Football Governance Bill

Rachel Hopkins Excerpts

2nd reading
Tuesday 23rd April 2024 Commons Chamber

[Rachel Hopkins (Luton South) (Lab)]

I am very pleased to finally be able to speak in today’s historic debate. A new independent football regulator is an important development, coming as a result of dysfunction in the game. I thank those who have worked hard to improve how football functions, including the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) for producing the fan-led review, the Football Supporters’ Association and Fair Game. I thank Luton Town’s chief executive, Gary Sweet, for sharing his views on a number of occasions and, importantly, I thank members of Luton Town Supporters’ Trust and Loyal Luton, who have always been willing to meet me and tell me their views, because ultimately football is about the fans.

However, the status quo is failing fans across the country. While the premier league is arguably the most globally popular and commercially successful sporting competition, more than 60 clubs throughout the English league system have gone bust since it was established in 1992. The financial power at the top of the English game has distorted competition and powered unsustainable business practices as clubs scramble to be one of the elite 20 clubs at all costs. We all agree that the future sustainability of the pyramid is heavily reliant on securing a fair financial distribution deal between the Premier League and the pyramid system, not to mention preventing any potential re-emergence of the European super league plan.

We also have a multitude of examples that demonstrate the owners and directors test has not stopped dubious owners buying clubs and running them into the ground. We Lutonians sadly know the ugly side of the beautiful game better than most. Back in 2003, in response to Luton fans wanting to save their club, the previous Luton Town chairman, John Gurney, disgracefully said:

“If they expect me to walk away from Luton with nothing, I’ll make very sure there’s nothing to walk away from”.

This was from a person who had already recklessly suggested renaming the club, pushing for a merger with Milton Keynes-bound Wimbledon FC and, wait for it, attaching a Formula 1 circuit to a new 70,000-seat stadium on stilts. My personal favourite, which did see the light of day, was suggesting selecting the club’s next manager through “manager idol”, with texts costing 50p. That was all in the face of clear and vocal opposition from the fans. Thankfully, due to the work of a group of fans creating Trust in Luton, including one of its founding members, Gary Sweet, who is now Luton Town chief executive, control of the club was wrestled away from that disastrous ownership.

However, that was not the last time that fans had to step up to protect the club, as the fan-led 2020 consortium bought them out from yet further mismanagement after they went into administrative receivership in 2007. Unfortunately, the previous mismanagement led to a huge 30-point deduction and ultimately relegation to the national league. While it has not always been plain sailing, successes on and off the pitch since have enabled Luton Town now to compete at the pinnacle of English football—from non-league to the premier league. How did Luton Town do it? They ensured that they were a unified club from top to bottom, with a clear vision rooted in our Luton community.

Mr Deputy Speaker, if I may, I will take the opportunity to celebrate a significant part of our Luton football heritage through the period by wishing Alison Taylor, the landlady of the Bricklayers Arms, a well-earned and relaxing retirement at the end of the season after 38 years of service.

I fully support the creation of the new independent football regulator to protect and promote the sustainability of English football, and particularly to safeguard the traditional features that matter most to fans and communities. I will put on the record a few initial concerns with the functioning of the regulator, as set out in the Bill. First, the regulator will have the backstop power to intervene in the distribution of broadcasting revenue between the Premier League and the wider pyramid if needed. It is important that we explore that to ensure that the regulator can facilitate a just and fair financial distribution deal, including parachute payments, and including the ability to initiate any regulation.

The regulatory principles in clause 8(b) do not make reference to fans or fan groups—or indeed players or employees—as groups that the regulator should proactively and constructively engage with. When I worked for a regulator in the health sector, we directly engaged with patients, so why would the regulator not directly engage with fans, who are the beneficiaries of football? I also have reservations about whether the Bill is sufficiently free from any vested interests. Further clarity may be needed to ensure that a person with a conflict of interest cannot be on the expert panel board.

The Bill is supported by so many of us on both sides of the House, and this is a historic moment. The game is not just a business, but one with deep roots in the nation’s identity and communities, which is central to our global appeal. I look forward to supporting the Opposition Front-Bench team in taking the Bill forward.

[Mr Deputy Speaker (Sir Roger Gale)]

We come to the Front-Bench speakers.

Football Governance Bill (First sitting)

Rachel Hopkins Excerpts

Committee stage
Tuesday 14th May 2024 Public Bill Committees

[The Chair]

The last question is to Rachel, because I think you are repeating yourself.

[Rachel Hopkins (Luton South) (Lab)]

Q I will summarise my question, so each of you can reply about the state of the game report. How important is it? Are there any specific topics you think it should cover? Should it be initially within a certain timeframe, and subsequently, at what sort of intervals?

Richard Masters: It is critically important and we look forward to playing our part in it. The key issue we have is in relation to its regularity. It should come as quickly as it can, and be done properly and efficiently. However, after that, we believe it should not be at three-year intervals, which would lead to almost perpetual discussion about the state of football. There should be a longer period of time. We are suggesting that five years is the appropriate time for the regularity of those reports.

Football has had a lot of uncertainty—through covid, and through the regulatory interventions that we are now talking about. I believe that football does better when it has certainty. Our commercial deals are becoming longer, so we are doing four-year commercial agreements. I think the EFL’s are five years. Most of our international revenue is tied up over six-year agreements. If you look at other industries, Ofcom’s review is every five years. I think the telecoms industry review is every 10 years. Three years is incredibly short. It would be like painting the Forth bridge—once you have finished one report, you will have to start another. It is great for the economists and the consultants; it is bad for the competition organisers and the clubs.

[The Chair]

Q I will give the last minute to Rick and then Mark.

Rick Parry: I echo what Richard said in terms of the report being incredibly important. It is important that it is comprehensive and able to address every issue facing the game, including parachute payments. The big point we would like to make is that we think the three-year interval for the first report to be completed is much too long. We think that should be a maximum of a year. We see no reason why it cannot be completed within a year. We actually think three years is fine, inasmuch as eight of the last Premier League TV deals have been on a three-year cycle; the champions league TV deal is on a three-year cycle; parachute payments operate on a three-year cycle. Football operates on a three-year cycle. However, the big report is the first one, and we think that the subsequent ones would be fine-tuning; they are not going to be a complete reinvention.

Mark Ives: I will be quick. I echo the importance of the report and it will address things that the regulator does not cover. It will address things that are important to our game and that the fan-led review spoke about, things that are outside the scope of the regulator—and I understand why they are outside its scope—such as three up, three down, protection of players, and all of that sort of stuff. It is really important that the emphasis on those things is not lost, and we have the ability to deal with that. The report is there to highlight the wider issues within the game.

Football Governance Bill (Second sitting)

Rachel Hopkins Excerpts

Committee stage
Tuesday 14th May 2024 Public Bill Committees

[Robin Millar]

Q I have to come back to this question about being custodians of heritage, because there is something really important here. Mr Parish said that money is pouring in from Europe. On the question of replays, the issue is that clubs are not going to play fewer games; they are going to play more games that are more valuable. It seems that in the decision that you have reached, you have looked at it purely transactionally: “We have a competition; we need to see results.” It is not even just about hope. You have cut out the match-day experience, the travelling to a new ground, and the stories that fathers tell sons and daughters over the years. Can you understand why fans, when they look at this decision, think that it should fall under the scope of a regulator?

David Newton: I can completely understand fans’ passion for the FA cup. People who work in football—all of us in football—have that same passion for the FA cup and our other competitions. We have all done those things that you talk about. Competition formats have changed over the last 30 years in a variety of the different competitions in English football that I have referred to, and that has been the way. I guess, as the game evolves and different demands are placed on it, that will continue to happen. As I have explained, the decision taken was based not just on one set of circumstances. There is a huge number of factors relating to the fixture calendar, which is an extremely complex piece of architecture. As I say, the decision was a necessary consequence of that, but, absolutely, we understand the passion and the interest that is involved in the FA cup.

[Rachel Hopkins (Luton South) (Lab)]

Q On heritage, the Bill gives fans say over club colours and club crest, but the ultimate say on club names stays with the FA. That is based on existing FA rules, if I am correct?

David Newton: Correct.

[Rachel Hopkins]

Q Can you give us a bit more of an explanation as to why fans are not given any say over names in these rules?

David Newton: In club playing names?

[Rachel Hopkins]

Yes.

David Newton: We introduced the rule about 10 to 15 years ago, and the rule actually gives the FA Council the final approval of a name change to a club in the top tiers of English football. As part of that, we conduct an extensive consultation. Thinking about one in particular, there was a significant amount of consultation with local stakeholders, the local MP, the local fans’ groups concerned, and so on. The decision was voted on by the FA Council, which also has supporter representation on it, so supporters are very much part of the stakeholder community that will consider those changes in names.

[Rachel Hopkins]

Q When you are collating those opinions to make important decisions such as that, how do you ensure that it is as accessible to fans as possible, and that there is a genuine emphasis on their involvement?

David Newton: As I say, the most recent one or two that I can think of were some time ago and were probably quite well publicised. The consideration of those decisions would have been accompanied by all the relevant submissions made by the various stakeholders and considered in the round, and the weight given to those views.

[Dame Tracey Crouch]

Q I have two quick questions. Are you content that the Bill preserves the FA’s position as the governing body for football in England, and are you content with your role as an official observer on the board? Secondly, in previous correspondence, the FA has been keen to ensure that there were no unintended consequences for women’s football. Are you satisfied that that is the case?

David Newton: On the first point, as I outlined at the start of this session, the FA is responsible for the whole of English football, ranging from grassroots right the way up to the international team. The Bill is concentrated, as we know, on a small—but none the less very important—subset of that. Our role as an observer on the board is extremely helpful to that. I am confident that with the work we do—whether that is in grassroots, on and off-field regulation, disciplinary matters, the national teams and that sort of thing—our position as the governing body of English football remains.

Regarding the women’s game, you are absolutely right. We raised the potential concern of the unintended consequences of investment in the women’s game being affected by their co-dependency in some situations on the men’s game, and with funding being removed or reduced as a result of decisions by the regulator. It is important that the regulator, in exercising its powers, does so in a proportionate and reasonable fashion and bears in mind that co-dependency, where it exists.

--- Later in debate ---

[Rachel Hopkins]

Q Can you give us an insight into why clubs benefit from having greater measures on equality, diversity and inclusion?

Niall Couper: When we look at that area, when Tracey Crouch wrote that original fan-led review it was one of the key recommendations. When you go to our clubs and look at them, the clubs that thrive and are actually forward thinking are the ones where you see that diversity put into the boardrooms and staffing structures, and where they actually try to address it.

It is a travesty of justice when you look at a football ground at a men’s match and it is 80% male. When you go into the club’s shop, nearly all the merchandise is for men. When you look at the toilet facilities, they are pretty poor for women. All those things are naive both financially and in terms of actual gender representation, and those are the things that need to change. The clubs that we have in Fair Game, which are across the pyramid, are the ones that are more forward thinking and realise that actually we cannot live in the dark ages.

A proper code of governance needs to have EDI embedded in it. It needs to be part of the way forward and part of how we look at football holistically, and that has not been the case. Having been a board member of a football club and sat there, there have been far too many instances where unfortunately it has been an awful lot of people looking an awful lot like me being the entire representation. That is not really appealing to wider society. If we want football to grow and thrive, ignoring vast sections of society is completely remiss.

[Rachel Hopkins]

Q How do you think EDI can be best incorporated into the regulator’s regime without going out of the scope of the Bill?

Niall Couper: When you look at it, there are a couple of things that clearly can be part of the Bill, such as the governance code. When you look at the governance code, that needs to include EDI representation, as you would see in nearly all other sports governance codes that exist. That is an obvious place. The other thing is the state of the game report, and I think we need to look at having proper benchmarking and seeing where we can improve. Fair Game has looked at a lot of this—we have done a lot of stuff on the gender divide and we are doing a lot of research on that—but we need to look at this issue as constantly going forward and improving. We cannot perform just tick-box exercises; it needs to be about developing real outcomes so that women and people from ethnic groups can feel safe within a football ground, and that is not the case.

On a side point, we have been doing some work on the women’s game and there is a significant difference in how that operates compared with the men’s game. The issue we have seen is that women are not feeling safe, and that is an area that we really need to address. Until we get to that position, we will have loads of steps and things we need to improve. Every single element in the Bill needs to address that and ensure that that goes forward and improves what we have. Going back to the Bill, I would say that 90% of it is pretty good, but there are bits that can be improved, and that is definitely one area that can be.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

Q I have been looking at the regulations that UEFA and FIFA have on their involvement generally in the governance of football, and their requirements about what Governments can and cannot do. We have tried to be very careful with setting up the regulator. How do you feel that interacts with some of the changes that you would like to see? Is there a big barrier, or is there anything that you think could be changed on that level that might be useful? How do you feel that affects the scope of what we can achieve? Has that been a big problem for you, would you say?

Simon Orriss: I don’t think it has. I have discussed it with a couple of colleagues—barristers and other people that I know in the profession—and the general consensus is that it is unlikely that some of the FIFA statute articles that prevent Government interference in the governance of the game would be enacted. In particular, we have looked at institutions in France and Spain, which don’t have a completely identical remit to what the IFR is proposed to do, but they have some role in regulating the sport in those countries, and FIFA has largely left them to that. Although it has been noted, as you have just done in your question, it has not been something that has got people terribly agitated.

Football Governance Bill (Third sitting)

Rachel Hopkins Excerpts

Committee stage
Thursday 16th May 2024 Public Bill Committees

[Robin Millar]

Would the introduction of a regulator would actually help owners to manage players’ wage expectations?

Ben Wright: I do not necessarily know that I would accept the premise that a regulator would help owners manage player’s wage expectations. What a regulator can do is make sure that the decisions clubs are making as private businesses about what to pay their employees are sustainable decisions. Ultimately, as we said at the start, this is something that football should have been able to do, but a regulator’s job as far as we understand it, is not to come in and, we would argue, artificially suppress wages. A regulator’s job is to make sure that when clubs write their budgets, and their payrolls, that they can fulfil them. Clubs as private businesses have got to be allowed to do that.

[Rachel Hopkins (Luton South) (Lab)]

Q If I may just touch on women’s football. What is your view about it falling out of the scope of the Bill as it is?



Ben Wright: We have been heavily involved in the Karen Carney review: obviously it is a different strand of work at the moment. We have taken the view that it is probably correct at the moment that it does not fall within the Bill. They are businesses, and leagues, that are at very different stages of development with very different issues. The stage we are at with women’s football and the professionalisation of women’s football— obviously, we speak representing every player in the WSL—is a very different stage of the professionalisation journey. I think it is right that the new structures being put in place around NewCo and the professionalisation of the Championship is allowed to be developed and owned in its own way before direct regulatory involvement. That is not to say that in the future there may not be a requirement or a need for a regulator to get involved. Given the scale and scope of the leagues, and their differing stages of development, we are happy, or comfortable, at the moment, that it does not fall under the auspices of the regulator. But that should not something that should be a sealed deal, and maybe that is something ready to be developed.

[Rachel Hopkins]

Q Just to follow up on that, is the women’s game sustainable and how would we ensure that the same mistakes are not made?

Ben Wright: We always bang the drum bout not making the same mistakes as the men’s game, particularly in areas such as fixture congestion in the calendar. What drives fixture overload and player workload overload? It is money. There is suddenly a realisation that people can invest and make money from holding competitions, and then, as there is in the men’s game, there is a race for space. So they try to fill the calendar. It has not worked in the men’s game and it will not work in the women’s game. That is something we watch very carefully. For it to be sustainable there has to be a proper balance with international football, which until this point has been the most high-profile format for the women’s game, particularly for an English audience, but it also has to allow the space for the domestic leagues to develop. That is something we are seeing play out in the men’s game, where there is a conflict between international scheduling and international competitions, and domestic competitions. You have to give our domestic game the room to grow and the space to do that without it being in competition with national and international formats.

[Anna Firth (Southend West) (Con)]

Q On Tuesday, we heard a lot of evidence about unintended consequences, but from the club and National League perspectives. In particular, talk was about possible additional bureaucratic burdens. Can you see any unintended consequences, but from the players’ perspective?

Ben Wright: I do not necessarily know if “unintended consequences” is how we would frame it; it is more about the need for awareness by the regulator of those consequences. A lot of them come down to practical impacts on players, and their contracts, rights and conditions. I believe that this is referenced in one of the amendments that you will consider, but where at the moment there is an outlining of the IFR’s ability to make decisions that impact clubs, whether that is sanctioning measures or things like that, there is not necessarily a huge amount of detail about what that might look like for the players, who almost inherit the decisions that are put on to clubs. That is not something that needs to be laid out in detail within the Bill, but we would argue that that is why it is so important that players and the potential consequences—unintended consequences, if you like—are reflected in the work of the regulator and in why it has that engagement with players and their representatives.

--- Later in debate ---

[Matt Rodda]

Q Thank you for your evidence this morning. Could you give us some examples of good practice by particular clubs?

Sanjay Bhandari: We see clubs like Brentford, which I worked with when it was recruiting independent non-executive directors. I helped to support that process. Having non-executive directors on the board is something that other people may talk about.

The Premier League is doing some good work trying to develop black coaches. An organisation called BAMREF has been working very effectively with the FA and Professional Game Match Officials Limited on developing the pipeline and pathway for Black and Asian referees and female referees. In many ways, that is one of the best examples of interventions that are connected across football, with a pathway to try to change the way the workforce looks. It is a relatively rare example. Football is a team sport, but not off the pitch. We are really not very good at teaming across, but that was a rare example of good teaming.

[Rachel Hopkins]

Q No active male professional footballer has felt able to publicly declare that they are gay since Justin Fashanu some 30-odd years ago. Why do you think that is?

Sanjay Bhandari: I think it is because the culture of football is such that people do not feel comfortable coming out. Every time there is a suggestion that someone might be coming out, there is a black silhouette on the front page of a tabloid newspaper, which then further discourages people from coming out. If we get the culture right, people will feel more comfortable being themselves.

[Rachel Hopkins]

Q You have talked about culture, and there is a role for transparency in that. Building on some of the things you have said, do you believe it is important for clubs to be transparent about diversity in their own organisations?

Sanjay Bhandari: After the Government’s response in September 2023 to Dame Tracey Crouch’s excellent review, we said that football needed to do three things. One was that EDI requirements should be incorporated into the club licensing system via the code for governance. It kind of appears that they now will be, although the wording is slightly ambiguous and probably could benefit from being clarified in schedule 5.

Secondly, we said that the processes for recruiting the leadership of the IFR should adopt best practice on inclusion. Again, there is some slightly ambiguous wording in relation to the recruitment of the CEO, which could benefit from being clarified.

The third one was that the requirements in the code for football governance should include, along with other requirements, significant mandatory data transparency reporting on representation, recruitment, progression and cases of discrimination. Transparency is the greatest disinfectant. Clubs are often collecting all this data for the Premier League equality standard or the EFL code, but they are not publishing it, so no one can hold them to account on it. We are asking for consistency and transparency.

I will give an example of where it goes very wrong. There are currently between 200 and 300 mechanisms for reporting discrimination incidents in English football. Those are 200 to 300 orphaned databases of information that do not speak to each other. We probably run the biggest reporting app. I have been banging my head against a brick wall for five years asking for insight from that data to be able to say, “What are the root causes? What are the outcomes of those incidents?” Then we can we create data-driven policy interventions, but we have not been able to get the clubs to agree to share the data.

From the clubs’ perspective, and I suppose often very legitimately, they think that data privacy is a worry. I do not share those concerns in the same way; I think there are exemptions that allow it. Fans have done their bit and said what they want. They are not tolerating discrimination. If we do not listen to them, we are doing them a disservice. Football needs to do its bit, and if it cannot volunteer to do that, an independent regulator can certainly cut through and help to create the exemptions to get that data sharing. Then we can start addressing the root causes of some of these incidents.

[Shaun Bailey (West Bromwich West) (Con)]

Q I want to touch on the senior managers regime that the Bill effectively tries to create. You will know the importance of that from your professional background, particularly in a financial services setting. There are two points to this question. First, how do we ensure that we are not, with this Bill, effectively turning football into something run by a bunch of chaps not necessarily connected in the way we need them to be, because we prohibit people coming through from grassroots who understand the clubs and know what they are doing?

My second point is on D&I, which has obviously been really important, particularly in the financial services space. Do you think there comes a point, which perhaps could be addressed in the Bill, at which there is not just a proactive obligation but maybe even a penalty system? It could be that if your club is not meeting those standards because of incidents like those you have highlighted, you as a senior manager become accountable, just as you would in a professional setting elsewhere.

Sanjay Bhandari: There is an answer in principle and an answer in practice. The answer in principle is that there should always be a sliding scale of sanctions, depending on the degree of the harm being caused. Whenever we are in any kind of regulatory or law enforcement regime and create sanctions frameworks, we reflect not just the offence itself, but the offender, the nature of the offence that has been committed, and whether it is persistent or egregious. You need to have that sliding scale. In reality, it will be relatively rare where you get to that point of actually sanctioning an individual. There might be rare occasions, but I think they will be highly unusual cases.

Football Governance Bill (Fourth sitting)

Rachel Hopkins Excerpts

Committee stage
Thursday 16th May 2024 Public Bill Committees

Overall, however, I am pleased to see the regulator established as an independent body, so I support what these clauses are trying to achieve.

[Rachel Hopkins (Luton South) (Lab)]

I would like to build on the comments made by the shadow Minister, particularly on the appointments to the independent regulator and the expert panel. We heard much in the evidence sessions around equality, diversity and inclusion, and I seek assurances from the Minister that there will, in the usual way with public appointments, be a desire for the board to be reflective of society. We have heard, sadly, that we do not see people with a range of diverse characteristics coming through to senior levels in all aspects of football, across the game—there are very few such referees, and so on.

On appointments to the expert panel, I would like a little more clarity from the Minister on the fact that the chief executive officer must exercise the power to secure

“the range of skills, knowledge and experience of the members of the Expert Panel”,

which includes skills, knowledge and experience relating to

“the operation, organisation or governance of clubs or competitions, and financial or other regulation.”

Reflecting on what we already know about the game, could we have some assurance that this provision merely includes that range of skills, and that we could, in fact, have a wider range of skillsets? We want to ensure that we recognise equality, diversity and inclusion in appointments to the expert panel and the board, so that we are not restricted only to people who have experience of the operation, organisation or governance of clubs or financial or other regulation. Other regulators often have a lay person, for example; they may be a senior professional, but they bring a sort of objectivity to the table that others who are very involved in the industry sometimes cannot see. I hope we can have some clarity from the Minister on that.

[Mr Betts]

Can I just raise two issues? The first is about appointments to the board. Does the Minister feel that the issue of conflict of interest is important? Does he feel that he ought to be setting down somewhere what conflicts of interest may amount to, and what may disqualify someone from being a member of the regulator’s board? Secondly—this issue arises in Select Committees from time to time—will the regulator’s chair be subject to a pre-confirmation hearing by the Select Committee?

--- Later in debate ---

[Stephanie Peacock]

I appreciate my hon. Friend’s intervention. I know the amount of work that he has done with his local football club and with fan groups.

[Rachel Hopkins]

I, too, mentioned this point on Second Reading. Does my hon. Friend agree that not including groups such as fans, players or staff of clubs would be like the health regulator regulating hospitals but not talking to patients or doctors?

[Stephanie Peacock]

My hon. Friend makes an important point. Again, we are attempting to be as helpful as we can. We are not giving a veto; we are simply saying that the regulator should have a good, constructive working relationship with these groups.

I will make a little progress. My final point, as I said, is that the Bill does not currently recognise that there are cross-governance structures that work well within the game and with which it could be beneficial for the regulator to work constructively. The PFA provides an example of that in the Professional Football Negotiating and Consultative Committee. This mechanism is used by the league’s union and governing body of football to provide a backstop on players’ rights, ensuring that substantive changes to player contracts and conditions cannot be made unilaterally. Where collaboration works well in the football ecosystem, it is important that the regulator can work constructively with the bodies as well as clubs, governance structures and competition organisers. Has the Minister considered that? I would welcome his thoughts on that today.

It is great that the independent regulator will be tasked with working constructively, but we must make sure that there is a comprehensive list of those that should apply to so that co-operation exists in the new landscape wherever possible. I tabled amendment 9 to broaden the scope of constructive working. I hope Members across the Committee will lend their support.

Amendments 20 and 2, tabled by my hon. Friends the Members for Liverpool, West Derby and for Sheffield South East, mirror my amendment, demonstrating that there is a wider recognition of the need to expand the list. I hope that the Minister will take that into account.

--- Later in debate ---

[Rachel Hopkins]

I listened to what the Minister said, but a number of regulators have statutory consultees, including groups of people who are involved in that industry or the service that they receive. I am coming from that point, which is why I would like to see them on the face of the Bill.

[Stuart Andrew]

I understand the hon. Lady’s point. I do feel confident, and I am trying to make this as clear as possible, that I cannot envisage why the regulator, where there is an issue that affects the fans, would not be looking at that. We will continue to look at this very carefully and make sure that we have got it right. I want to make it very clear, as the Minister, that we expect fans to be very much part of this process. That is why I said that clause 1 was so important in making that point right at the very outset.

Football Governance Bill (Fifth sitting)

Rachel Hopkins Excerpts

Committee stage
Tuesday 21st May 2024 Public Bill Committees

[Stephanie Peacock]

Clause 20 and schedule 5 provide us with the building blocks of a licensing regime. The Minister set out the mandatory licence conditions that all clubs must comply with in order to obtain a provisional or full licence. That will ensure that base-level requirements are fulfilled on key areas such as finances, corporate governance and fan engagement. I will speak briefly to each area in turn, and then address the amendments.

The first condition relates to financial plans. I will not spend too much time on it as we have already discussed financial resources. However, I believe that the requirement to submit a financial plan would be fundamental for clubs wanting to exercise best practice.

The second requirement is on corporate governance. As we just discussed, good corporate governance can help to deliver better business outcomes, improve the efficiency of decision making and demonstrate to stakeholders that a club is well managed, to the benefit of both fans and investors. Furthermore, as the Government’s White Paper says, poor governance can exacerbate financial issues, allowing reckless decisions to be made without challenge or scrutiny. Many clubs already engage in good corporate governance, and for those that are not, the introduction of requirements should genuinely help to move them towards best practice.

However, I have some questions about the content of the corporate governance code of practice, which will be published by the regulator and reported against by clubs. In particular, Fair Game and Kick It Out have questioned whether issues such as equality, diversity and inclusion will be included in the code. Indeed, the Government chose not to pick up the recommendation of the fan-led review to mandate EDI action plans through the licence regime, pointing instead towards enhanced industry assessments in that area.

I understand the need to ensure that existing structures that are working well are not disrupted, and to give the regulator a well-defined scope. Given the explicit focus that the regulator will have on good governance, however, it seems slightly odd to divorce the concept from the issue of EDI. The fan-led review said:

“Aside from a clear moral case, improving diversity is also a key aspect of driving better business decisions by football clubs. Diverse companies perform better”.

A football that welcomes everyone, then, is a football in which clubs have the best possible chance of success. But change is needed at almost every level for that to happen.

Kick It Out’s reporting statistics from last season show that it received a record 1,007 reports of discriminatory behaviour across the professional game, including a 400% increase in reports of sexism and misogyny. Meanwhile, in 2019, the law firm Farrer & Co found that across all professional football clubs only 7% of board directors were female. Just one club met the 30% target set for other industries, and only 7% have a woman in a leadership position on the board. Work must be done to address the problem across the board. I am keen to hear from the Minister about how whether issues such as EDI will form part of the governance code will ultimately be decided, and whether he has a view on whether they should.

I have spoken about fan consultation in detail during our discussions on schedule 4, so I will save repeating how important it is. However, I would like to raise some further concerns. Namely, I am disappointed that the Bill makes no provisions regarding supporters’ trusts, as noted by my amendment 19 and amendment 7 tabled by my hon. Friend the Member for Liverpool, West Derby.

At the time of the fan-led review, 73 clubs had a community benefit society in the form of a supporters’ trust. Community benefit societies are incorporated co-operatives that conduct business for the benefit of their community. They must follow certain rules, including operating on a democratic basis and ensuring that any profits gained by a trust can only be reinvested into the club or returned to the community. Those minimum standards mean that CBSs in the form of supporters’ trusts operate with a broad level of consistency and reliability. Many of them have a long legacy of connecting with the local area, liaising with their club and organising on behalf of fans. Many trusts should therefore be viewed as an asset to the community that clubs can learn from and engage with positively. We saw that at first hand in our evidence sessions, with the insight that Action for Albion, Supporters’ Trust At Reading and Arsenal Supporters’ Trust brought us in respect of their clubs and the view of their communities.

I understand why the Bill has sought to ensure that fan engagement measures are not a one-size-fits-all. However, where trusts are established, I believe that clubs should consider them when forming their consultation processes. Amendment 19 would ensure that where a club’s fans have established a legally registered supporters’ trust, that body is considered for representation in the club’s fan consultation process. Clubs would not be bound by any hard-and-fast rules, but would be encouraged to consider the benefits of engaging relevant existing trusts.

That brings me to the broader issue of how fans will be selected for consultation. Amendment 7 suggests that fans are given a democratic mandate if they are to be consulted by the club regularly. That way they would have the backing of fellow fans, helping to avoid scenarios in which the fans are seen as a mouthpiece for the club directed at fans, rather than the other way round. I am keen to hear how the Minister thinks we can ensure that fans are both selected and treated fairly. Will there be standards or guidance on that specific issue?

Finally, I am pleased to touch on the annual declaration condition. Given that there is no requirement for licences to be renewed, it is right that there is a touchpoint for clubs with the regulator to ensure that everything is in order, but I have one brief question. The schedule outlines that the annual declaration must contain a summary of any “material change” at the club over the year. That phrase is used 11 times throughout the Bill, but its definition is not clearly set out. Will the Minister provide a working definition today, or write to me with one?

Overall, I am broadly happy with the contents of the clause and schedule, albeit with a few questions that I would like answering on governance code and on supporter involvement.

[Rachel Hopkins (Luton South) (Lab)]

It is a pleasure to speak in this debate on an important Bill. I would like clarification on a few points with regard to schedule 5, particularly—following the excellent remarks made by the shadow Minister, with which I wholeheartedly agree—paragraph 7(4), which states:

“Before publishing a code of practice or any alterations to the code, the IFR must consult…the Football Association, and…other such persons as appear to the IFR to be representative of persons likely to be affected by the code.”

Can I seek assurances from the Minister that fans and fans’ representative groups will be included as people who are likely to be affected by the code? They will take a deep interest in the corporate governance of their clubs, which is why we are here with this piece of legislation. Similarly, I would like to press for clarifications on reporting on equality and diversity and inclusion matters, which are a really important aspect of good corporate governance. Once again, I add my support to the remarks made by the shadow Minister.

[Ian Byrne]

I wish to support the excellent remarks by the shadow Minister, who gave a very comprehensive overview of why we need amendments to the Bill. There is a real worry, as I have outlined, that the clubs will seek to dilute the power of the supporter’s voice by filling the boards full of stooges, shall we say. We need some sort of system to ensure that boards are appointed through a democratic and independent process. Supporters trusts are a ready-made option. There are over 130 of them in the football world. They are democratic, independent organisations that have the trust of the wider supporter base, mainly. It would be foolish not to utilise that expertise and the system that is already in place.

If a club has not got a supporters trust we need to have some sort of oversight to ensure there are independent fan voices holding clubs to account, which will be a crucial part of the independent football regulator. We have got to ensure that those boards are fit for purpose and, as I said, not diluted by clubs that want to disempower supporters and supporter voices.

Football Governance Bill (Sixth sitting)

Rachel Hopkins Excerpts

Committee stage
Tuesday 21st May 2024 Public Bill Committees

[Anna Firth (Southend West) (Con)]

Second time lucky, Ms Nokes! I am delighted to talk about this part of the Bill and the important owner and director test, and I want to support clause 37(3) and (4). The current Premier League and English Football League owners and directors test requires that any prospective owner must not have been subject to two or more bankruptcy events—so the current position is that someone could have been subject to one bankruptcy event, and in theory still own a football club. I am pleased to see that the clause removes any minimum number of events; obviously, that will place further emphasis on sustainable management and stewardship, and is much to be commended.

For context, I should say that Southend United Football Club in the National League has had 19 winding-up petitions in the last 25 years; the last one was last Wednesday. During the course of this Bill, the club was in court and was given a further six-week adjournment—hence my interest in making sure that no other clubs in future suffer the same fate as Southend United and its loyal fans.

[Rachel Hopkins (Luton South) (Lab)]

I want to carry on the debate about clause 37 and reflect on honesty and integrity as set out in subsection (3), on “matters relevant to determinations” of the “requisite honesty and integrity”, and subsection (3)(g), which talks about

“such other matters relating to honesty and integrity as may be specified”

by rules. I would be interested in a little clarity from the Minister about that. Some of the other prerequisites or matters to be considered, such as whether someone is financially sound, can involve hard evidence, and someone’s competence can be tested by qualifications; integrity, however, is a bit of a subjective matter. It is more about things that are not against the law but are certainly not in the spirit of the law, and it is often behavioural.

Does the Minister have any examples that he might want to see in those rules? Someone might have used poor employment practices, for example, as we have seen in other industries, some of which are regulated and some of which are not. The issue would not reach a tribunal so it would not be a piece of hard evidence, but it would bring into question why an owner or officers of a club, in a different business, deployed fire-and-rehire tactics, for example, that were detrimental to their workforce and local community. Similarly, in a positive sense, would there be any consideration of what high integrity might be: for example, owners and officers who championed equality and diversity—an issue that we have been speaking a lot about in this Bill? I would welcome the Minister’s comments.

[Damian Collins (Folkestone and Hythe) (Con)]

I will be interested in the Minister’s remarks about amendment 1. I understand the point that my hon. Friend the Member for Chatham and Aylesford is making, in seeking to create a bit more flexibility for the regulator. We would all hope that the integrity checks against an individual owner could ultimately “trump”—if she does not mind my using the word—any positive trading relationship. If the person were not considered a good and proper owner, the fact that we had a good trading relationship with their country should make no difference: they should not be able to avoid the checks simply because they come from a trusted trader nation.

However, on the other hand, I can see that having “must” would be helpful for the regulator in two ways. One is that if a would-be owner of a club met all the criteria and therefore should be allowed to acquire the club, but the only block on them was that they were a sanctioned individual, the regulator would have the certainty of knowing that it could not let the deal go through. There would not be grounds for challenge, say, at the Court of Arbitration for Sport over whether an appropriate judgment had been made. There would be no question of the sanctioned person’s suitability on any other grounds. In that particular circumstance, the provision could be helpful.

I imagine that it would be reassuring for the regulator to know that, as was the case when Newcastle United was acquired, if another Premier League club was acquired by a country that was not sanctioned—we did not have a trade embargo with it—but was nevertheless controversial, the regulator would not have to consider that, whether people wanted it to or not, because no Government policy would be saying that we could not trade with or allow investment from that country. The regulator would have the certainty of knowing that it was acting purely within the confines of its role.

I appreciate the intention of the amendment and the reasons behind it, but perhaps the Minister could give us some guidance on whether “must” may be better than “may”.

[Stuart Andrew]

The Government absolutely recognise the intent behind the amendment to ensure the independence of the regulator. We have been extremely clear that the independence of the regulator is vital. That is why the regulator will be set up as a new public body to ensure its full operational independence.

Clause 37(2) does not diminish the regulator’s independence. It does not mean that the regulator needs to consult the Government about the suitability of an owner, nor can the Government interfere with the regulator’s decision. If the regulator determines that an individual does not have the requisite honesty and integrity, or is not financially sound, or that the individual has any source of wealth connected to serious criminal conduct, that individual cannot be determined to be a suitable owner of a regulated club. Clause 37(2) does not override those fundamental requirements. Nor can any individual, fan, league, club or Government influence override them.

The purpose of clause 37(2) is to ensure that the regulator has to have regard to the UK’s foreign and trade policy objectives when it makes a determination about any new or incumbent owner. That will ensure that the regulator cannot make unilateral moral judgments on which countries it may consider unsuitable when it tests owners. We do not want to allow for a scenario where that happens and in effect a regulator, as I said this morning, sets the Government’s foreign policy.

The effect of the amendment would be to increase discretion for the regulator to decide when it will have regard to the UK’s foreign and trade policy objectives when making decisions about owners. The Government believe that their foreign and trade policy objectives are a relevant matter for the regulator to have regard to whenever it makes a determination about the suitability of any and all owners, not just some. Increased discretion for the regulator may risk it making unilateral judgments that stray into foreign policy.

To be clear, requiring that the regulator must have regard to the Government’s objectives does not mean that that must be a decisive factor. It might have limited relevance in a particular case and, if so, the regulator will not have to give that undue weight. The fundamental basis for a regulator’s determinations about owners will be honesty, integrity, financial soundness, source of wealth and, for new owners, sufficiency of financial resources.

I heard what my hon. Friend the Member for Chatham and Aylesford said and we will continue to reflect further, ahead of Report. But for the reasons that I have set out, I am not able to accept her amendment and I hope she will withdraw it.

Clause 37 lists the matters that the regulator must take into account when it conducts owners and directors tests, including what it must consider when determining whether an individual is financially sound and whether they have the requisite honesty and integrity and, for officers only, the competence needed to fulfil the role, and ultimately to determine whether they are sensible—sorry, suitable.

[Rachel Hopkins]

And sensible.

[Stuart Andrew]

Absolutely.

My hon. Friend the Member for Southend West and the hon. Member for Luton South made important points. As a public body, the regulator must act fairly when it makes decisions. As set out in the White Paper, it will make an evidence-based objective judgment to assess whether an owner or a director is a suitable custodian of a club, and it will apply its tests consistently and fairly to every person.

The fitness element of the test will assess an individual’s honesty, integrity and financial soundness, as well as, for directors, competence. That draws on the fit and proper person test applied by other regulators, including the Financial Conduct Authority, His Majesty’s Revenue and Customs and the Solicitors Regulation Authority. The regulator will set out in its rules and guidance further detail on how it will conduct its tests.

The factors I have outlined are specified because they have a real bearing on whether an owner or officer could have a significant detrimental impact on a club’s financial sustainability. Listing specific matters provides greater clarity to the industry about what will be tested. It also constrains the regulator. The matters listed in the clause are the only things that it will take into account when considering honesty, integrity, financial soundness or competence. To ensure that the fitness test remains effective in the future, the clause gives the regulator the power to use its rules to add further matters that it will need to take into account when considering someone’s honesty, integrity or financial soundness. Before using that power, the regulator must consult the leagues.