Football Governance Bill [HL]

Lord Pannick Excerpts

Report stage
Monday 17th March 2025 Lords Chamber

[Lord Jackson of Peterborough (Con)]

My Lords, I rise to move Amendment 31 and to support Amendment 33 in my name and that of the noble Baroness, Lady Fox of Buckley. The amendment seeks to remove the explicit reference to EDI—equality, diversity and inclusion—in the Bill by way of a compulsory obligation in the independent football regulator’s corporate governance statement.

I do not wish to rehearse the arguments made in Committee, when the Minister, I gently suggest, did not fully engage on this issue. I am nevertheless grateful that her letter of 15 January to my noble friend Lord Moynihan of Chelsea—who, incidentally, has done excellent work on this issue—was more helpful and at least tried to put forward a partial rationale for this part of the Bill. As your Lordships will know, this is an additional duty and encumbrance from the Bill put forward in the last Parliament. To that extent, it does not have the support of His Majesty’s loyal Opposition.

I want to say at the outset that it is important to treat everyone in football with fairness and equity; I believe that is good business as well as morally the correct thing to do. That is why we have a strong existing regulatory and legislative regime in this country, to ensure compliance with the basic tenets of decency, fairness and equality. But I oppose the compulsory and draconian imposition of an EDI obligation on football clubs for a number of reasons. It is heavy-handed and diverts resources from excellent existing community engagement initiatives that have developed organically over the last few years in grass-roots football. It is costly, bureaucratic and divisive, and I believe it under- mines community cohesion. It will impose unnecessary costs on a majority of smaller clubs whose financial health is precarious, and on which the onerous provisions will weigh heavily.

It will encourage diverse and divisive litigation and the intervention of third-party groups such as Stonewall, and will result in cases such as that of the football fan Linzi Smith, banished from Newcastle United Football Club for expressing her own lawful and reasonable gender- critical views online and questioned, in my opinion, in a disgraceful Orwellian fashion by Northumbria Police, for which it was forced to issue a belated and grudging apology. These proposals will chill free speech, cause the proliferation of ideological training schemes and undermine women’s sex-based rights in their workplace.

The Minister prays in aid a study by McKinsey into EDI and improved corporate decision-making but, as she knows, McKinsey’s 2018 study Delivering Through Diversity has been comprehensively critiqued and discredited by Green and Hand’s March 2024 paper published in Econ Journal Watch, which demolished its empirical evidence base and methodological assumptions, specifically on reverse causality, narrow focus, opaque data, quartile bias and global versus US scope of the research. Other academics, such as Alex Edmans of the London Business School, have similarly echoed Green and Hand’s robust and rigorous refutation of McKinsey’s studies. It is noteworthy that the Minister does not in her letter, or previously in this House, reference any other generic EDI research in respect of its efficacy, nor any on football specifically or wider sport. Perhaps she will address this issue in her later remarks.

There is a reason. Green and Hand’s headline finding was that EDI policies did not harm profitability, but there was no evidence that it helps it either—a rather important issue, given that the Wall Street Journal estimates that, globally, businesses will spend $15.4 billion on EDI next year. Where is the evidence that an EDI duty will, as the Minister has stated, “make clubs more sustainable” and ensure “good corporate decision-making”? Really?

The penny is finally dropping. Last week, the Financial Conduct Authority and the Prudential Regulation Authority ditched their plans to impose costly and bureaucratic diversity and inclusion regulations on the financial services sector, which the FCA’s own impact assessment estimated would cost £561 million to set up and £317 million in recurring annual expenditure. The fans and wider public agree. In May last year, Policy Exchange found that, by 50% to 14%, people agree that businesses have become too concerned with taking political positions on contested issues, while 75% of people believe that companies should prioritise hiring on merit, regardless of race or gender, rather than hiring to create a diverse team. Of course, they are right: 40% of Premier League footballers are non-white—on merit.

I assume that both the Prime Minister and his adviser, Morgan McSweeney, read those polls and media coverage too. I am heartened by reports today that the most senior leaders in government are considering prioritising growth and economic prosperity rather than overregulation and virtue signalling, and are giving serious thought to ditching the IFR. Perhaps the Minister will offer her views on that issue.

Does anyone really believe that fans clamoured for the mandatory reporting of data on race, gender and sexuality when Bury FC went bust in 2019? The proposition is ridiculous. We need to trust our football clubs to do the right thing within our current laws. Regulation for regulation’s sake will only hasten the demise of our world-beating football success story. For those reasons, I beg to move.

[Lord Pannick (CB)]

My Lords, the noble Lord, Lord Jackson, puts his case very high. He says that this is draconian and heavy-handed, will lead to ideological training schemes and is even Orwellian. His case is simply not made out. The EFL in its briefing to noble Lords says on corporate governance:

“The EFL supports the inclusion of equality, diversity and inclusion provisions within the corporate governance code of the Bill. The EFL’s equality code of practice is already mandatory for member clubs and this approach is a logical extension of existing arrangements that will ensure high standards are maintained”.

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[Lord Parkinson of Whitley Bay (Con)]

My Lords, I agree with what the noble Lord, Lord Goddard of Stockport, has just said, and we are grateful to the noble Baroness, Lady Grey-Thompson, who has spoken up for the women’s game from Second Reading all the way through the Bill. I am grateful to the noble Lord, Lord Grantchester, for moving the amendment today on her behalf. We touched on this a little when we were looking at the thorny question of putting in the Bill the types of competitions, leagues and so on that would be covered, where we ran into the problem of not wanting to make this a hybrid Bill, but we were interested in the consultation that would be needed if the women’s game were to come under the scope of the Bill and the regulator. So I am grateful to the noble Lord—and the noble Baroness, in her absence—for returning to this today.

I shall speak to my Amendments 36 and 95, which have been put in this group. My Amendment 36 seeks to ensure that the regulator has power to restrict funding from sources that it deems

“harmful to the interests of the United Kingdom”.

This is intended as a slightly softer approach to the duty now removed from the Bill to have regard to the foreign and trade policy of His Majesty’s Government, which we discussed during our first day on Report. Rather than providing for the regulator to consider the Government’s foreign and trade policy, my amendment focuses on conduct it considers harmful to our national interest, allowing the regulator to interpret that as it wishes and, crucially, independently from the Government of the day, as we know that UEFA and others are very anxious that it should.

My Amendment 95 reflects some discussions that we had in Committee in which there was cross-party support. The noble Lords, Lord Addington and Watson of Invergowrie, spoke at that point in favour of the suggestion that the Secretary of State might make regulations for Part 3 to come into effect only at the end of a relevant football season, rather than partway through. Clearly, there will be burdens on clubs that will have to comply with the new regulatory regime and it would be easier and simpler for them if they were able to do so at the start of a season. So I have brought this matter back in the hope that again it will receive some cross-party support. It is intended as a constructive suggestion and I look forward to the Minister’s reply.

[Lord Pannick (CB)]

I will add just two comments, the first on Amendment 35 on the women’s game. It is plainly at a very sensitive stage of development and we would all wish to encourage that development. My concern is that including Amendment 35 might perversely deter some clubs from investing in women’s football, and that would be most unfortunate indeed.

In relation to Amendment 36, to which the noble Lord, Lord Parkinson, just spoke, this is an exceptionally vague provision: the idea that the regulator should have power in relation to discretionary licence conditions where there is

“conduct which it reasonably suspects to be harmful to the interests of the United Kingdom”.

This would be very difficult to apply and would lead to all sorts of probably legal arguments on what this means. In any event, it is a power that would be given on the basis of reasonable suspicion. That is most unfair to the clubs concerned, because there might be a reasonable suspicion that is not justified. As always, I declare my interest as a practising lawyer, partly in sports law, acting in particular for Manchester City in current disciplinary proceedings.

[Baroness Twycross (Lab)]

I thank the noble Lords, Lord Parkinson, Lord Goddard of Stockport and Lord Moynihan, and the noble Baroness, Lady Grey-Thompson, for tabling amendments, and my noble friend Lord Grantchester for moving, in her unavoidable absence, the amendment tabled by the noble Baroness, Lady Grey-Thompson.

I welcome in particular the opportunity to discuss the women’s game and to set out the Government’s position on it, not least in relation to this Bill. I know that the noble Baroness, Lady Grey-Thompson, was keen to have a debate on the women’s game and frustrated that we did not have one at earlier stages, so I am sorry that she could not join us. However, I hope that I can give all noble Lords who have spoken in support of the women’s game the assurance that the Government really do want to see women’s football in this country thrive.

Recent years have seen incredible growth in the sport, catalysed by the amazing success of our Lionesses. I know that all noble Lords are hugely proud of their achievements. We understand why there is an interest in ensuring that women’s football is accorded some of the same protections that the Bill would deliver for the men’s game. As someone who was not allowed to play football at school, I am delighted that my nieces take it absolutely for granted that they are, so this is an area that I personally want to see grow and thrive.

My noble friend Lord Grantchester spoke passionately in favour of the women’s game. We agree with the independent review of women’s football that he noted, and which was expertly chaired by Karen Carney. As my noble friend stated, that review recommended that the women’s game should be given the time, space and opportunity to grow and govern itself. So, while there are some shared features, the problems facing women’s football and men’s football are not the same. The Government are in regular contact with the Women’s Professional Leagues Ltd. We are confident that it will be able to implement the structures, processes and regulations to drive the sport forward. Where appropriate, this can involve taking learnings from the men’s game and the regulator.

I reassure my noble friend that, as with all regulation, the scope of the regulator will be kept under review. As it is not intended in the first instance for the regulator to cover the women’s game, the “state of the game” report will consider only matters in scope of the regulator. However, if appropriate in the future and following proper consultation, the regulator’s remit could be extended to include women’s competitions via secondary legislation.

To expand slightly on why we are not at this point intending to regulate the women’s game, it is by its own admission at a different stage from the men’s game. It is still in a start-up phase, needing significant investment and growth to achieve its potential. The men’s game, by virtue of being a more mature commercial product, has no issue with growth or investment. Its issue is that it spends unsustainably, accumulates debt and cannot keep the massive revenues that it raises within the game. Therefore, neither the Government nor the women’s football industry believes that statutory regulation is the correct approach to helping women’s football at this stage.

The noble Lord, Lord Moynihan, alluded to issues that might be prevented. I will refer to the specific example of Reading Football Club. I do not want to assume that the noble Lord was referring to it as an example of where the regulator might have helped. Currently, the women’s game is not intended to fall within the regulator’s initial scope, so the regulator could not have directly prevented funding to Reading Football Club Women being cut. However, importantly, it would have been able to address financial problems at the men’s club, which may have averted the issue. So it is an indirect benefit, potentially. It would also have had access to information that it could have shared, only in certain specific circumstances, with the authorities in the women’s game. This might have allowed them to identify and react earlier to an issue and protect the women’s team. So we are confident that the authorities responsible for governing the women’s game will be able to implement the appropriate protections to prevent a future similar scenario to that which happened in Reading.

Amendment 36 would allow the regulator to stop a club accepting funding that it reasonably suspects to be harmful to the interests of the United Kingdom. I know that protecting football from wider harms is important to the noble Lord, Lord Parkinson of Whitley Bay, as it is for us all. I agree with the intent and thank him for his engagement on this. However, it is not for a football regulator to judge what is harmful to the interests of this country; indeed, this is what the UK’s financial sanctions regime is for. If there is an oligarch or bad actor with connections to a hostile state acting against UK interests, they can be sanctioned. That would automatically stop a club receiving funding from the party in question. Sanctions can be imposed for a whole range of reasons, including in the interests of national security.

Beyond this, the Bill already provides protections against wider harms. The owners’ and directors’ test, for example, will look at the fitness of a club’s owners and officers, including sanctions, and whether the individual has been prevented from entering the UK. This seeks to protect English clubs from unsuitable owners or officers. In conjunction with the power to restrict funds suspected to be connected to serious criminal conduct, this will help to ensure that clubs are protected from harm.

I thank the noble Lord, Lord Goddard of Stockport, for his Amendments 38 to 41 and his continued engagement on the Bill. I have written to the noble Lord on some of the points he raised on discretionary licence conditions and the commitments in lieu process, and I am happy to lay a copy of this letter in the House Library for other Members of your Lordships’ House to access as well. As I outlined in that letter, we feel that it is appropriate for competition organisers to have a formal opportunity to intervene on a financial issue if they could achieve the same goal in a more effective and less burdensome way. This commitments in lieu process encodes the light-touch and collaborative approach that we have discussed at great length in your Lordships’ House.

The Bill as drafted allows clubs ample opportunity to make representations about proposed financial discretionary licence conditions. As part of ongoing supervision by the regulator, clubs will be made aware of what potential action the regulator may take to improve the clubs’ standards. However, if a competition organiser proposes a commitment that the regulator believes would solve the issue in a quicker, more effective or more proportionate manner than the regulator’s proposed licence condition, the club should not be able to veto this.

I turn to Amendment 95 in the name of the noble Lord, Lord Parkinson. We understand the intention of this amendment, and we agree that the regulator should avoid any burdens or disruptions that may be associated with mid-season licensing of clubs, including the risk, albeit remote, that licences are refused mid-season. As currently envisaged, once the regulator is set up, it will make rules around how and when clubs need to submit their applications. The noble Lord’s amendment would prevent the entirety of Part 3 being commenced until the period between seasons. For example, if the regulator were ready to start preparing clubs for licensing in September in a given year, it would have to wait until the following May before it could do so. We want clubs to be able to prepare their application and engage with the licensing process early to avoid a rush and high burdens in the relatively short window between seasons. This amendment would prevent that.

By contrast, if commenced properly, there will be a substantial onboarding time for clubs, and the regulator will not have to process 116 applications in a short space of time. The noble Lord’s intention of avoiding mid-season disruption can be achieved through a careful commencement of Part 3. We intend to delay commencing the Clause 15(1) requirement on clubs to have a licence until all clubs have had the necessary opportunity to obtain one.

On Amendment 96 in the name of the noble Lord, Lord Moynihan, I understand that the noble Lord’s view is that the Secretary of State guidance on significant influence and control is integral in providing certainty for the industry, and that it must be produced in a timely manner. That is why, last week on Report, I committed

“that the Secretary of State’s guidance will be produced before clubs are required to identify their owners who meet the definition of having significant influence or control”.—[Official Report, 11/3/25; cols. 626-27.]

I would like to reiterate this commitment and reassure the noble Lord that it would be superfluous in this instance to make this amendment. Additionally, I remind the noble Lord that the House made its view on the definition very clear when it voted against Amendment 7. I hope he will agree that it would be an inefficient use of the House’s time to discuss this issue any further and will take reassurance from the commitment I have already made.

I turn finally to government Amendment 37. A number of noble Lords have raised concerns regarding consultation requirements and discretionary licence conditions. We are making a change to the consultation requirement that the regulator must satisfy before submitting a request to the Secretary of State, to amend the scope of discretionary licence conditions. We were confident that the previous drafting would have captured clubs and competition organisers, but we have listened to concerns across the House about this not being stated explicitly. Therefore, we have brought forward this amendment to put this beyond all doubt and address those concerns. As a result of this amendment, the regulator will now be required in legislation to consult all regulated clubs and each specified competition organiser in this process.

For the reasons I have set out, I hope the noble Lords will not press their amendments.

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[Lord Goddard of Stockport (LD)]

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

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

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


The then Government’s consultation response document noted:

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


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

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

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

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

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


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

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


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

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

[Lord Pannick (CB)]

My Lords, I support the noble Lord, Lord Markham, in relation to Amendment 52 on consultation. As noble Lords will know, Clause 54 requires the regulator to consult persons including all regulated clubs before making, amending or replacing levy rules, and consultation is a vital component of fairness. However, Clause 54(2) says that this obligation

“does not apply in relation to amendments to or replacements of levy rules if the IFR considers the changes to be minor”.

The noble Lord, Lord Markham, is absolutely right: it is not for the regulator to determine whether changes are minor; it is for those who are potentially adversely affected. Consultation on matters that the regulator may consider to be minor is no great impediment. If the changes are in truth minor, as perceived by the regulated clubs, the consultation will not take very long and will not involve any great effort by the regulator. I hope that the Government will accept Amendment 52 in the names of the noble Lords, Lord Parkinson and Lord Markham.

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[Baroness Taylor of Bolton (Lab)]

My Lords, I want to say a few words, because the whole House acknowledges that the noble Lord, Lord Birt, is trying to be constructive here. He, with his colleagues, has produced some incredibly detailed amendments, and that is partly what concerns me. I am not saying that there is no merit in his approach, but I think that some of the conditions are potentially overburdensome.

Will the Minister remind the House of the purpose behind the backstop? As I understand it, the backstop was there to encourage parties to come together, discuss the situation and try to reach agreement. That is so important, because we have had the absence of agreement in recent years because, I think, of the stubbornness of one party.

I therefore worry that the amendments from the noble Lord, Lord Birt, and his colleagues are overprescriptive. He mentioned several of the problems that exist in football today, such as the level and unsustainability of players’ wages and the need for stadium improvements. All are relevant and important to those of us who are concerned about the future of football but, if we are going to be prescriptive about what comes in at that last stage, we may get into difficulties. I hope that the “state of the game” report, which he mentioned and which is extremely important going forward, will deal with some of these issues.

I would like to agree with the noble Lord that all of football is two sides of the same family, but I am not sure that that has been the experience of the last few years in the negotiations between the Premier League and the EFL. It certainly is not a balanced debate or discussion in terms of their powers. I understand the noble Lord’s wish to have levels of arbitration, but we must be careful not to cause delays or take the pressure off parties to come to an agreement between themselves.

[Lord Pannick (CB)]

My Lords, I added my name to my noble friend Lord Birt’s series of amendments and thank him for the time and effort that he has devoted to producing them. I also thank the Minister, the Bill team and the Secretary of State herself for the amount of time that they have devoted to discussions with me and many other noble Lords on this complex topic of the distribution of revenue and the resolution process.

I entirely support what has been said today by my noble friends Lord Birt and Lord Burns and by my noble and learned friend Lord Thomas: a formidable forward line—the Pelé, Messi and Bobby Charlton of this debate. I will add a response to the concerns that some noble Lords and perhaps the Minister have about these amendments, which have been expressed by the noble Baroness, Lady Taylor, and are in the briefing to noble Lords from the EFL. There are two main concerns that need to be addressed.

First, there is a concern that we have agreed that the Bill is to be light-touch regulation when we have a complex series of amendments here—and they are complex. My response is that the distribution of revenue and the resolution process are complex matters. We are addressing the distribution of millions of pounds, which is vital to the financial stability of clubs outside the Premier League, and this money is to be extracted from Premier League clubs. The mechanisms for that process have to be effective and fair. They need to set out how this is to occur in detail and by reference to what substantive principles. As has been said, with all due respect to those who drafted this Bill, the current provisions lack proper detail on evidential basis and procedures that are adequate to ensure a fair result, and they do not contain the substantive criteria that are required. Yes, we could regulate this important matter in a much simpler manner, but the detail is absolutely vital in this context to ensure efficacy and fairness.

The second criticism that has been made is that expressed by the EFL in its briefing document. The EFL is worried that the Birt amendments will result in an invasion of lawyers—as they put it, “in particular, expensive lawyers”, God forbid—who will be briefed by the Premier League. The EFL says that it will not be able to compete. As the EFL has expressed this concern, it needs to be addressed in this debate.