Football Governance Bill

Thangam Debbonaire Excerpts

2nd reading
Tuesday 23rd April 2024 Commons Chamber

[Thangam Debbonaire (Bristol West) (Lab)]

May I start by saying how good it is to see the Bill receive its Second Reading? Many people have been campaigning for it for many years, and as the Secretary of State has acknowledged, it has strong cross-party support. A lot of people—both inside and outside the Chamber—have put in a lot of work. Sadly, weeks, months and, I am afraid, Secretaries of State have gone by, but I am glad to see it here at last.

Since I was given the honour of serving in this role, I have met fans, clubs, representative leagues, governing bodies and special interest groups, and I want to thank them all for their time and expertise. I know that they are following our proceedings closely. I also thank the civil servants at the Department, who I know will have put in painstaking work to get us to this point. They deserve our appreciation, and I hear that same point being made by those on the Government Benches.

This new law will not fix all of football’s problems, nor is it designed to. I believe that it can be transformative, if things are done right both during its passage through Parliament and in the crucial implementation phase. The prize could be greater financial sustainability across the whole football pyramid, and, crucially, fans having a greater say in how their clubs are run. It could be those things, but it is up to us to make sure that it is. That is what fans deserve, and what Labour has called for in our last three election manifestos. We Opposition Members are therefore absolutely committed to passing this Bill into law, and to making it work. It is a once-in-a-generation chance to change the game that this country loves for the better. We must all realise the responsibility that we have to make a success of it.

Football is part of what it means to be British. It reaches across borders. It is part of our global brand. It brings us together. Yes, it sometimes brings crushing disappointment, but it also brings us joy. We watch with our families and friends at the local, in the stands or in our living room. We cheer and chant with strangers in stadiums, and together, we sit on the edge of our seat with nervousness. Labour will never take the magic of football for granted. It deserves our attention and our hard work.

Football is also an economic powerhouse. As my right hon. and learned Friend the Leader of the Opposition has clearly set out, Labour’s No. 1 mission is to go for growth. The premier league and its clubs contributed more than £4.2 billion in tax in 2021-22 and supported more than 90,000 jobs. The English Football League clubs contribute so much to our country’s finances, to jobs, and also to joy. The next Labour Government want to invest—in hospitals, in schools, in repairing the damage done by the last 14 years, and in making sure that every child gets a great experience of sport and physical activity at school. That is why football’s contribution to public funds is so important to us, and it is why we will focus on economic growth. Labour will support football up and down the pyramid to grow sustainably, and to create even more jobs, as well as joy. I say “sustainably”, because Labour believes it is important that the whole football pyramid shares in the success of the game.

England leads the world in its system for football. The English pyramid is built on competition. The fans’ love of the game was never more clearly demonstrated than when they overwhelmingly rejected the close competition model of the proposed European super league. That set in train the fan-led review by the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) and led to where we are today, but there is so much more work to do.

[Valerie Vaz]

My hon. Friend mentioned the fan-led review. Does she agree with me that the women’s game, which is out of scope of the Bill, is growing exponentially, and that there is scope for the hon. Member for Chatham and Aylesford (Dame Tracey Crouch), in a new role, to look at the women’s game and see whether we could have some regulation there?

[Thangam Debbonaire]

I thank my right hon. Friend for that intervention. She rightly pays tribute to the hon. Member for Chatham and Aylesford, although Karen Carney has also made a substantial contribution in leading the Carney review. I read the review with interest—it was great—and I believe my right hon. Friend may be aware of it. It is certainly worth Members giving it a detailed read; it deserves all of our attention. I am really proud of the fact that the English women’s game is growing so strongly and so well, and that it is inspiring so many women and girls to get active and get fit. The work of the hon. Member for Chatham and Aylesford, combined with the Carney review, sets in train exactly what my right hon. Friend is looking for: strength in our women’s game, which deserves it and deserves our admiration. It is bringing in new audiences all the time, which I think is fantastic.

Thirty years ago, English Football League revenues were 75% of the Premier League’s; today they are just 6%. The gap then was £11 million; it is now £3 billion. It is not that that income is not distributed from the Premier League—it is. It is because increasing amounts are spent on parachute payments, which are made to clubs relegated from the premier league for up to three seasons. I respectfully remind the ministerial team that it was the Government’s own White Paper that recognised the scale of these payments and that they can have unintended consequences.

[Sir Mark Hendrick (Preston) (Lab/Co-op)]

My hon. Friend referred to parachute payments. Does she feel that the inclusion of the clause that prohibits the parachute payments as “relevant revenue” is already prejudging the outcome of the state of the game review? It is excluding them to start with, rather than leaving the question open until the review is done.

[Thangam Debbonaire]

My hon. Friend raises a really important point. It is so important that the state of the game report leads the way, and that the regulator is allowed to look at the evidence and have the scope to intervene where that is necessary. I fear that the Secretary of State may inadvertently have confused the issue in her earlier remarks, although I think she began to clarify it. I would be grateful if the Minister could further clarify it in his summing up, as there is some remaining confusion.

[Mr Betts]

I certainly think that if we do not sort this issue out today, we must at least have some time in Committee to try to untangle what clause 55 actually means. I thought the Secretary of State said that the parachute payments were in play in the discussions about distribution of funds within football until it gets to the backstop, when they are taken off the table. It is almost being said that if the Premier League does not reach an agreement with the EFL until the point of the backstop, the Premier League will in effect have a veto over parachute payments being changed. That is what is being said, and I think that position really needs to be changed when we are in Committee.

[Thangam Debbonaire]

I thank my hon. Friend for that intervention. Like other colleagues, he is so knowledgeable about the detail of this Bill. I urge the Government to consider what has been said in a constructive spirit. Everybody present wants to get to the bottom of this confusion. We want to make sure that football and the regulator have the tools they need to grow sustainability—a key word which the Government have themselves used. The confusion about parachute payments is worthy of further attention, because there is so much money involved. They also have the distorting effect that the Government’s White Paper rightly identified.

If we do not look at this issue, we risk distorted competition in the championship by encouraging greater financial risk taking by the clubs that do not receive those payments. We know that that can result in an over-reliance on owner funding, which again is simply not always sustainable. As my hon. Friends have mentioned, clause 55(2) excludes parachute payments from any order by the regulator on revenue distribution. I gently say to the Government that, as there seems to be some contradiction or possible confusion, we would like that cleared up. I would be grateful if the Minister could say more in his summing up about how the money currently used for parachute payments could make more impact and perhaps be shared more widely, whether he has examined that in detail and to what extent he feels the current terms of the Bill are satisfactory.

[Dr Evans]

Part of the problem is that football is inherently risky; the very nature of what a club does is in order to get promoted. If, in trying to engineer some sustainability from the point of view of people investing in a club, Derby County had been promoted, the model would have been deemed to have worked, but it failed and so did the club. How would Labour facilitate individuals from across the globe investing in the best leagues in the world, while making sure that clubs such as Derby County were protected?

[Thangam Debbonaire]

I gently point the hon. Gentleman to his Government’s White Paper, because the Bill comes from there. Yes, of course the game is inherently risky—that is part of what makes it thrilling—but we need to be thinking about whether that is a calculated risk that is part of the thrill of the game, or an unintended consequence of a possible market failure. We really need to look at whether there is distorted competition. I gently suggest that, if the hon. Gentleman has not read his Government’s White Paper, he should.

[Dr Evans]

I have.

[Thangam Debbonaire]

Then we really need further discussion in Committee on this issue; it is worthy of such consideration. On calculated risk taking, we need to be clear about when we are taking unnecessary risks and when there are unintended consequences of the way finance is distributed.

[Mr Perkins]

Surely football club owners should be able to spend the money they have to take such a risk. However, if they are spending money from the future, as Derby County and Glasgow Rangers did, and the risk fails in the current year, they will inevitably go bust. Glasgow Rangers disappeared altogether, and Derby County almost disappeared. Football fans do not want clubs to take that risk, and surely the regulator should be preventing that.

[Thangam Debbonaire]

My hon. Friend raises the most important point, which is about how fans feel. There should be no taking of reckless risks and there should be no jeopardising of a club’s future, and that is important. Any business owner—the hon. Member for Bosworth (Dr Evans) mentioned businesses—knows that they have to think about what level of risk they are going to take. Fans are at the heart of football, which is one of the things that makes football special and unique, and what fans want is such an important feature of our discussion.

[Steve Brine]

I will ask the same question that I asked the Secretary of State, because the hon. Lady could be the Secretary of State this year. I do not know whether she goes to watch football—perhaps she goes to watch Bristol Rovers in her own city—but she will know that, earlier this year Bristol Rovers had the mighty Norwich City at its stadium. It had 10,000 fans for a mid-week FA cup replay, which was really important to the club. Bristol Rovers has called on the FA to reverse its decision to scrap FA cup replays. This Bill is about financial resilience and viability throughout the pyramid, so what is the Opposition’s view of the FA’s decision last week?

[Thangam Debbonaire]

I am grateful to the hon. Gentleman, who says that the Bill is about financial resilience. Obviously, Bristol Rovers is my local club, and I listen to what it has to say, but I also listen to what fans across the country have to say, and they are clearly very upset about that decision. My right hon. and learned Friend the Leader of the Opposition has made his views on this extremely clear, because we really think that replays are part of the game. [Hon. Members: “Hear, hear.”] He has said that replays are an important part of our game, and we can hear that in the reactions of my right hon. and hon. Friends behind me. However, as the hon. Gentleman says, replays are not part of this Bill, and we are focused on financial resilience. He will know how much I have enjoyed being at Bristol Rovers. I was on the terraces only the other week watching them lose to Reading, but that is part of the joy of football—that and the pies—isn’t it?

I want to talk about how revenue is distributed throughout the football pyramid, because that is an important consideration of this Bill. One of the many ways the Bill sets out a future for the regulator is on financial distribution. It is down to the leagues themselves to reach a deal on broadcast revenue distribution, but it saddens us all that, at the moment, a deal still seems a long way off. It seems that there has been something of a breakdown in communication. I have met many of the interested parties and listened to concerns, and I appreciate that this is complex and not easy, but I urge both sides to come to an agreement.

However, if those negotiations cannot result in a deal once the Bill is enacted and the regulator is in operation, the regulator will have the power to select one of the two options put forward by the parties. That important backstop power should be used as a last resort, but it is clearly important that such a power exists. Given how important the backstop is, will the Minister say what work has been undertaken to ensure that that specific part of the Bill works in practice? Is it legally watertight? Are there questions that still have to be answered? From my engagement with stakeholders there seem to be many important questions that still need to be answered and we will be exploring them further in Committee, but will the Minister give us a bit more of an indication at this stage regarding what work has been done and what that will mean in reality?

Proportionality will be key for us all. As many Members across the House have said, we want the game to succeed and to continue in the great future that it has for the whole country. Proportionality is important. With all legislation and regulation we must strike the right balance, and nowhere more so than with the licensing scheme for clubs. That is the mechanism through which a majority of the regulation and enforcement will be delivered, and it is right that the regulator will be able to tailor a club’s obligations proportionately, especially when it comes to clubs in the national league—many hon. Members represent constituencies in which there is a national league team. We support an appropriate transition period, to enable clubs to prepare for this process. We must bring clubs of all sizes into the system in an appropriate way.

Colleagues have also mentioned sanctions. As the Bill stands, the regulator will not be able to impose points deductions on clubs that break the rules. Labour backs that decision, but I know how much this issue matters to colleagues across the House and to fans up and down the country who are understandably devastated when their clubs are hit with points deductions as a result of decisions that the fans have no power over. After the formation of the regulator, the leagues will continue to have their own financial rules, and there is nothing to suggest that points deductions for breaches of the league’s own rules will not continue. Nobody wants to see points deductions for corporate or financial mismanagement, least of all fans. I hope, and I know fans hope, that the regulator and licensing scheme will mean that clubs are more financially sustainable, and that breaches of league rules and the associated points deductions are much less likely. Again, if the Minister would like to address that when summing up the debate, that would be helpful.

Football clubs are the pride of our towns and cities. They are an important part of our civic identity and the heart of our communities. New owners often bring important investment, but I know from speaking with clubs that it is about more than that. It is a big responsibility and honour to be the custodian of a football club, and owners should take that seriously. I know that is how it feels for the owner of my local club, Bristol Rovers.

[Andy Slaughter]

My hon. Friend is making a very good speech. One other thing that clubs do through their community arms—in the case of QPR that is QPR in the Community Trust—is regenerate an area. In one of the poorest communities in the country we have Andy Evans and his team. It is big business, and they make a massive contribution to the local community. However, they and the club fear that the poor governance and financial inequality of football puts all that at risk. Is that what is at stake in the Bill?

[Thangam Debbonaire]

My hon. Friend is exactly right. So many things are at stake in the Bill, which is why it is so important we get it right. I know Fulham well, and the important work done by football community trusts, supporters clubs, and so many people involved in the game who help to regenerate their communities. However, they cannot do that on their own, or if their club is not sustained financially. That is what is at stake, my hon. Friend is absolutely right. Indeed, I have seen that for myself in what Bristol Rovers does for our local community. I met the owner of my local club recently. It was a pleasure to meet him and to hear from him and fans about the importance of growing the club sustainably and investing in the local community. I was impressed to hear the number of ways that the owner, management and fans have engaged with each other and learned from each other. There is always more to do—I am sure all clubs would acknowledge that there is always more they can do to hear what fans have to say, and what their community trusts are doing, as well as how they can be enabled and supported to do more of what they do so well.

Although the vast majority of owners act in the best interests of their club, some do not. That is why Labour has been calling for new checks on owners and directors. The Bill stipulates that those checks will: look into whether prospective new owners have sufficient financial resources to be a suitable owner; review their finances to ensure they are sound; check whether prospective owners behave with honesty and integrity; and assess officers’ competence and whether an owner’s source of wealth is connected to serious criminal conduct. Again, will the Minister address those points when summing up the debate? What does all that mean in practice? The Bill is not clear whether the tests will be objective or subjective in nature, and some of them appear to be distinctly subjective. How will the tests be conducted and what will the criteria be? Will that issue be addressed in Government guidance or the regulations? Does the Minister expect it to be addressed in the code? I would be grateful if he clarified that.

[Damian Collins]

The Bill is reasonably clear that the regulator considers not only those rules, but any other rules that it wishes to write into the rulebook. This will give us for the first time ever a subjective test set by the regulator, which can be enforced with statute backing it up.

[Thangam Debbonaire]

The hon. Gentleman seems to be saying that it is a subjective test. I was asking whether there are any objective tests, because I think that is important in terms of fairness. Where are they objective, where are they subjective? Concepts such as competency can be interpreted both objectively and subjectively, and I would appreciate the Minister’s clarification of what he views as the Government’s position.

[Mr Robin Walker]

One issue we came across in the huge difficulties that Worcester Warriors went through was that it had a director who was approved on the basis that he had been approved by the footballing authorities. He was approved because he was a practising solicitor, but it turned out he was a disbarred practising solicitor. Is it vital that a regulator has the ability to check information given to it, so that even if people provide misleading information to a regulator, it has the ability to intervene and strike those people off as appropriate directors where necessary?

[Thangam Debbonaire]

The hon. Gentleman explains exactly why it is so important that the owners and directors test will work. That is why I am addressing these remarks to the Government—it is, after all, their Bill. I would like to know substantially more from the Minister in answer to the questions that I and others have raised.

Fan engagement is crucial and we back fans having a greater say in how their clubs are run. Therefore it is right that the Bill requires that if a club proposes changes to club crests or colours, it has taken reasonable steps to ensure that those changes are supported by a majority of fans. Fan engagement should not be reduced to a box-ticking exercise, and neither should it be one size fits all. Engagement must be meaningful and appropriate, and suitable for each club.

The women’s game is not explicitly mentioned in the Bill, but we would all agree that it has had a stellar few years. It is growing quickly, bringing new crowds to stadiums, and introducing lots of girls to the joys of physical activity. I am determined to see the women’s game grow even more. I have already mentioned that proportionality is a key principle that must be considered during the passage of this Bill. Having listened to what representatives of the women’s have to say, I do not think it wise to introduce regulation to the women’s game before it is ready or unless it is necessary. It is right that there are powers in the Bill to introduce regulation to a league designated by the Secretary of State that could, if necessary in future, include the women’s game. I will be monitoring that closely, in collaboration with representatives from women’s football.

The governance of English football is in a position of uncertainty, and on this Government’s watch that uncertainty has been allowed to carry on far too long. That has been, and continues to be, to the detriment of clubs and their finances. After the passage of this long-awaited Bill and the establishment of the regulator, I hope that football will be able to enter a new period of governance stability. As the Bill progresses, that is what Members across the House should be aiming for, and what fans across the country deserve.