Football Governance Bill [ Lords ] (Seventh sitting)
(Limited Text - Ministerial Extracts only)
Read Full debateThursday 12th June 2025
(2 days, 21 hours ago)
Public Bill CommitteesFootball Governance Bill [HL] 2024-26 View all Football Governance Bill [HL] 2024-26 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 12 June 2025 - (12 Jun 2025)
The Committee divided: - Ayes: 3 / Noes: 10 - Question accordingly negatived.
Mr Louie French (Old Bexley and Sidcup) (Con)
I beg to move amendment 110, in clause 37, page 28, line 28, at end insert—
“(fa) whether the individual is a member of a proscribed organisation as per section (3) and schedule (2) of the Terrorism Act 2000.”
This amendment requires that IFR, in determining whether an owner or officer has the requisite honesty or integrity, to consider whether the person is a member of an organisation proscribed under the Terrorism Act 2000.
It is a pleasure to serve under your chairship again, Ms Butler. I welcome all Committee members back for day four. Amendment 110, tabled in my name, requires this Government’s regulator, in determining whether an owner or officer has the requisite honesty or integrity, to consider whether the person is a member of an organisation proscribed under the Terrorism Act 2000.
Clause 37 sets out the framework under which the Government’s football regulator must assess whether an owner or officer of a football club meets the required standards of honesty, integrity and competence. This is an important part of the Bill. Football clubs are not like ordinary businesses, as we have discussed; they are institutions rooted in community, tradition and even national identity. Those who control them must be held to the highest standards and supporters quite rightly expect that clubs should be fit to uphold those responsibilities.
The Government’s regulator’s task in clause 37 is to ensure that persons in positions of influence over our national game are financially sound and professionally competent. However, the clause as currently drafted leaves the test for honesty and integrity open to interpretation—arguably too open. That is why we have tabled amendment 110, which provides a clear and unambiguous requirement that, in determining whether a person has the requisite honesty or integrity, the regulator must take into account whether that person is or has been a member of an organisation proscribed under the Terrorism Act 2000.
Let me be clear: this is not about political views, past associations or guilt by implication, but about having a national minimum standard of moral fitness. It should be inconceivable that a person with demonstrable ties to a terrorist organisation could pass the fit and proper person test to own or operate a football club in this country. Football clubs are part of the fabric of British civil society. They are symbols of local pride and national values, and they have international reputations. To allow a person associated with a proscribed group, many of which pose active threats to our national security, public order and democratic way of life, to take a controlling interest in such an institution would be not only morally indefensible, but deeply dangerous.
This is not a hypothetical concern. We live in an increasingly globalised football economy and genuine questions have been raised in recent years about the sources of funding, ownership and political influence across the game. My amendment does not attempt to legislate morality in broad terms; it simply anchors the Government’s regulator’s assessment in existing law, specifically the Terrorism Act 2000, which provides a clear, publicly available list of proscribed organisations that Parliament has already determined pose an unacceptable risk to our way of life.
By incorporating that into clause 37, we do two things. First, we clarify the threshold for what constitutes a failure of the honesty and integrity test, giving both clubs and the regulator a clear reference point. Secondly, we send a signal to not just fans and communities here at home, but investors and foreign Governments abroad, that English football will not be compromised by individuals whose allegiances lie with organisations committed to violence, extremism or the subversion of our national interest.
Football is a global sport, but it must still reflect and uphold our national values. It is not alarmist or over-zealous to say that those who control our clubs must have a character as close to unimpeachable as possible. We are asking them not to be saints—unless, perhaps, they own Southampton FC—but to be the pillars of the community that we already expect them to be.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stephanie Peacock)
That was so bad.
Mr French
I have woken everyone up there.
Clause 37 is an important safeguard, but without amendment 110, it lacks a clear and necessary line in the sand. Parliament has already determined that proscribed organisations represent a threat to public safety and national order. That same logic must apply here. I urge the Government to accept this modest but essential amendment and, in doing so, to help to ensure that our clubs are not just well run and financially sustainable, but led by people whose values are consistent with the country, communities and traditions that they are entrusted to serve.
Joe Robertson (Isle of Wight East) (Con)
It is a pleasure to serve under your chairship, Ms Butler. I rise to add my support to the amendment that the shadow Minister discussed very well and clearly.
The point is that the list set out in clause 37(2)(a) to (f), which gives examples of things that would prevent a potential owner from having the requisite honesty and integrity to own a football club, is missing a provision about their being a member of a proscribed organisation such as a terrorist organisation. In football, which is the most international sport and which has very international ownership, it seems particularly sensible to have that provision.
I do not think a terrorist offence is captured by someone being
“convicted of a criminal offence”,
because, as we know, the Terrorism Act 2000 was put in place to introduce various provisions relating to terrorism where it had not necessarily been identified that a perpetrator had committed a criminal offence. The provision in the amendment would therefore be a fair addition to that list.
Of course, clause 37(2)(g) is a catch-all measure that refers to “such other matters”. Nevertheless, the point is that this matter is particularly important and we do not want to leave it to be swept up in a catch-all measure. Of course, if it is argued that it could be swept up in a catch-all measure such as clause 37(2)(g), why have the list in clause 37(2)(a) to (f) at all? I support the sensible and non-controversial amendment.
Stephanie Peacock
It is a pleasure to serve once again under your chairship, Ms Butler. I echo the welcome back from the shadow Minister, the hon. Member for Old Bexley and Sidcup, to Committee members.
I will respond to amendment 110. I reassure the shadow Minister that the intent of his amendment is already achieved within the current drafting of clause 37, which lists the matters that the regulator must take into account when it conducts its owners and directors test. We will discuss that in more detail when we consider the next group of amendments, but I will summarise briefly now.
When assessing an owner or officer’s fitness, the regulator must have regard to any criminal convictions and proceedings, in particular those included in schedule 1 to the Serious Crime Act 2007. Membership of a proscribed organisation is an offence under the Terrorism Act 2000, and that offence is included in paragraph 2A of schedule 1 to the Serious Crime Act 2007.
The regulator will seek information and expertise from relevant organisations to help it to stay alive to both national and international concerns. The shadow regulator is already building a strong relationship with the National Crime Agency and law enforcement in general to ensure that the regulator is in a strong position to gather the information it needs.
I also reassure Members that the regulator and its staff will have the requisite measures and security clearance to be able to receive information relevant to their functions. Consequently, the current provisions in the Bill deliver the intent of the amendment. On that basis, I would be grateful if the shadow Minister would withdraw it.
Mr French
I appreciate the Minister’s comments with regard to amendment 110, which I tabled. I have listened carefully to her arguments, but it is still unclear to those of us on this side of the Committee why consideration of the Terrorism Act 2000 was not included in the list of factors set out in clause 37. We believe that is an oversight and, consequently, that the clause lacks the clarity that the amendment seeks to deliver in the Bill and that those who refer to it will seek going forward—in other words, the regulator. We will therefore press the amendment to a vote.
Question put, That the amendment be made.
Stephanie Peacock
Clause 37 lists the matters the regulator must take into account when it conducts an owners and directors test. That includes what it must consider when determining whether an individual is financially sound, has the requisite honesty and integrity and, for officers only, has the competence needed to do their role—ultimately, to determine whether they are suitable. The matters listed in the clause draw heavily on existing fit and proper person tests applied by other regulators, such as the Financial Conduct Authority and Bar Standards Board.
For financial soundness, the clause includes past bankruptcies and the financial situation of companies and other bodies they have been responsible for. For honesty and integrity, it includes an individual’s criminal history, legal cases they have been involved in, regulatory or disciplinary action, and whether they are banned from entering the UK or sanctioned by the UK Government. When assessing officers’ competency, it includes qualifications, experience and training.
Those factors are specified because they have a bearing on whether the owner or officer could have a significant detrimental impact on a club’s financial sustainability. That is why the legislation requires that they are taken into account when the regulator is considering someone’s suitability. Listing specific matters also provides greater clarity to the industry about what will be tested, and it constrains the regulator, as the matters listed in the clause are the only things it will take into account when considering their fitness. To future-proof the test, the regulator has the power to use its rules to add further matters it will take into account. That will ensure that the list of matters for fitness tests continues to be relevant over time.
Before using the power, the regulator must consult with the leagues. Suitability should be based purely on an impartial assessment of the individual’s fitness, their source of wealth, and their financial plans and resources. The Government have been clear that the independence of the regulator is vital, which is why they have removed the requirement for the regulator to have regard to His Majesty’s Government’s foreign and trade policy objectives when assessing an owner’s suitability. The clause will ensure that the test can be applied consistently and that it remains fair, transparent and robust and focused on whether the individual is a suitable person to own a football club.
Question put and agreed to.
Clause 37 accordingly ordered to stand part of the Bill.
Clause 38
Disqualification orders
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
The financial distress experienced by some of English football’s most historic clubs was partly down to unsuitable owners and directors. As we have already discussed, the regulator will be able to conduct strengthened owners and directors tests to tackle that and to help to ensure that each club has suitable custodians. I previously set out what powers the Bill gives the regulator to disqualify a person it finds unsuitable, what happens when an individual is found unsuitable, how they can be removed, how they can be prevented from causing further harm to the club, and the tools the regulator needs to ensure the continued effective operation of the club.
Where the regulator finds someone to be unsuitable to be an owner or an officer at a particular club, clause 38 gives the regulator the power to disqualify that person from being an owner or an officer at any regulated club in the future. In order to ensure that sufficient protections are in place, relevant parties will be allowed to express their views before the regulator makes its decision. Once a decision has been made that takes those views into account, the regulator must publish a notice of that decision, including the rationale behind it. That will help to ensure that those key community assets have suitable custodians who run the club properly.
When the regulator finds an incumbent owner unsuitable, the regulator must begin the process of removing them from the club. Clause 39 therefore gives the regulator the power to direct an unsuitable owner to relinquish ownership of the club. This is the first step in removing an unsuitable owner. They are directed to leave by the regulator and given a deadline, but they have a chance to take steps to leave the club on their own terms before the regulator takes direct action to remove them. For instance, those steps could include selling their stake in the club.
To ensure that sufficient protections are in place, the regulator must consult the unsuitable owner, the relevant club and the relevant league before issuing the direction. If an owner does not comply with such a direction, the regulator can escalate to the next stage of making a removal order under clause 43, which we will discuss in the debate on the next group.
Mr French
I thank the hon. Member for that valuable contribution and for telling us his experiences as a Derby fan. There are many examples that have been drawn on in various aspects of the Committee’s debates, and I suspect that there will be more going forward. Just to be clear, we are not seeking to press the provision to a Division. The point we are making is that we want the strongest owners and fittest people to run clubs, but we also want to ensure that the regulator is seen to be acting lawfully and in a balanced way at all times, to avoid any issues of impartiality. I understand the point the hon. Member makes, which is why I have always supported strengthening ownership tests, even in the previous Parliament.
We do not believe that exclusion based on reputational judgment or politics should come into these kinds of judgment. The Government must not forget that they are regulating not just football clubs, but people’s lives, reputations and livelihoods. That demands humility, caution and a presumption in favour of freedom and innocence, unless the case for restriction is absolutely clear and overwhelming. Where there is doubt, the Government’s regulator must not fill in the blanks with its own qualifications or prejudices.
The Opposition support the need for disqualification in serious cases, but we continue to press the Government to ensure that the clause is not open to abuse, and that football remains a competitive, plural and fair environment, rather than one policed by the regulator, acting as judge, jury and executioner in uncertain circumstances.
Clause 39 empowers the regulator to give a removal direction in requiring an unsuitable owner to take all reasonable steps to cease being an owner by the end of a specified period. The exception to this requirement is when an owner did not have prior regulatory approval, and the regulator can exercise its power to make an ownership removal order within three months, starting from the determination day. The clause requires the football regulator to inform the owner of the club and relevant competition organiser before giving a removal direction. It also requires the football regulator to notify the owner and the club of the possible enforcement action for not complying with the direction.
It is because of powers such as these that the regulator must be seen as independent. If a Government regulator is to order the removal of incumbent owners, this could be seen by competition organisations as clear interference, which as we have discussed at length, and could cause many issues for English clubs, especially when competing in UEFA and FIFA competitions. I would be interested to hear some assurances from the Minister about how that might work in practice. If the Government’s regulator is to tell clubs that they must change ownership, how confident is the Minister that that will not breach the rules that we have discussed?
This goes back to a point I made in a previous sitting about something that is a theme of the clauses in this group. Giving the owner or officer of a club notice of a regulatory action that is coming will hopefully allow them the rights of representation and challenge, if they feel that they have been handled wrongfully, but it also opens up issues around insider information, particularly with regard to a club’s valuation. I suspect that all hon. Members appreciate that such a change, particularly at the top levels of ownership, will have a dramatic impact on the valuation of a club. We want to understand how the regulator will deal with that issue to ensure that insider dealing, in particular, does not become a widespread issue where the regulator is trying to enforce its actions, as provided for by these clauses. We want to understand how that will work in practice, to ensure that these clauses do not have unintended consequences.
Clause 40 empowers the regulator either to issue a removal direction to an unsuitable officer, requiring them to take all reasonable steps to cease being an officer by the end of a specified period, or to give such a direction to the relevant club, or both. It requires the independent football regulator to inform the owner, club, and relevant competition organiser before giving a removal direction. It also requires the IFR to notify the owner and the club of the possible enforcement action for not complying with the direction. I have the same question about this clause as for the previous one: how will the risk of inside information be managed?
Clause 41 empowers the regulator to prohibit an unsuitable owner or officer from carrying out specified activities or exercising specific rights and/or to issue a direction to the club requiring it to ensure that the unsuitable owner or officer does not exercise specified activities or rights. The clause provides a non-exhaustive list of such activities and rights, including any right
“to vote on any matter relating to the…club’s activities”;
appointing, terminating or changing the terms of appointment or responsibilities of any officer or employee; changing the corporate structure; and undertaking any specified actions without obtaining prior approval from the independent regulator.
Clause 41 also requires the IFR to notify the owner and the club of the possible enforcement action for not complying with the direction. Such action could seriously impair the ability of a club to function while it seeks a new owner or officers, as ordered by the regulator. As we all know, it takes a significant amount of time to find a new owner, and many may be deterred by perceived interference in English football, compared with other nations without a state regulator. Clause 41 may cause more damage to a football club than the owner, who the regulator cannot dismiss. How will the Minister ensure that the regulator uses these powers only if and when deemed strictly necessary?
Clause 42 relates to situations where directions under clause 41 would impede a club’s ability to operate effectively or comply with regulatory requirements. It empowers the IFR to temporarily appoint an officer to carry out a specified function, or redistribute functions among existing officers. It stipulates that those functions must be specified, must be for a specified amount of time, and can be revoked or varied by another order. It specifies that an interim officer is not subject to the duties and requirements placed on officers by the Bill. It also requires the IFR to notify the owner and club of the possible enforcement action for not complying with the direction.
Clause 42 adds to the fear that the regulator could erode the independence of English clubs and how they operate. It empowers the regulator to effectively govern a club while seeking to remove unsuitable officers or owners. Given the time that it takes to find new ownership, that situation could last for a considerable period and cause massive issues on the pitch with regards to investment and transfers—as we discussed in a previous sitting—and how the club functions. It would also leave the regulator wide open to criticism if its actions lead to relegation, for example, for a particular club. Does the Minister think that there is a risk that such a club could be barred from international competitions—as I suggested earlier—or that the Government’s regulator could be left wide open to legal challenge if it directly impacts a club’s performance on the pitch, or its financial performance off the pitch while such considerations, or changes of ownership, take place?
Stephanie Peacock
I thank the shadow Minister for his points, to which I will respond briefly. There are no changes in the bit of the Bill that we are talking about compared with the previous Bill, other than—as I referenced in my previous contribution—the removal of the requirement for the regulator to
“have regard to the foreign and trade policy”
of the Government. We think that removal strengthens the independence of the regulator, and I reiterate that we do not have any concerns in relation to UEFA.
The shadow Minister asked some specific questions. There are no thresholds in the Bill, but the regulator will need to act fairly and proportionately. There are robust appeals processes through the Competition Appeal Tribunal. The shadow Minister made points about the publication of information. In order to ensure that sufficient protections are in place, relevant parties will be able to express their views before the regulator makes a decision. Once the decision is made, it will take these views into account, and the regulator must publish a notice of that decision, including the rationale behind it.
Question put and agreed to.
Clause 38 accordingly ordered to stand part of the Bill.
Clauses 39 to 42 ordered to stand part of the Bill.
Clause 43
Ownership removal orders
Mr Clive Betts (Sheffield South East) (Lab)
I beg to move amendment 94, in clause 43, page 34, line 38, at end insert—
“(e) following the revocation by the IFR of the club’s operating licence under clause 19 or under paragraph 9 of Part 1 of Schedule 9.”
I am pleased to see you in the Chair again, Ms Butler; it is a pleasure to have you presiding over us. The amendment is fairly simple, and I hope the Minister will consider it. Clause 43 is quite an important clause, because it deals with the removal of ownership. Ownership, in the end, is of a private asset. A club is a public good for the fan base, but in the end, it is owned by an individual or a corporate entity. The clause provides the regulator with a power, not a duty, to remove owners in certain circumstances if appropriate. All my amendment would do is add the revocation of a club’s operating licence to the circumstances in which the regulator can act. In other words, if the club does not have an operating licence, should not that be a factor that allows, but not forces, the regulator to deal with the ownership of the club?
Stephanie Peacock
I thank my hon. Friend for his amendment. We have seen far too many examples of the damage that can be caused by unsuitable custodians of clubs, and that is why the Bill introduces a strengthened owners and directors test.
I believe that my hon. Friend hopes that the amendment will give reassurance to fans that, where a club fails to comply with regulation and loses its licence as a result, the regulator will be able to remove the owner. The aim is to hold those responsible to account. Let me reassure my hon. Friend that the regulator is already empowered to hold individuals to account for their actions. If the club’s non-compliance or its financial situation gives the regulator concern about the owner’s suitability, it can test them, and they could be failed on that basis. If they are found to be unsuitable, the regulator will have the power to remove them. That ability to isolate and remove unsuitable owners and officers should mean that a club never has to have its licence suspended or revoked on the basis of poor ownership. That means that a club’s fans should not have to suffer the consequences of bad leadership.
The revocation of a club’s licence is the very last resort. We hope the regulator will never have to do that, but I reassure my hon. Friend that if a club is so seriously and consistently non-compliant that the regulator has no choice but to revoke its licence, we would expect the regulator to consider very carefully whether any responsibility for that failure can be laid at the owner’s door, and if the owner is tested and found unsuitable, they can be removed on that basis. We believe that the Bill’s provisions are sufficient to protect fans and hold owners to account where necessary. We hope that they will ensure that a licence is never revoked.
Lincoln Jopp
If a club has lost its licence, has it not therefore been taken beyond the purview of the regulator? How is the regulator still empowered to pursue the owner?
Stephanie Peacock
I will address that point in just a moment.
As a club’s licence is separate from its owners, the licence is held directly by the club itself, not its owners. The removal of an owner will not impact the club’s licence status. This ability to isolate and remove unsuitable and owners and officers should mean that a club never has to have its licence suspended or revoked because of its owner, which means that a club’s fans should not have to suffer the consequences of bad leadership.
We hope that a club losing its licence will be the very last resort, and an unsuitable owner will have to follow the removal order made by the regulator. It will be in the best interests of an unsuitable owner to sell their stake in a club before the regulator has to step in to force divestment and a sale at no minimum price. If the owner fails to comply with this order, the regulator will have enforcement powers that it can use to ensure compliance.
These powers will include a variety of sanctions against the individuals calling shots at the club and, where necessary, directly against the club itself. Where appropriate, the regulator will also be able to seek an injunction from the courts. Having this broad range of tools of escalating severity at its disposal will allow the regulator to take strong action as and when required. For those reasons, I hope that my hon. Friend the Member for Sheffield South East will withdraw his amendment.
Stephanie Peacock
As set out previously in the debate on clauses 38 to 42, the regulator will be able to direct an unsuitable owner to leave the club in a specified timeframe and to prohibit them from undertaking certain activities at the club in the interim. However, there is a risk that an unsuitable owner does not comply with these directions. For instance, they may refuse to leave the club or continue to use their position as an owner to damage the club. In these situations, the regulator will need sufficient powers to directly remove the unsuitable owner from the club. That is why clause 43 gives the regulator broad discretion in such cases.
The regulator can make an order containing such provision as the regulator considers appropriate to secure the unsuitable owner’s removal. For example, that could include appointing trustees, empowering the trustees to sell the club and requiring the unsuitable owner, or any other person, to comply with the trustees’ directions. However, the regulator can use this power only against unsuitable owners who have demonstrated that they are willing to flout regulatory requirements, or if they fail to comply with the directions that the regulator has made to protect the club from harm. As set out previously, in certain situations the regulator will have the power to make an ownership removal order containing whatever provision is appropriate to ensure that an unsuitable owner leaves a club.
To ensure that there are sufficient safeguards in place, clause 44 sets out the process that needs to be followed by the regulator. In particular, before issuing an ownership removal order, the regulator must publish a notice that it intends to issue the order and allow a period for interested parties to express their views. After this, the regulator must decide whether to make the order, and must publish a notice of its decision including its rationale. This helps to ensure that the views of those affected are taken into account in the decision-making process. Separately, the regulator may make rules requiring unsuitable owners to pay costs associated with an ownership removal order, such as costs incurred by a trustee appointed by an order. This power helps to ensure that the costs are borne by the unsuitable owner.
Mr French
Clauses 43 and 44 set out how ownership removal orders are to be made, and the legal consequences of non-compliance. Clause 43 matters hugely because it allows the regulator to force an individual to sell their ownership stake in a club. That is a serious and intrusive power, so we must ensure that it is used sparingly, lawfully and with robust safeguards. On process and fairness, we welcome the requirement in clause 44 to notify the person and allow representations to be made before an order is issued. However, is that enough? Will representations be meaningful, or will this just be a procedural tick-box exercise?
I have some questions for the Minister. Will the regulator be required to give full written reasons for the proposed removal? Will the owner have access to the evidence relied upon? Is there a statutory right of appeal or review, and if not, why? Secondly, on liability and legal exposure, clause 44(6) imposes the liability for costs incurred by non-compliance with an order on to an owner. What types of loss are envisaged for owners? Are they just financial, or reputational and contractual? Who decides whether a loss is caused by the non-compliance, and is causation clearly defined? Could this lead to vexatious or opportunistic claims in the future? How will this work with ownership groups, when there are multiple owners of a club?
On commercial realities, forcing the sale of a football club is not simple; in most cases, these are not liquid assets. The value depends on market conditions, the timing of the economy and sale, and obviously buyer availability and demand to purchase a football club. I therefore ask the Minister: will the regulator have a duty to ensure fair market value is preserved during a forced sale? What happens if the regulator’s actions or any delays cause the value of a club to fall? Could we see a situation where the regulator is frequently appearing in court on such claims? Fourthly, on the broader principle, the clause is in effect a power to force the sale of a privately-owned business. That is a major constitutional step. Property rights in this country matter, due process matters, and so does the rule of law. We need real safeguards, not just procedural gestures.
We want to keep football in safe hands, but the clause needs to be clearer, fairer and more restrained in its use. It must not give the regulator quasi-judicial power without necessary oversight of Parliament. That is not regulation; we believe it would be overreach. I would be interested to hear the Minister’s comments on my questions.
Stephanie Peacock
I echo the shadow Minister’s comments about the power being used clearly, robustly and fairly. I think all of us on the Committee can agree that that is absolutely right. On his question about whether the reasons would have to be written, the regulator will have to give the owner enough reasons for its decision to enable them to understand why it has been taken. That has one of the strongest appeal routes in the Bill; it can go directly to the Competition Appeals Tribunal and be heard on its merits. We think there are robust protections in place here already.
Question put and agreed to.
Clause 43 accordingly ordered to stand part of the Bill.
Clause 44 ordered to stand part of the Bill.
Clause 45
Duty not to operate a team in relation to a prohibited competition
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
The clause is the first in part 5 of the Bill, which deals with duties on clubs and competition organisers. It prevents all regulated clubs and clubs that have been regulated in the previous 10 years from having a relevant team participate in a prohibited competition.
The European super league proposed in 2021 posed an existential threat to the English football pyramid. It was an attempt by a small number of clubs to set up a closed-shop league to benefit themselves at the expense of all other clubs and against the wishes of fans. Ultimately, the European super league was stopped by the sheer will of fans around the country and the then Government’s promise to consider legislation. However, the risk of a similar breakaway competition rearing its head in the future remains, which is why we are now bringing forward statutory protections.
The clause will prevent a regulated club, or a club that has been regulated in the previous 10 years, from entering a team into a competition that the regulator has prohibited. The extension to clubs regulated in the past 10 years will stop clubs circumventing the rules by withdrawing from existing competitions to join a new breakaway competition. Similar safeguards against circumvention are found in clauses 46 and 47, which require clubs to gain the approval of the regulator for the disposal of the home ground or the appointment of an administrator. I will speak to them later.
On clause 45, the regulator is expected to prohibit competitions on the basis of a predetermined, proportionate and transparent framework based on the prescribed factors set out in legislation. That will provide up-front clarity to the industry and mean that new competitions will not just be prohibited outright. That is important to ensure that the regulator does not unduly stand in the way of innovation in the market, such as when the old First Division became the Premier League in 1992.
The clause requires the regulator, when deciding whether to prohibit a competition, to consider several factors, including whether the competition is merit-based, operates on the basis of fair and open competition, jeopardises the suitability of English football’s existing competitions or the clubs in those competitions, or harms the heritage of English football. Football belongs to its fans, so the regulator will also determine and consider the views of fans in England and Wales before prohibiting a competition.
As the national governing body for football, the FA will be consulted before the regulator prohibits any competition, and the regulator will also consult anyone else it considers appropriate. For example, we might reasonably expect that to include other competition organisers, clubs and players who might have been involved in the competition that the regulator is considering prohibiting.
Lincoln Jopp
The hon. Member makes a pertinent point. As I said, the word “competition” seems to refer to the sort of flyaway league we have discussed; are one-off friendlies competitions under the terms of the Bill?
Stephanie Peacock
I am grateful to Members for their contributions and will take their points in turn.
The clause applies both to existing and to new competitions. If any competition breaches the criteria, it can be prohibited, but matters such as scheduling are for competition organisers.
On shadow Minister’s points, we will come on to player welfare, to which we are all very sympathetic, just as we are sympathetic to the 3UP campaign, but it is outside the Bill’s scope and is for organisers. He asked some specific questions on the criteria; that will be for the regulator to determine. It is expected to do so based on a predetermined, proportionate, objective and transparent framework based on factors listed in the clause. For example, if a competition is not merit-based, jeopardises the sustainability of existing domestic competitions, and is not supported by the fans, we would expect it to be prohibited.
Mr French
My hon. Friend the Member for Spelthorne and the hon. Member for Newbury highlighted the issue of friendlies. The Minister has indicated that she will come to that, but I do think we need some clarity as to what that might look like in practice. The end-of-season competitions are normally internationally designed, and although they may be endorsed by UEFA or FIFA, they would breach some of the conditions under the definition the Minister just gave. We need clarity about how this will work, because we do not want to put English football on a collision course with international football.
Stephanie Peacock
No, of course we do not. I totally agree. I was coming to that point. As I understand it, friendlies would be out of scope, but I am happy to write to Committee members if they would like greater clarity.
We have discussed the appeals and representations several times. The relevant competition organiser will be given a period in which they can make representations. If the organiser has concerns about the regulator’s decision to prohibit the competition, it will be able to appeal the decision. As has been discussed, the organiser can also appeal to the competition appeal tribunal.
Mr French
I thank the Minister for those remarks. I suspect that a letter of clarity would be helpful for all Members. There is a risk that FIFA, or UEFA, as we have seen with the Nations League in recent years, looks to introduce a new competition, whether at club or international level, that would contradict the regulator. As we have spoken about at length, and as the hon. Member for Sheffield South East has described, the different governing bodies of UEFA and FIFA are often in competition with our national competitions. We have to ensure that clubs are not forced to choose between a licence in the English game and partaking in international competitions. We fear that could drive acceleration toward a breakaway league, rather than prevent one.
Stephanie Peacock
I completely appreciate the shadow Minister’s comments. As I said in my opening remarks, we do not ban all international competitions automatically. We are mindful of enabling innovation in the market. I am happy to supplement my comments with a letter to Committee members.
Question put and agreed to.
Clause 45 accordingly ordered to stand part of the Bill.
Stephanie Peacock
I thank my hon. Friend the Member for Sheffield South East for tabling his amendments. Prior to speaking to them, I would like to let him know that I have raised his points on a similar issue—on assets of community value—with the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Nottingham North and Kimberley (Alex Norris). I spoke to him following our Committee session on Tuesday, and he has committed to write to my hon. Friend as swiftly as possible, so I will follow up with him in a timely fashion.
Turning to my hon. Friend’s amendments, I hope I will be able to reassure him on the development of the reform. I understand the intention of his amendments, but I will explain why we intend to resist the changes to include specified properties. On extending the scope of clause 46 to include training grounds, among other properties, the legislation has carved out specific protections to safeguard home grounds against risky financial decisions or sales of the grounds. I will speak specifically to the mechanism of clause 46 and the approval process later, but the focus on the home ground is to reflect that it is often the most financially significant asset at the club. That does not mean that other assets such as training grounds or office space are not also important to the club, but that there is a specific consideration necessary for the home ground.
I understand that my hon. Friend’s amendments are likely in response to instances where owners have intended to asset strip or make reckless decisions. Members on the Committee have shared some examples, and we are all familiar with recent ones. I wish to reassure all that there are protections elsewhere in the Bill to safeguard against this. That includes an enhanced owners and directors test that will ensure that owners are prepared to be appropriate custodians of their club and its assets, as we discussed on part 4 of the Bill. If it were to become evident that an owner’s actions were likely to worsen the financial position of the club, the licensing regime gives the regulator power to place licensing conditions on the club. The regulator can also take enforcement action where such a condition has been breached or the financial plan has not been followed. Additionally, the regulator will have oversight of the financial plans and balance sheets of the regulated clubs, ensuring that the club is not putting itself in a risky position unnecessarily.
Mr French
On the point about risky situations and the risk-averse nature the Minister is describing, the Bill is clearer on disposable home grounds. I am intrigued to see how the regulator would deem a club either selling its freehold and then having a leaseback option, which we have heard has happened, or looking to move to a ground or stadium that it did not own and pay rent going forward. Would that be seen as a bad financial move or a good one by the regulator? It is not quite clear how it would work for non-disposable treatment of assets.
Stephanie Peacock
I do not want to get drawn into hypotheticals. As we previously discussed, there might be a perfectly legitimate reason for a club to move—or to move temporarily, such as for flooding. It is not an absolute power. We want to give the regulator discretion when clubs may need that for legitimate reasons. The amendment speaks to where we think clubs are asset stripping or acting in bad faith.
We would expect the power to include assets remaining in the club’s ownership and any plans to change its financial arrangements. It would be at odds with the sustainability of a football club for there to be no home ground or location to train. It is therefore implicit that the regulator would address that.
Stephanie Peacock
Yes, I believe that there is provision in the Bill to do that. For those reasons, I ask my hon. Friend to withdraw the amendment.
Lincoln Jopp
The Minister knows—I have approached her about this—that a club in my constituency of Spelthorne has gone into administration. It has no home ground, but it does have a training ground, which is a community asset. I am intrigued to know whether, in the potential conflict between the purview of the regulator and the enactment of companies law in dealing with the administration of the company, the provisions in the clause give the regulator power to influence the administrator on the manner of the administration and whether clubs’ training grounds can be bought or sold. What is the hierarchy of legislative authority between companies law and the clause?
Mr Betts
I beg to move amendment 83, in clause 46, page 39, line 2, at end insert—
“(ii) in the case of the home ground and training ground, it is satisfied that there are suitable plans in place to ensure the club’s continued long-term use of the home ground or training ground or to secure an alternative home ground or training ground for the next football season;
(iii) in the case of a home ground, it is satisfied that any alternative under sub-paragraph (ii) will have been actively approved by the club’s fans domiciled in England and Wales if any of the following non-exhaustive factors represent a significant upheaval of the connection between the fans of a club and the club: proximity to home ground, proximity to other clubs' grounds, journey time for fans and any other factors that the Regulator deems relevant;”
I have a simple question for the Minister. If the regulator decides that a sale can go ahead, is the power there to allow it to be satisfied that there are suitable plans to ensure that the club will have long-term use of a home ground and training ground? That may not be the ground it had before, but there must at least be a replacement. Does the regulator have the power to ensure that?
Stephanie Peacock
I thank my hon. Friend tabling the amendment. It seeks a number of things: extending the clause to include training grounds; guaranteeing long-term use of home grounds and/or training grounds; and introducing parameters for home ground relocation. If it is helpful, I will address those briefly, but I appreciate that this debate is similar to the one we just had.
On extending the scope of the clause to include training grounds, the Bill has carved out specific protections to safeguard home grounds against risky financial decisions or the sale of grounds. As I said in the previous debate, that is to reflect the home ground being the club’s most important asset. It does not mean that other assets, such as training grounds or office space, are not important.
I understand that, as we have discussed, the amendment is really focused on asset stripping. As I have alluded to—I will be a bit clearer and perhaps more explicit—the regulator has the power to attach discretionary licence conditions. Therefore, on the point about needing a training ground, I believe that the regulator could apply a temporary or particular licence condition on a club.
Mr French
I will not dwell on this point too much, but the implications of this amendment and the ones that we were just discussing are not hypothetical; we have seen real-life examples of where this issue has become a real one for football clubs. So, we seek some clarity from the Minister about how the regulator would act in such scenarios in the future.
As I said in my previous comments, I think the disposal of a ground is probably slightly clearer than the relocation of a ground. However, I will use the example of Coventry City football club. When they moved to the Ricoh Arena, I believe that the stadium was jointly owned by the local council and another group. I assumed that the club moved to a new stadium with the best interests of the club at heart. I had the pleasure of going to Coventry’s old stadium when Charlton played Coventry in the FA Cup, but that is a bit by the by. It was in need of improvements; most people would have thought that.
How would this measure work? We know that Coventry ran into a number of issues with the Ricoh Arena, which I believe is now owned by the Frasers Group. At that point in time, when the club moved, would that move have been deemed to be in the regulator’s purview of an inappropriate action by the previous owners? I ask that question because this is a real-life example of where it is not clear how this legislation would apply. As Parliament, we have to be clear how we intend the regulator to behave in such situations, because, as I say, that was a real-life example of how football clubs might seek to improve their stadia when they do not have the assets to do so themselves.
Stephanie Peacock
I am grateful to the hon. Gentleman for his comments. I draw his attention to the discretionary licensing addition that I have referred to: the regulator can react to different situations. I do not want to be drawn on individual cases, nor do I want to pre-empt the actions of the regulator.
Mr Betts
I really do not understand the way in which the Bill is written at present; perhaps the Minister can help me with that.
We will come on to clause 48, which is about the relocation of a club; of course, that means moving grounds. As set out in clause 48 4(c) and (d), there is a specific requirement on the club to consult with fans. We can have another discussion at some point—we may do—about consultation with which fans and which groups. I still think that this is a challenging issue that we need more clarity about.
Clause 46 is about the disposal of a ground, which is a very emotive subject for fans. It may not be the wrong decision to relocate, and clubs can relocate and take their fans with them, with proper involvement; the Everton example is probably in that category. However, there is no requirement at all to consult the fans on the potential sale of a ground. That seems to be a big omission in the Bill. Fans would not have a veto, because it is understood that sometimes there are very good commercial reasons as to why a club needs to move, which can be accepted and explained to the regulator.
Therefore, I am not saying that the disposal of a ground has to get the full approval of the fans, but surely there should be a measure whereby the fans are at least consulted and their views taken into account before the home ground of a club, where the club may have played for 100 years, is disposed of. That would not be inappropriate.
Stephanie Peacock
I thank my hon. Friend for tabling the amendments. Home grounds are a vital asset for all clubs, so I do understand his intent.
Regarding changes to the ownership of a home ground, the potential adverse outcomes are entirely financial. We do not believe that they impact the heritage of the club, which is why clause 46 does not require any heritage consideration or fan engagement. Additionally, decisions about the financial arrangements of a home ground are commercial decisions and therefore we do not think it is appropriate to legislate on them. However, I will reassure my hon. Friend that if the sale of a club’s home ground would result in the relocation of the club, fans absolutely have to be consulted about that, as per clause 48, which we will discuss later. We know how much home grounds matter to fans and communities, but this clause is purely about protecting a club’s financial position.
Mr Dillon
I seek some clarity on the relocation of a ground. White Hart Lane was demolished and rebuilt on a similar, but bigger footprint. Obviously, at Old Trafford, Manchester United’s owners are talking about building on land next to the stadium. Personally, I would not class either of those moves as the relocation of a ground. However, in the Bill would they count as relocation, because those new stadia are not on the same footprint as the original stadium?
Stephanie Peacock
I will double-check that point, but I believe they would. I also refer to the points we discussed earlier in the Committee: clubs may want to move for a particular, legitimate reason—to improve their ground, or because they have to due to flooding in adverse weather, for example. We appreciate that these are not all bad actors and it is not all bad faith, but I will double-check that point and come back to the hon. Gentleman. We know how much home grounds matter to fans and communities; this clause, together with the owners and directors test, is about protecting the club’s financial position and its balance sheet from asset stripping by bad actors.
Mr Betts
Is the Minister saying, then, that a club owner could sell the ground without even consulting the fans—just present it as a fait accompli—and then, because there would not be a home ground to play on and the club might have to relocate, at that point they could say to the fans, “Well, the ground’s gone; we’re now going to ask you whether you want to move.”? There seems to be a gap in the thinking somewhere.
Stephanie Peacock
I appreciate that point, but the sale of home grounds is a primarily financial decision, separate from the decision about where the club actually plays its games. That is why there is currently no requirement to consult or obtain approval. If the club has not actually relocated, it would be caught in clause 48 and would be required to consult fans. We will come on to discuss that later.
Mr French
I must admit that—like other members of the Committee, to judge from their facial expressions—I am slightly confused by the reasoning the Minister has given in response to the hon. Member for Sheffield South East on this clause, and where the distinction lies between the ultimate decision to relocate the ground and the sale of the ground. The decisions are clearly interlinked, and I would argue that fans would have strong concerns if a club owner was seeking to sell the ground, which would in a number of instances lead to either a relocation or an impact on the club’s heritage. The sale, for example, could lead to the renaming of a stadium, and the fans would clearly have a view on how that would impact their support for the club.
I ask the Minister to reflect on the hon. Gentleman’s points, because the clause seems to lack clarity on how that distinction is being made. I understand the point she is making about the financial considerations of owners, but the Government should reflect carefully on the argument against this clause, because it is not very clear to members of the Committee.
Stephanie Peacock
I appreciate the comments that have been made, and I will take them away and reflect on them, but I ask my hon. Friend the Member for Sheffield South East at this point to withdraw his amendment.
Mr Betts
The Minister has taken a very sensible approach. I accept that accepting an amendment here and now, out of the blue, is not how Government operate; but there is a lack of consistency between the two clauses, so I appreciate her agreeing to go and have a look at them. She has not committed to a change, but she has agreed to have a look, and that is very helpful. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
As discussed during the debate on the previous amendments, clause 46 serves as an important protection for the home ground of a club. It requires clubs to gain the approval of the regulator prior to any sale or use of the home ground as collateral. A home ground is often one of the most vital and valuable assets a club can own. If it is used as collateral for debt or sold off, that can impact a club’s financial position by weakening the balance sheet. Not owning the stadium may also threaten a club’s long-term financial sustainability.
This clause requires clubs who own their ground to obtain the approval of the regulator prior to any sale or use as collateral. The regulator will consider the risk to the financial sustainability of the proposed transaction and block any potentially financially damaging sale of a club’s home ground. This applies to regulated clubs and also to any club regulated within the last five years, which prevents bad actors from being able to circumvent regulation by leaving regulated leagues in order to skirt protections and strip assets. It recognises the important role that football grounds play in the financial sustainability of clubs and adds protections against bad actors.
Question put and agreed to.
Clause 46 accordingly ordered to stand part of the Bill.
Clause 47
Duty not to appoint administrator without approval
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
This clause sets out the duty on regulated and formally regulated clubs not to appoint an administrator without approval from the regulator. This is to ensure that administration is transparent, acts in the best interests of the club and its creditors and avoids any perceived or actual conflicts of interest. This will give all stakeholders, especially fans, confidence in the administration process.
As with clause 46, this applies to regulated and formally regulated clubs to avoid any risk of circumvention of the rules. The regulatory framework is not a zero-failure regime, so it is possible that football clubs may enter administration despite the best efforts of the regulator. There is already a legal framework for companies, including football clubs, to enter into administration, which is detailed in the Insolvency Act 1986. In many cases, the existing framework has enabled clubs to go into administration and re-emerge as solvent.
However, there are occasions where the administration of a club is not initiated by the creditors but the club itself, so it does not require a court to sanction the appointment in advance. In these circumstances, there have been occasions when some have had cause to question a relationship between the insolvency practitioner appointed as administrator and the football club. This is why, in specific circumstances, the appointment of an administrator requires the regulator’s approval to ensure that the process is transparent, and to avoid conflicts of interests or perceived bias in the appointment. By doing so, all stakeholders, particularly fans, should have more confidence that the outcome is the best one available in the circumstances for the individual club.
Mr French
Clause 47, as the Minister has just outlined, creates a new legal duty on clubs not to enter administration without the prior approval of the regulator. This is an unprecedented intervention: a regulator potentially blocking access to what is, in most sectors, a standard insolvency mechanism. We understand the intent to prevent abuse of administration as a means of dodging financial responsibility and to help protect club continuity. However, this clause raises serious concerns about the balance between corporate law and football regulation going forward.
As drafted, subsection (1) says,
“as soon as reasonably practicable after the body considers that there is a reasonable prospect of an administrator of the body being appointed”.
I would therefore naturally ask the Minister: what constitutes “reasonably practicable” and “a reasonable prospect”? We all appreciate that, in most examples, an owner’s wealth is generated not by the club itself but other business interests. It may become very difficult to determine what is “a reasonable prospect” if we are looking at business interests far from football.
Administration is recognised as part of UK insolvency law, which the Minister referred to, and it exists to help distressed businesses rescue viable parts and protect creditors where possible. Blocking access to administration could make things worse, not better, specifically if it delays actions or deters future buyers. Why are the Government confident that the regulator is better placed than insolvency professionals to determine when administration is appropriate?
On some of the practical risks, insolvency situations often develop quickly, and clubs may need to act fast to avoid a complete liquidation of assets. A duty to obtain the regulator’s approval would therefore add delay and could risk total collapse where speed might be essential. We have seen that in a number of club takeovers over the years. Will there be an emergency approval process for an administrator? Within what timeframe does the Minister expect the regulator to respond? Is there a default route if it does not respond in a quick enough time?
On consistency with company law, clause 47 effectively overrides the Companies Act 2006, creating a two-tier insolvency regime for football clubs. That is not a small step. It sets a precedent for sector-specific interference into commercial law. What discussions has the Minister’s Department had with the Insolvency Service and the Department for Business and Trade on this specific clause and mechanism going forward? Are there any comparable sectors in the UK where companies would be forbidden from entering administration without the regulator’s consent?
Lastly, on unintended consequences, could this provision make distressed clubs less attractive to investors who fear regulatory delays? I fear that it may. It may also push clubs to delay taking action, making outcomes worse for creditors, fans and staff in the longer term. It could also expose clubs to legal risks, if creditors challenge a failure to act promptly to directors. The Opposition support strong oversight, but clause 47 must not become a regulatory roadblock in moments of crisis. Football clubs must be able to act swiftly to protect their future. The football regulator should be a safeguard, not a barrier to survival. We urge the Minister to have a close look at some of those questions and hopefully provide some answers today. We fear that this clause, as drafted, may have a number of unintended consequences.
Ordered, That the debate be now adjourned.—(Vicky Foxcroft.)