropriate timeframes might be through our discussions on this, and there may be arguments to vary that slightly—but one way or the other, it is quite important that we set out what those timings and expectations should be.

Finally, Amendment 133 tries to give more time for how long provisional licences last. We want to try and avoid a cliff-edge situation whereby clubs are suddenly in the provisional licensing regime and then do not get beyond that. We would all then have a set of circumstances which I do not think any of us have really planned for, in terms of what would happen and whether the club would have to stop taking part in the competition at that point. Amendment 133 tries to give a bit more time around the provisional licence, increasing it from three years to four.

The main reason for these amendments is to make sure that these things are considered and that there is a good debate on what the appropriate timeframes are. It is reasonable that we put down what those timeframes should be, so clubs get as much certainty as possible in this. I beg to move.

[Lord Pannick (CB)]

My Lords, I am very sympathetic to the purpose of the noble Lord, Lord Markham, in relation to his Amendments 125 and 135. Perhaps I may respectfully suggest to him and to the Minister what may be more palatable than what his amendments suggest. Amendment 125 is rightly concerned that the rules for a provisional operating licence should be made speedily. Everybody must know what the rules are. The amendment would require that these rules be made no later than the period of one month beginning with the day that this Act is passed. If the noble Lord is going to bring the amendment back on Report, I respectfully suggest that it would be more acceptable to say within one month from the date when the Act is brought into effect. The noble Lord will know that under Clause 99(1) and (2), Part 3—with which we are concerned—comes into effect not when the Act is passed but at a later date when regulations are made.

In relation to Amendment 135, the noble Lord is rightly concerned that the IFR should make the decision whether to grant a regulated club a provisional operating licence speedily. He lays down a period of one month from when the application is made. The amendment would allow for an extension of only two weeks. It is an absolute rule, subject to a two-week extension period. I respectfully suggest that that is far too confined. It is normal in a provision of this sort to allow for the period to be extended if there are exceptional circumstances. It is not difficult to envisage cases where, rightly, the IFR cannot take the decision within a period of one month plus two weeks.

For example, the IFR might reasonably take the view that it needs answers from the club to questions of detail, which it puts to the club, and the club may not provide those answers, or be able to provide them, within the period of six weeks for which the noble Lord’s amendment allows. I understand and I share the concerns at the root of Amendment 135, but it really needs to have an exceptional circumstances provision.

[Lord Addington (LD)]

My Lords, looking at these amendments, I think that a little bit of agreement is breaking out that certainty and getting things done quickly are required in the Bill. The noble Lord, Lord Pannick, may have made drafting suggestions on the hoof, and we are lucky to have him to fulfil that function for us, but something that clarifies and addresses the issues raised here would probably be helpful. If there is something that we have all missed and it is hiding somewhere, that is great, but we need those answers.

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[Lord Markham (Con)]

In speaking to my Amendment 332, I will follow the words of some other noble Lords and say that I find it quite confusing that we have so many disparate amendments grouped together.

My Amendment 332 would stop the Secretary of State being able to define a season. I hope that someone—maybe the Minister or the noble Lord, Lord Pannick—will tell me that I have read this wrong somehow, or that it is not the intention at all, but I think we would all agree that, when it comes to regulatory or government overreach, trying to define a season and when it should start and end is not the role of government or a regulator. I hope that this is quite an easy one to clear up, because I would be very surprised if that is the intention behind it. The relevant Clause 92(3)(a) says that:

“The Secretary of State may by regulations amend this section so as to change … the definition of ‘football season’”.


It would be very welcome if that could be clarified; otherwise, I suggest that we might want to delete it.

[Lord Pannick (CB)]

My Lords, I will comment very briefly on the subject of football agents, which was raised by the noble Lord, Lord Mann, and supported by the noble Lord, Lord Goddard. I declare an interest: my son Joel Pannick is a football agent—I am very proud of my son—who works at Base. My perspective of football agents is that there are still abuses; they need to be regulated and they are regulated. The era of unregulated bungs no longer exists to the extent so vividly described by the noble Lord, Lord Mann.

Let me say why I want, in the interests of balance, to inform this Committee of what the position is. Football agents are now licensed and they have to pass a demanding examination. They are regulated by FIFA and the FA. I should mention that the scope of the regulations was the subject of legal challenges in the last year, and those legal challenges partially were successful. It is the case that HMRC adopts a far more vigorous approach to this topic than it used to, and rightly so; it keeps a close eye on payments and receipts. The noble Lord, Lord Mann, is absolutely right that there are many agents who are not subject to HMRC because they are based abroad, but those based in this country certainly pay tax, and in many cases a great deal of tax. I thought I would just mention those factors in the interests of balance.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, like the noble Baroness, Lady Taylor of Bolton, I always balk when I see a group described as miscellaneous, or even worse in this case, “misc”. On the failure to give new names to the groups that have been degrouped, it is always helpful to have a go at giving us a theme. But I am grateful to the noble Lords who have covered a wide range of very important issues in this group.

I wanted to say a few words about my noble friend Lord Markham’s Amendment 332, to which I have added my name. A number of noble Lords raised in previous debates the concerning example of the delegated power for the Secretary of State to decide what and when a season is. I am glad we have had opportunity to discuss that on its own. This delegated power seems to be egregious. I am not quite clear why the Secretary of State should have a say on what constitutes a football season. I am not even sure why this delegated power is necessary—apart from granting the Secretary of State more powers over the game, there does not seem to be any particular advantage to her in granting herself this rather curious power. I would be interested to hear the Minister’s response. I wonder whether UEFA has a view on this measure. Would it not regard the Secretary of State being able to intervene in the definition of a season as political interference? If the Government have had discussions with UEFA on this point, I would be grateful to know.

I do not think the noble Lord, Lord Mann, actually got round to speaking to his Amendment 153 in this group, which relates to modern slavery—such are the pitfalls of a miscellany—but I wanted to highlight that one and congratulate him on bringing it forward. I am sure all noble Lords would agree that everyone has a duty to prevent this abhorrent crime. I was very proud to work at the Home Office when my noble friend Lady May of Maidenhead brought through the Modern Slavery Act 2015, which has made large headway into cracking down on this abhorrent behaviour. Since then, both the Premier League and the English Football League have released an annual anti-slavery and human trafficking statement, as have all the participating clubs. As the Minister knows, I am wary of increasing the scope of the regulator, but I would be interested in hearing how she thinks this new regulatory regime will operate within the law that we already have to tackle modern slavery and what she thinks of the amendment from the noble Lord, Lord Mann.

I am grateful to the noble Lord, Lord Pannick, for his comments on football agents. Whether they are more or less popular than lawyers, I will leave to others to decide—and indeed whether the existing regulation that is brought about by UEFA and others he mentions is, in this case, sufficient and not a requirement for further regulation, as we see in some of the other behaviours in football. I leave all these, and the miscellaneous other issues that noble Lords have raised, to the Minister to respond to.

Football Governance Bill [HL]

Lord Pannick Excerpts

Committee stage
Wednesday 18th December 2024 Lords Chamber

[Lord Pannick (CB)]

My Lords, I declare again my interest as counsel for Manchester City Football Club in recent disciplinary proceedings brought by the Premier League. I offer my support to Amendment 173A from the noble Lord, Lord Moynihan. We discussed the principle of consultation on Monday evening. I repeat that, in my view, consultation with clubs and specified competition organisers is vital to ensure that they have confidence in the operations of the regulator. It is also vital to ensure that the regulator is operating, as he or she would want to do, in a fair manner. I very much hope that the Minister will give consideration to that and bring an amendment back on Report, in relation to Amendment 173A and earlier provisions of the Bill.

I am far less keen, I regret to say, on Amendment 172 from the noble Lord, Lord Markham, which seeks, as I understand it, to remove from the Bill the discretionary licence condition relating to restricting the clubs’ overall expenditure. I suggest that it is important to see the limits of that power of the regulator, because Clause 22(4) provides that this discretionary licence condition

“may not impose restrictions on expenditure of a particular kind or a particular transaction”.

As I understand it—the Minister will say whether or not this is correct—the regulator would therefore not have the power, using the example given by the noble Lord, Lord Markham, to say, “You can’t buy a particular player for £50 million”, as that would be outside the scope of Clause 22.

It is not difficult to see that there may be circumstances —one hopes that they would be very rare indeed—where the regulator takes the view that its objective under Clause 6

“to protect and promote the financial soundness of regulated clubs”,

which is what it is there for, would be damaged if it did not have a power to restrict in exceptional circumstances a club’s overall expenditure.

[Lord Addington (LD)]

My Lords, I am beginning to wish I had jumped up before the noble Lord, Lord Pannick, because I have come to a similar conclusion.

For every success story in football, if you look you will find a failure. It is often the case when people come forward and buy themselves the dream team, then something goes wrong. You will find that especially in the lower levels. There are stories of those clubs, with Bury et cetera copping out, that have more expenditure going out on wages than they have coming in from revenue. If the regulator does not have the power to stop that speculative spending in certain circumstances, it is being denied a basic power over one of the biggest problems that has led to instability, particularly in the lower parts of the game. After some of the discussions we had on this, I really cannot see how we can support the lead amendment here and still have the central thrust of the Bill.

How will the regulator assess the slightly strange finances of investing in people who are always one trip away from being worth nothing? One accident on a training field and your principal asset is worth nothing. How is that taken into account and balanced, which would require a level of expertise? Does the Minister have examples of where information will be gathered to make a sensible assessment on this?

On speculative purchases, we have heard about deals with agents, et cetera, on other parts of this Bill; it is important to bear in mind how these are done. If the Minister has information on how that information will be gathered and those assessments made, I would be very interested to hear it.

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[Baroness Twycross (Lab)]

I hear what the noble Lord says and look forward to further discussions with him on that point, but we feel that the regulator will be best placed to determine which persons are appropriate to consult.

[Lord Pannick (CB)]

I am sorry to keep on at the Minister about this, but can she really think of any circumstances in which it would be appropriate for the regulator not to consult the competition organisers and the clubs in this context? If the answer to that is “Of course not”, let us put it in the Bill and make it clear.

[Baroness Twycross (Lab)]

I recognise the strength of feeling on this point and look forward to discussing this further as we proceed through the Bill’s progress in this House.

Amendment 173B is in the name of the noble Lord, Lord Hayward, and the noble Baroness, Lady Evans of Bowes Park, spoke to it in his absence. Its intention is to place procedural requirements around the regulator’s use of capital buffers as part of a liquidity requirement. First, I reassure noble Lords that the model of financial regulation is about making clubs more financially resilient.

The noble Lord, Lord Markham, raised an issue that has been discussed previously in this Committee, where owners tragically die and the issues this can cause clubs, which is that clubs will have to submit detailed financial plans, including contingency plans. This could include what the club would do in the event of a financial shock such as the sudden loss of an owner.

If the regulator has concerns about the level of financial risk exhibited in a range of scenarios, it can place discretionary licence conditions on clubs in limited areas. That does not necessarily mean that owners will have to put funding in up front. If the regulator does reach for liquidity requirements, there are already safeguards. Indeed, the amendment seeks to require the regulator to have regard to a number of considerations, but in each case the Bill already requires this.

When assessing whether to attach the discretionary licence conditions needed to meet the appropriate financial resources threshold condition, the regulator will already be fully informed of the club’s financial position because clubs have to submit a financial plan, which would already include detail of any existing liquidity buffers. Consideration of proportionality and existing financial rules is covered by the regulatory principles in Clause 8(c) and (d). Again, consideration of the impact on competitiveness and investment is covered by the regulator’s duties in Clause 7(2). Therefore, this is all already accounted for.

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[Baroness Butler-Sloss (CB)]

I do not want to deal with human rights. I have come here to deal with modern slavery. I disagree with the noble Lord. The problem is that Section 56 is voluntary and not mandatory. Consequently, companies are not obliged to follow what happens. In a 2019 review led by Lord Field of Birkenhead, of which I was a part, we picked up the fact that it was not mandatory. Consequently, if the regulator does not have to think about modern slavery, he would not have to look to see whether or not an individual taking over a club is making his money in a wholly inappropriate and extremely wicked way. Because it is not mandatory, it is important that someone else looks at it. If it were mandatory, I would entirely agree with the noble Lord.

[Lord Pannick (CB)]

Is it the case that the reason it is not mandatory is that Parliament did not think it should be? Therefore, the question is: why should it be imposed in this context and not generally?

[Baroness Butler-Sloss (CB)]

Section 56 says that it is utterly wrong to have companies that make money by exploiting people down the chain—consequently, it is wrong. But, for reasons I do not know but can guess, the last Government, who put in place this very good bit of legislation, presumably did not want to offend businesses. I understand that there are problems in making it mandatory but, if somebody is making money that they are going to put into a football club by exploiting other people down the chain, that is something we should not want our clubs to be involved in.

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[Baroness Grey-Thompson (CB)]

My Lords, in speaking to Amendments 178, 185 and 199, I draw attention to my interests in the register. I thank my noble and learned friend Lady Butler-Sloss for her contribution to the debate this afternoon.

Among the detail of what a regulator may or may not look like, we spent some time noting para football and how it can change and improve lives, and almost change the world. I would imagine that modern slavery is something that we would want to try to impact. Major games, such as the Olympics and the Paralympics, have made strong commitments in this area, as well as around trafficking. Their success is up for debate, but surely football and sport should try to leave the world a better place, and so I believe that these amendments are important.

Briefly, Amendment 199 is about the ownership of clubs. We have debated Reading and Aston Villa at length. This amendment merely seeks to strengthen the owners’ and directors’ test.

[Lord Pannick (CB)]

My Lords, I think a very strong case has been made this afternoon by the noble Lords, Lord Bassam and Lord Scriven, the noble and learned Baroness, Lady Butler-Sloss, and my noble friend Lady Grey-Thompson to require the regulator to assess whether a prospective owner of a football club respects and promotes the protection of human rights and prevents modern slavery.

I am very sympathetic to the principle. I am just concerned about the practicality. Is it really practical to expect that the regulator is going to have the expertise, time or ability to conduct a general assessment of whether a particular person—who may, for all I know, be based abroad—is generally respecting human rights and preventing modern slavery? This is going to take an enormous amount of time and money, and I fear that it would distract the regulator from the more day-to-day, prosaic functions that Parliament will be asking it to perform. I would be pleased to hear from the noble Lord, Lord Bassam, how this is going to work in practice, because I am very sceptical.

[Lord Scriven (LD)]

Does the noble Lord accept that it already takes place for certain individuals and entities with regard to the regulations that I pointed out, and that the Government already have a system in place to do this for takeovers? The issue is that there are gaps, which is why it needs to be in this Bill, particularly around football and state entities.

[Lord Pannick (CB)]

I entirely accept that there are detailed regulations, in particular in relation to money laundering, but that is a far more specific area, where there is a government system and a whole army of people with expertise to assess those matters. The question is whether we wish to make it a function of the independent football regulator to have a whole department that is concerned with this. I see the force of the principle, but I remain sceptical about it in practice.

[Lord Moynihan (Con)]

My Lords, this is one of the best debates we have had in Committee to date. I am equally sympathetic to the points made by the noble and learned Baroness, Lady Butler-Sloss, and the interventions of the noble Lord, Lord Scriven, and the concern about the practicality of this, but none of that is covered in Amendment 200, which is in this group.

Let us just assume, hypothetically, that a state-owned entity acquiring a football club in England has an excellent human rights record and no problems with modern slavery. Under Amendment 200, it would be banned from owning a club in England because it is state-controlled. All the points that have been made are relevant and important, but Amendment 200, in the name of the noble Lord, Lord Bassam, is very specific and states that:

“No state-controlled club may be granted an operating licence”.


There is no reference to human rights abuses or to any of the important issues regarding the supply chain, which have been mentioned. It simply states that a foreign-owned, state-controlled company cannot own an English football club. If we pass this amendment, immediately we would then have to divest the Abu Dhabi United Group of its majority ownership of Manchester City and Saudi Arabia’s Public Investment Fund of its ownership of Newcastle United, to mention but two cases.

How have the Premier League and UEFA addressed this to date? They have focused on the word “control”. When the Premier League addressed the Newcastle ownership test, it received “legally binding guarantees” that the state of Saudi Arabia would not have control over Newcastle United in the event of any deal. However, the Bill goes much further. It grants powers to the regulator that are not just about control. An individual has to be considered who has

“a higher degree of influence”

over the ownership of a club. The control test that UEFA and the Premier League currently use, which is a tough test that takes up a lot of time and energy, is overridden by a requirement in this legislation—for the first time in sport—to test whether an individual has a higher degree of influence. There can be no doubt that the Crown Prince of Saudi Arabia, as chair of the PIF, has a very high degree of influence over that board —he appoints it. Indeed, a Minister from that board has been appointed to be chairman of Newcastle.

If we go forward and accept Amendment 200 as it stands, what would we be saying to football, to Newcastle, to the Qataris—who might want to acquire a company, which there has been much speculation about, not least in this Committee—and to Abu Dhabi in relation to Man City? It would drive a coach and horses through the current ownership of the Premier League. It would be a very serious decision by the Government to take state control over who owns the football clubs in this country.

I say that because it comes down to the degree of state influence that is behind the regulator. The Government have said:

“Regarding the scope of the tests, we recognise the trade-offs involved, and are aware of the range of corporate structures behind clubs”,


and they specifically mention here sovereign wealth funds. They go on to say:

“We are designing the legal scope of the tests with these challenges in mind”.


They call them challenges, to be faced down at the request of government. We would have an open back door in the Bill if we accepted the amendment in the name of the noble Lord, Lord Bassam, straying into foreign policy in a way that we do not currently do. We have plenty of legislation elsewhere on the statute book allowing the Government to intervene if they felt they needed to in a certain circumstance.

The Government have therefore further confirmed the scope of the regulator. To me, it is incredibly important that the regulator is not given so many powers as to require it to have direct influence. I lost an amendment on Monday night, when I asked for that at least to be defined and for consultation to go out to find out what “significant influence” means in this context. I think that is extremely important.

I have a question for the Minister. I cannot find an answer as a result of the debates we have had so far, but football needs an answer and probably needs it now. Is it the Government’s position that the Crown Prince, Mohammed bin Salman, should be able to own Newcastle United under the definition of ownership in the Bill? It is a very simple question, with a yes or no answer. If yes, why have Ministers deliberately constructed a Bill that will quickly put him through the ownership test of significant influence, and why did the Minister confirm on Monday that she wanted incumbent Heads of State to be tested? If no then surely the Government should say so, and we should have that as part of an open debate.

I hope that, if that question is answered this evening, there will be no doubt in future about what the Government intend, not least following the Prime Minister’s visit to Saudi Arabia last week and his offer to go to a football match with the Crown Prince. It is only reasonable for Saudi Arabia and the Crown Prince to know whether he is expected to divest himself of the interest in Newcastle United or not.

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[Baroness Brady (Con)]

My Lords, I refer the Committee to my interests as detailed in the register. I support Amendments 187ZA and 187ZB, tabled by my noble friend Lord Moynihan, which propose a sensible and very necessary adjustment to the presumptions under- pinning the ownership test.

These amendments address an important issue in the Bill, ensuring that the ownership process is fair, reasonable and aligned with best practices in other regulated sectors. As my noble friend has said, as it stands, Clause 32(5) means that if the independent football regulator fails to determine an application for a new owner or officer within a set timeframe, the applicant will be automatically treated as unsuitable. This is a really problematic approach. It assumes that any delay is the fault of the applicant or reflective of their unsuitability when, in reality, delays can occur for many good reasons. Quite often, they are entirely outside the applicant’s control or, indeed, the control of the selling club.

Simple cases can, of course, be done quickly, but acquisitions of football clubs can be complex undertakings. Applications for ownership done well involve a detailed examination of financial records, governance structures and regulatory compliance. Imposing arbitrary deadlines does not speed things up; it just risks poor decisions being taken on very consequential issues without all the facts. Indeed, taking time to get it right is in the best interests of all involved: the club, the fans and the broader football ecosystem. To penalise an applicant simply because the IFR runs out of time is neither fair nor proportionate.

The Premier League allocates significant resources to operate its own owners’ and directors’ tests. I have spoken to it about this issue and, of course, so has DCMS. It has told me that the league sees no benefit whatever in arbitrary deadlines and has explicitly told the Government that unless this is staffed and resourced intensively, the IFR will almost definitely hit the deadline in a range of cases. Of course, this will be compounded by the fact that the Premier League will be running its own process without a statutory deadline, meaning the IFR would be ruling people to be unsuitable for no good reason while the league would still be performing its test. This is a recipe for chaos and, I am afraid to say, litigation.

This presumption of unfitness if a statutory deadline is not met could have significant unintended consequences. Let us imagine a scenario where a club is on the brink of critical ownership transfer—perhaps its survival depends on transferring the ownership—and the only prospective buyer is deemed unsuitable purely because the IFR failed to meet its deadline. In the last Committee debate, the Minister said:

“Although the risk of clubs going into administration will be greatly reduced, it may still happen”.—[Official Report, 16/12/24; col. 54.]


For a club to go into administration because the regulator has not met its deadline would be unfair, and catastrophic for its supporters. Even if it did not result in immediate administration, it could leave the club in limbo, unable to secure necessary investment and potentially sliding into financial difficulty or worse.

This issue is not confined to the immediate impact on clubs. There are also wider reputational and practical implications for prospective owners and officers. Being deemed “unsuitable” by default could carry consequences far beyond football, affecting their credibility and standing in other sectors. That is not how a fair and just regulatory process should operate.

The amendments before us propose a simple but important correction. By reversing the presumption, they would ensure that applicants were not unfairly penalised for delays that were outside their control. Instead, if the IFR fails to make a determination within the specified timeline, the applicant would be treated as suitable by default. As my noble friend Lord Moynihan said, that is much more aligned with practices in other regulated sectors. For example, in merger control, if the Competition and Markets Authority fails to make a decision within the statutory time limit, the merger is automatically allowed. That ensures that the time limits are meaningful but that regulatory delay does not create unnecessary barriers or unfair outcomes.

It is important to emphasise that this amendment does not undermine the integrity of the ownership test. The IFR will still be able to make a determination based on the suitability of the applicant, but it will no longer have the ability, in effect, to penalise applicants or clubs because of its own delays. It would, in truth, be far better not have a timeframe at all, for the reasons I have outlined. However, if there is to be one, we must reverse the presumption and place incentives in the right place.

I hope the Minister will recognise the value of these amendments, and the much greater fairness and reduced risk they would bring to the process. It is a small but crucial change that will help ensure the ownership process operates in way that is both reasonable and just. I urge the Government to give the amendments the consideration they warrant.

[Lord Pannick (CB)]

My Lords, I support the noble Lord, Lord Moynihan, and the noble Baroness, Lady Brady, in this matter. It cannot possibly be fair to have a regulatory system in which, if the regulator does not perform and reach a decision within the specified time, for reasons that are not the responsibility of the applicant, the application fails. That is plainly unjust and, as the noble Baroness, Lady Brady, says, it is contradictory to the approach adopted in competition law, where the regulator has short time limits and must comply with them. The alternative is to have a more open-ended system, whereby the regulator can take more time if it is necessary to do so in exceptional circumstances.

[Baroness Blake of Leeds (Lab)]

My Lords, I start by thanking the noble Lords, Lord Markham and Lord Moynihan, for tabling these amendments. I will start with Amendment 180, in the name of the noble Lord, Lord Markham. The regulator needs to know who a club’s prospective new owners and officers are before they can buy or join the club, so they can be tested.

Although clubs, owners and officers are required to pre-notify the regulator, there may be occasions where someone becomes an owner or officer of a club without having first notified the regulator. In these circumstances, it is vital that the regulator is notified after the event—precisely what this amendment would remove. That is because, if the regulator is not aware that someone has become an owner or officer, the regulator will not know to test them. This risks clubs having unsuitable owners or officers in place.

I turn now to Amendments 187ZA and 187ZB, in the name of the noble Lord, Lord Moynihan. I will not deviate to talk about Leeds United at this point, although we always find reasons to do so in our general conversations. I am grateful for his comments and for those of the noble Baroness, Lady Brady, and the noble Lord, Lord Pannick. Clearly, I think we come down to the issue of timely decision-making on the suitability of new owners and officers, and we recognise that this is important for clubs’ financial sustainability.

It is a fact that, without deadlines, we have seen league determinations drag on, unable to reach a decision. That is why the regulator will be subject to a statutory deadline when it tests the suitability of prospective new owners and officers.

We believe that Amendment 187ZA would undermine the regulator’s tests. It would require the regulator to deem an owner or officer suitable to take up a position at a club if the deadline had been met, and the regulator had otherwise been unable to make a determination. This means that it would have to approve an applicant it did not know was suitable.

Amendment 187ZB would then allow that owner or officer to remain at the club until such point as the regulator found them unsuitable. This creates very concerning outcomes. If the end of the time limit resulted in an automatic pass, this could incentivise prospective applicants to stall and withhold information. More worryingly, as I set out, it would also mean that new entrants were approved even if the regulator was not confident that they were suitable—which is something that we simply cannot have.

This risks owners and officers who should never have been allowed to take up positions at clubs in the first place to potentially do considerable harm to clubs, which is why the statutory deadline must result in an automatic negative determination if reached, because this is the only way to ensure that suitable owners and officers become custodians. If the end of the time limit resulted in an automatic affirmative determination, this would incentivise prospective applicants to stall, as I have already outlined. It would also mean that new entrants would be approved if the regulator was not confident, and I hope that noble Lords will understand that this is not an acceptable position to be in. That is why—

[Lord Pannick (CB)]

Does the Minister accept that the current wording of the clause means that the application fails even if the delay is due entirely to the incompetence of the regulator or the failure of the regulator to have an efficient system for dealing with applications? Surely that cannot be right.

[Baroness Blake of Leeds (Lab)]

I understand the noble Lord’s comment but I really believe we are covering our tracks in this. We are improving the situation where the regulator works to avoid the situations that he outlined. I will add that this also provides certainty to the industry and, most importantly, it will incentivise the prospective person to promptly provide information to the regulator to allow it to make its determination. With those comments, I hope that noble Lords will not press their amendments.

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[Baroness Blake of Leeds (Lab)]

I am sorry that we have not had a fuller discussion on that, but I thank the noble Lord, Lord Addington, for his amendment and I agree that equality, diversity and inclusion are significant factors which the regulator has a duty to highlight. Equality, diversity and inclusion are not named criteria in the fitness test, and I do not believe they should be. If an individual has behaved in a seriously discriminatory and harmful way that rises to the level of a criminal offence, and which results in a civil lawsuit or regulatory or disciplinary action, the existing test will capture this. We believe that this is the appropriate threshold. It would not be proportionate to require the regulator to assess individuals’ commitment to equality, diversity and inclusion.

I will return to the point the noble Lord, Lord Parkinson, made regarding a blank cheque, and pick up on his Amendments 195 and 198. The Bill sets out a list of matters the regulator must consider when assessing an owner or officer’s honesty and integrity as part of the fitness test. Those are the relevant matters when assessing an individual’s honesty and integrity, and they are based heavily on precedent—namely, the Financial Conduct Authority’s fit and proper person test. However, as we have discussed before, football is a changing industry and the regulator must be able to adapt to this. Matters may emerge in the future that are crucial to assessing an individual’s fitness.

The purpose of the owners’ and directors’ test is to ensure that clubs have suitable custodians. That is why it is vital that the regulator be able to consider other matters. This sort of discretion is well precedented; indeed, the FCA has more discretion when conducting its fit and proper tests. However, we want to make it explicitly clear that it would not be appropriate for the regulator to add any matters which would allow it to determine an individual’s suitability solely based on their connection with a Government. That should not be what determines whether an individual is suitable or not.

Turning to Amendment 204 from the noble Lord, Lord Parkinson, nothing in the Bill prohibits an owner owning more than one club. I thank the noble Lord, Lord Moynihan, for his comments on this issue. Concerns about multi-club ownership are to do with conflicts of interest and competition, which is why the leagues and UEFA have rules about multi-club ownership. Clubs competing in these competitions will be required to abide by any applicable rules.

Turning finally to Amendment 202, from the noble Lord, Lord McNally, I agree that it is crucial that clubs be protected from unsuitable officers, which is why the Bill gives the regulator the powers to disqualify any unsuitable officer from being an officer at any regulated club, up to and including for life. That, I am sure noble Lords will agree, is a very strong tool that has powerful ramifications. It means that all clubs will be better protected from unsuitable officers, but it should be used carefully.

There are scenarios where the regulator must find an officer unsuitable—for example, if an officer lacks the requisite qualification, experience or training to take up that specific officer role at the club—but it should not automatically follow that they are deemed unsuitable for any officer role at the club. Indeed, there may be other officer roles that they are suitable and qualified for, but this amendment would ban that. It would mean that the regulator would have to disqualify them from being an officer anywhere. This we cannot and should not accept. That is why it is important that the regulator has the power to disqualify unsuitable officers but is not always required to do so. For the reasons I have set out, I hope the noble Lord will be able to withdraw his amendment.

[Lord Pannick (CB)]

Could the noble Baroness say something about the UEFA letter which expresses its views on the Bill? Will she assure the Committee that a copy of this letter will speedily be sent to the noble Baroness, Lady Brady, and a copy put in the Library so that we know what it says?

[Baroness Blake of Leeds (Lab)]

My understanding is that we will not be sending it, but I am sure there will be further clarification on this point.

[Lord Pannick (CB)]

Can I ask why? This is a letter from the sports regulatory body that governs European football. Surely the Committee is entitled to know what its views are on the substance of the Bill we are debating.