Football Governance Bill [HL]

Lord Parkinson of Whitley Bay Excerpts

Report stage
Monday 17th March 2025 Lords Chamber

[Lord Parkinson of Whitley Bay (Con)]

My Lords, although I am mindful of the rules of debate on Report, I am sure that noble Lords will understand if I preface my remarks with a short, two-hour encomium to Newcastle United, congratulating them on their victory in the Carabao Cup, their first domestic trophy in 70 years—that is longer than the living memory of any of my relatives. That is an area on which I know the Minister and I are in full agreement. I am mindful that other noble Lords were present at Wembley yesterday and hoping for a different result, so I shall not go on about it, other than to say that I hope that anyone who had the pleasure of being on the London Underground yesterday was as delighted as I was to see all the lads and lasses there with smiling faces and will join me in sending hearty congratulations to the Newcastle fans, who have waited so very long for this moment.

The Government’s new corporate governance provisions have, I think it is safe to say, received considerable attention during our debates on this Bill. My noble friend Lord Jackson of Peterborough has just set out the concerns of many on these Benches very powerfully, and the noble Baroness, Lady Fox of Buckley, has echoed them and added her own concerns.

I have been very clear throughout the passage of the Bill that we on the Opposition Benches are not persuaded by the changes the Government have made to the Bill, compared to the version we put forward in the last Parliament. As I said in Committee, we do not believe that the additions the Government have made in this area are necessary either. The Bill already has strong corporate governance requirements, mandating a corporate governance statement as part of the licensing process, and that is in addition to the rules already enforced by the Football Association and competition organisers.

Regardless of whether one believes that prescribed EDI policies would improve the operation of clubs and football in this country—and as we can see from the short debate we have had again today, that is by no means a settled view—clubs already have to comply with similar rules and, in many cases, voluntarily go further. The noble Lord, Lord Bassam, alluded to some of the work they do, and my noble friend Lady Brady mentioned it in more detail in our debate in Committee. Mandating further policies and action to promote equality, diversity and inclusion is, therefore, a clear example—we think—of unduly onerous regulation which has little to do with financial stability. The Minister has been clear throughout our scrutiny that this is intended to be a sustainability regulator.

Our concern is that placing new EDI duties in the Bill and, therefore, tasking the regulator with concocting rules to that end would increase the risk of mission creep, which we have all been very concerned about. We are clear that this will end up meaning more, not less, regulation. At a time when the Prime Minister is promising to clear out the regulatory weeds, and the Chancellor is writing letters to regulators asking them to promote economic growth, we should be aiming for fewer regulatory burdens, not more.

I shall say a few words about Amendment 34, which my noble friend Lord Markham outlined the case for, which relates to independent non-executive directors. We had a strong cross-party exchange on this topic in Committee, when amendments to the same effect were tabled by the noble Lords, Lord Knight of Weymouth and Lord Blunkett. They were evidently satisfied with the Minister’s response, so they have not brought them back, but I am glad that my noble friend Lord Markham has tabled his. I am very grateful to the Minister for taking the time to discuss this issue with both of us, as I believe she also did with a number of other noble Lords who raised it in Committee. She kindly copied us in to the letter she sent to the noble Lord, Lord Knight of Weymouth, about it, but I look forward to any further reassurances she is able to give on Amendment 34.

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

I join the noble Lord, Lord Parkinson of Whitley Bay, in his congratulations to Newcastle United, and I offer commiserations to Liverpool and its supporters. Good football is always a joy to watch, but only one side can win; I feel for those who put in all their effort and did not go away smiley-faced.

I want to address one of the points raised by the noble Lord, Lord Jackson of Peterborough, in relation to reports in the media this morning. The noble Lord should be mindful of the old adage that you should not believe everything you read in the newspapers. Your Lordships’ House has heard at length during the Bill’s passage that too many football fans have been left with nowhere to turn when faced with reckless owners, financial mismanagement and threats to their club’s very existence. That is why the Government remain absolutely committed to introducing an independent football regulator to put fans back at the heart of the game.

We had extensive discussion on the topic of equality, diversity and inclusion in Committee, when a number of noble Lords opposite aired their considerable concern over what is a very standard addition to almost all corporate governance codes. I am sure that the noble Lord, Lord Jackson of Peterborough, and the noble Baroness, Lady Fox of Buckley, will not be surprised to know that I do not agree with them. The Government have not changed our view that equality, diversity and inclusion is a key part of good corporate governance. Research has shown that diversity on boards and in organisations promotes better governance, decision-making and transparency, all of which in turn contribute to improved financial sustainability.

We heard in Committee about the vital work that the industry is already undertaking in this area. The regulator will look to work co-operatively with other stakeholders, to draw on the expertise of the sector and to add to industry initiatives through the code. As with fan engagement, this will be a statutory baseline.

The noble Lord, Lord Jackson, referred to the Green and Hand report, which was forwarded to me —I am very grateful to the noble Lord, Lord Moynihan of Chelsea, for that. I appreciate that the noble Lord, Lord Jackson of Peterborough, noted the findings of Green and Hand regarding McKinsey studies into the relationship between EDI and corporate performance. I recognise that the assessment refutes the link between ethnic diversity and financial performance. However, it remains my view that the relationship between diversity and improved corporate performance is well established and accepted beyond the studies of McKinsey alone. For example, both the Financial Reporting Council and the Association of Chartered Certified Accountants acknowledge this relationship. Clubs that already champion equality, diversity and inclusion will not have an additional burden placed on them, other than having to periodically report on these things.

My noble friend Lord Bassam of Brighton outlined a number of issues that remain within the game. Under the corporate governance code, clubs will simply be required to explain how they are applying the code and what action they are taking on equality, diversity and inclusion—nothing more. As suggested by the noble Lord, Lord Addington, that does not feel onerous, but it is a helpful and transparent measure, in the Government’s view, and I refer noble Lords to the points made by the noble Lord, Lord Pannick. As I have said previously, the regulator is not going to prescriptively micromanage each club’s board, or set targets and quotas on EDI. That is not the role of the regulator, and would be a significant burden on both the regulator and clubs.

Turning to Amendment 34, in the name of the noble Lord, Lord Markham, I thank the noble Lord for this amendment and for his engagement on this, along with a number of other noble Lords. I particularly thank my noble friend Lord Knight, who has been a strong advocate on this issue and has met me to discuss it. I wrote to him about it, as the noble Lord, Lord Parkinson of Whitley Bay, mentioned, and I would be happy to lay a copy of this letter in the Library of the House.

As I outlined in the letter, we are fully in agreement with the principle of independent non-exec directors. We recognise that they can greatly improve decision-making, provide independent scrutiny and drive up corporate governance standards. This supports the regulator’s objective of better financial soundness, stability and decision-making for football clubs. However, while we agree with the principle, we do not feel it is right to include this detail in the Bill. We do not believe that the Government should be writing the corporate governance code, or making detailed recommendations on how a club’s board should operate. Indeed, no corporate governance code is written in primary legislation; this helps ensure flexibility and future-proofing.

We are setting up an independent, specialist football regulator, which will have in-depth knowledge of the unique challenges of football club governance. It will be for the regulator to then develop, consult on and ultimately publish this code. This approach enables consultation with industry, including clubs, which is essential to ensure that it is appropriate for the football industry and that it can be adapted in the future to reflect best practice. However, I again assure noble Lords that we fully expect the regulator’s code to include detail and guidance on independent directors. This is the norm for all corporate governance codes, and we do not expect the regulator’s code to be any different.

I think there is broad agreement on the importance of independent non-exec directors, and I thank noble Lords across the House for the interest shown in this issue. I hope that the reassurance I have provided will satisfy any concerns that INEDs will not be included in the corporate governance code. I therefore hope that noble Lords will not press their amendments for the reasons I have given.

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[Lord Goddard of Stockport (LD)]

We support the amendment from the noble Baroness, Lady Grey-Thompson. I have had a long conversation with her around the state of the women’s game and the lighter touch in the Bill on aspects of women’s football. In essence, it runs parallel and there needs to be some cognisance of that. There needs to be an understanding of that in the Bill. It may come through the reviews that are going to come forward, but I would just like it acknowledged somewhere that women’s football is emerging, developing and encouraging young girls and young women to play football and sport, which helps the NHS and everything else. There should really be some cognisance from the Government that there should be a line in this Bill that acknowledges and supports the noble Baroness’s objectives.

[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.

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Moved by

[Lord Parkinson of Whitley Bay]

52: Clause 54, page 43, line 38, leave out subsection (2)
Member's explanatory statement
This amendment requires the regulator to consult on all changes to levy rules.

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Moved by

[Lord Parkinson of Whitley Bay]

80: After Clause 85, insert the following new Clause—
“Armorial bearingsNothing in this Act is to be read with prejudice to the powers of the Kings of Arms in regard to armorial bearings.”

[Lord Parkinson of Whitley Bay (Con)]

My Lords, Amendment 80, which relates to my favourite topic of heraldry, has already been debated. At the end of that debate on the first day on Report, the Minister very kindly agreed to a further meeting with me and with the College of Arms, which took place this morning. I am going to move my amendment in order to allow the Minister to say what she took from that meeting. On the basis of what I expect her to say, I will not be pressing this to a Division, but I look forward to hearing her.

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Parkinson of Whitley Bay, for sharing his expertise and enthusiasm on this topic in your Lordships’ House, and for the opportunity to respond on this point. I thank him and the College of Arms for their time earlier today. Before he confirms whether he is going to divide the House, I reiterate that it is the Government’s intention that nothing in the Bill is to be read as superseding or impairing any prerogative powers of the Crown in relation to coats of arms, whether exercised directly by the King or on his behalf by the Kings of Arms. I guarantee that something to this effect will be added to the Explanatory Notes to this clause.

[Lord Parkinson of Whitley Bay]

My Lords, I am very grateful to the noble Baroness, particularly for all the time that she has spent on this niche but important issue. I am also grateful to the Bill team for their meetings, including the one we had today with Norroy and Ulster King of Arms. With gratitude, I beg leave to withdraw my amendment.

Amendment 80 withdrawn.

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When we come to the operation of the IFR, I have no doubt—as I indicated in my comments in my previous contribution—that the views of clubs will vary enormously depending on their level. At that point, they really will start fighting and employing lawyers.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, the noble Baroness, Lady Fox, is right that the congratulations that have been coming my way for Newcastle are entirely misplaced. However, I am sure that the cross-party support the noble Baroness and I gave them on the first day of Report buoyed the team and their success, but it had nothing to do with me. But I can reassure noble Lords that my uncle Barry was probably the person cheering the most loudly at Wembley last night.

I also agree with all those who have welcomed the Government tabling Amendment 90. In Committee, there was cross-party support for looking at how this will all work in practice, from those who are keen to see the regulator up and running swiftly to those who are more sceptical. We had support from the chairman of the Hansard Society and my noble friend Lord Norton of Louth, who watches legislation very carefully. I join the welcome expressed to the Government for bringing forward Amendment 90.

My noble friend Lord Goodman of Wycombe has argued throughout the passage of the Bill, from Second Reading onwards, that greater oversight and post-legislative scrutiny would be needed. I therefore hope that the Minister will look at the further helpful amendments that the noble Lord has tabled today, arguing that it would be better for an independent body to conduct the review of this independent regulator. Again, my noble friend has been very constructive in the points that he has raised.

Amendment 81, tabled by my noble friend Lord Maude of Horsham, which leads this group, covers the same area that my noble friend Lord Hayward has just touched on in his contribution: the cost of compliance with the new regulatory regime. Clearly, since the Bill that was brought forward in the last Parliament, we have seen new things such as increased employer national insurance contributions, the increase in the minimum wage and the further costs to business that will be coming through the Employment Rights Bill. The financial position of smaller clubs takes place in an even more difficult economic environment. We on this side of the House remain concerned that imposing a levy and further regulatory costs on top of these will likely make clubs less financially sustainable, not more.

My noble friend Lord Hayward points once again to the impact assessment, which does not account for the increased costs of hiring. It says that clubs will have to hire more staff to comply with the extra regulation but does not consider that those extra employees will cost more now than they would have done even when we first looked at the Bill. This is particularly severe when it comes to the smallest clubs in the National League. The general manager of the National League, Mark Ives, and the chief executive of Dagenham and Redbridge, Stephen Thompson, have both warned of the potential for the Bill to create onerous consequences for National League clubs which are not only financial but bureaucratic. Mr Ives said:

“We are concerned about the costs … The expectation of how much it is going to cost clubs at a National League level is a huge concern—it may be a small amount of money, but it is a lot to the clubs”.


National League clubs operate with a very small number of staff, with many in Mr Thompson’s words working on only

“two or three people and some volunteers”.

There is a real risk that some of these smallest clubs will struggle with the further burdens that are placed upon them, so I hope the Minister will look at these amendments.

My Amendment 94, which is in this final group, seeks to ensure that the review takes into account the effect of the regulator’s activity on ticket prices. We had a good debate on this during our first day on Report and indeed a Division which was very conclusive, so I will not say anything further about that issue other than to thank the Minister for all the engagement that she has given during and since Committee, ahead of Report and during our two days on Report. We are all very grateful.

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Goodman, for his amendments and for speaking to the amendment in the name of the noble Lord, Lord Maude of Horsham, and other noble Lords who have spoken during this short debate.

In Committee, Peers across the House raised the topic of evaluating the impacts, efficacy and success of the regulator. I thank the noble Lord, Lord Norton, in particular, for his expertise and time in discussing the topic despite his complete lack of interest in football. I have sometimes found that those noble Lords who have an interest in the details relating to legislation or a regulator come at this topic with a slightly different perspective, which is really helpful, and I welcome his contribution tonight. I am keen to continue discussions on this and other topics with noble Lords across your Lordships’ House—although I must admit that I am quite pleased to be reaching the end of Report.

We agree that it is good practice for the impact of regulation to be monitored and evaluated post-implementation. I am grateful to noble Lords across the House for welcoming government Amendment 90, which will require the Secretary of State to carry out a review of the operation of the Act and its impact on the industry. This must be completed no later than five years after the full commencement of the licensing regime. Among other things, the review will look into whether the regulator has been effectively achieving its objectives or whether they might be better achieved in a different way. This includes explicitly considering whether delegation might be appropriate, for example, to an independent industry body.

As part of looking into the impacts of the regulator on the market, the review will also consider interactions with industry rules and any resulting burdens. It will also be a set opportunity for the Secretary of State to formally consider and set out whether the competitions in scope of the regulation remain appropriate. The report will be laid before Parliament and will lay long-term scrutiny of this regime by this House and the other place.

The noble Lord, Lord Hayward, has been a champion of clubs in relation to costs throughout. In relation to compliance costs and the statutory review proposed, a separate review of compliance costs alone might be unnecessary, duplicating the work of the post-implementation review and creating additional costs. The statutory review will offer an opportunity for a more complete and detailed view of the regulator’s performance, per se, and will therefore be more useful in understanding the costs and benefits of regulation to clubs. It will also capture compliance costs that are more reflective of ongoing costs instead of the initial costs of the first year of familiarisation, although we expect that, in its annual report, the independent football regulator will have due regard to these issues.

I thank the noble Lord, Lord Goodman of Wycombe, for tabling his amendments. I completely understand their intent—namely to introduce more independent scrutiny of the legislation and its effects—but, unfortunately, we do not think it is appropriate for an external third party to carry out this review of the Act. As is common practice, it should be carried out by the Government, particularly because the review may inform future government policy and because its conclusions may include recommendations to add, amend or repeal primary legislation. The Government introduced this legislation, and, in our view, it should be the Government which review whether it has achieved what it intended. However, we completely agree that there should be additional scrutiny, and the intention is that this review will facilitate that scrutiny, for example, by a relevant committee of Parliament. However, it is not for this Act or the Government to direct Parliament to undertake that scrutiny.

On Amendment 92, we have not taken the approach anywhere in the Bill of prescribing specifically where publication must be done. Clearly, the norm these days is for publication online. However, there is no need to mandate where online, as to do so would risk the legislation becoming outdated.

I appreciate the intention of Amendment 81, tabled by the noble Lord, Lord Maude of Horsham: to ensure the regulator is offering value for money and not unduly burdening clubs financially. Ensuring efficiency and avoiding unnecessary costs have been at the heart of the Bill’s development, but the proposed amendment would duplicate the Government’s statutory review amendment and would therefore impose unnecessary additional costs and burdens on the regulator.

On Amendment 94, in the name of the noble Lord, Lord Parkinson, we are acutely aware that ticket prices are a key issue for fans. That is why the Bill explicitly requires clubs to consult their fans on this point. It may well be that the regulator also chooses to look at ticket pricing as part of the “state of the game” report. However, as it is a commercial decision, the regulator will not intervene beyond this. I again reassure the House: we do not believe that an increase in ticket prices would be a proportionate reaction to the cost of the regulator. The levy will be distributed proportionately, and no club will be asked to pay more than is fair and affordable.

An industry that earns over £6 billion a year in revenue and spends hundreds of millions of pounds on player transfers every year cannot legitimately say that it has no choice but to pass the cost of regulation on to fans, particularly since the cost faced by any one club will be relatively low and proportionate to their financial resources. However, if the regulator were to lead to higher ticket prices, this in our view would be captured within the review, which must look at the impacts of the regulator on football in England and Wales.

I turn finally to Amendment 94D in the name of the noble Lord, Lord Moynihan. As I have set out, one aspect of the statutory review will be to consider whether delegation might be beneficial. However, we do not believe that the power to delegate should be provided for in the legislation at this stage. We should not pre-empt the findings of the review, particularly as there is no way of predicting what delegation might need to look like or to whom that delegation might be. We have been clear, as the previous Government were clear, that independent regulation is needed in English football because the industry has shown itself to be incapable. Any decision to delegate back to the industry is not a decision that should be taken lightly, nor should powers established by an Act of Parliament be transferred to private third parties without proper parliamentary process. I am surprised that the noble Lord has tabled this amendment, given the concerns that he has raised repeatedly on delegated powers.

For these reasons, I hope that noble Lords will not press their amendments, and will accept government Amendment 90 when we come to it.