Football Governance Bill [ Lords ] (Eighth sitting) Debate
Full Debate: Read Full DebateDepartment: Department for Digital, Culture, Media & Sport
Louie French
Main Page: Louie French (Conservative - Old Bexley and Sidcup)Department Debates - View all Louie French's debates with the Department for Digital, Culture, Media & Sport
Football Governance Bill [ Lords ] (Eighth sitting)
Louie French ExcerptsThursday 12th June 2025
(2 days, 20 hours ago)
Public Bill CommitteesRead Full debate Football Governance Bill [HL] 2024-26 View all Football Governance Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 12 June 2025 - (12 Jun 2025)
Mr Betts
It is good to have you back in the Chair with us this afternoon, Ms Butler—I am sure you are happy to be here. We are moving to further deliberation on the issue of consultation, in connection with the movement of grounds and the importance of the fans’ views. One issue is around not the desire or intention to stop clubs moving grounds at all costs, but ensuring that if ground movement happens, the fans’ interests are clearly taken into account. It is not to stop the Everton move, a little way down the road in Liverpool; it is to stop the Wimbledon move to Milton Keynes. That is what this is about—the fact that a club could be uprooted.
I have wandered around parts of London for many years, seeing Wimbledon play at various grounds. I think they played at Charlton for a time, and probably also at West Ham—they certainly moved to different places. I think Brighton played in Gillingham for a time as well. Those were temporary moves, but they should have been stopped in the first instance by not letting the club owner sell the ground. For Wimbledon, it was simply a move that took no account of where fans live or their loyalty to the club. It operated a bit like an American franchise system: “I’ve got the ownership of the club. I can move it where I want.” That is what happens in football in the States. We do not want it to happen here.
Amendment 91 is an attempt to add certain criteria when the regulator is looking at the potential to approve a transfer of grounds, including the proximity to the current home ground and the club’s other grounds, where fans live and how far they have to travel. I suppose Manchester United could locate almost anywhere because they have fans, they would claim, all over the world, and Man City fans would claim that there are more Man United fans outside Manchester than in it. But those are internal rivalries that we should not get into here. The reality for most clubs is that they have a local fanbase, and that should be taken into account before any move is deemed acceptable.
Even if the Minister cannot accept the amendment’s wording, I hope she might recognise that in reaching those decisions, the regulator must seriously take account of fans’ views—not just the view, “We don’t want to move; we’ve always been here,” but, “We don’t want to move because they’re trying to locate us 100 miles away and we simply can’t get to home games on that basis.” I hope that the Minister might think about that.
New clause 14 aims to get clubs to write into their articles of association the issues in the Bill that they have to take account of—the heritage restrictions—to ensure that they are firmly embedded in how the club operates.
Mr Louie French (Old Bexley and Sidcup) (Con)
I hope that everyone is appropriately refreshed after the lunch break. I will not seek to go to VAR to rehash any of the debates we had before lunch, but we have great sympathy with the points made by the hon. Member for Sheffield South East. We also believe that fans should have a strong say if clubs seek to move ground, as we have debated. The obvious questions, which we will come to in the next set of debates, are about what fan consultation and approval would look like. I know that that will be part of our heritage discussion in a moment, so I will not proceed on that now.
In thinking about some of the hon. Gentleman’s examples—Wimbledon being the most obvious one—I recall that as a teenager, or a bit younger, I would watch Wimbledon play at Crystal Palace, at Selhurst Park. They were the Crazy Gang in south London at that point, and they would often play there. So I understand his point, especially about the move to Milton Keynes and the controversy that that caused. As he highlighted, thankfully, we have not had too many examples that are similar to the American franchise system, where, in the National Football League, the Raiders have moved a number of times over the years, to different cities, depending on the financial attraction of each state.
Beyond the Man United and Everton examples, which we have discussed, there are other clubs who have moved. The one I first think of, which is closest to where I am from, is the Arsenal move a number of years ago from Woolwich Arsenal in south-east London to Islington. It is an interesting point, because a lot of the fans in south-east London are still strong supporters of Arsenal because of their generational links. For example, my brother-in-law’s grandfather was an Arsenal fan, so he is an Arsenal fan. The London example is probably not the best one, because it is simple to argue that fans can get across London fairly easily. It would be more dramatic if a club were being moved to the other end of the country, which is the point he is making—he is nodding in agreement.
I will be interested to know how the Minister and the Government view the amendments and how this issue might impact the regulator’s operations. I have a lot of sympathy for the amendments, and I will listen carefully to the Minister’s response.
Stephanie Peacock
Welcome back to the Committee after lunch, Ms Butler. I thank my hon. Friend the Member for Sheffield South East for tabling the proposals, which seek to strengthen the protections on club heritage. The safeguarding of football heritage will be a key priority for the regulator, and there are a number of provisions in the Bill to uphold that key objective. It is vital that fans can have their voices heard at their clubs, especially regarding key heritage assets that can play a significant role in community identity and history.
That is why, as we will discuss in relation to clause stand part, clause 48 requires clubs to consult their fans and have regard to their views on a proposed relocation of a home ground. It is also why the regulator will determine whether the relocation will result in significant harm to a club’s heritage. This is not a binary decision, however, and in lots of cases will require a holistic approach and for the regulator to consider a number of factors, including not just the views of current fans, but the club’s history and the ability of fans to get to the ground. We would expect the regulator to engage and consult fans of the club, because it would be necessary to do so to ascertain the impact on club heritage. As the shadow Minister touched on, we will discuss this further in a little bit.
Amendment 91 would require the club to take reasonable steps to establish the views of the majority of supporters, rather than allowing the regulator to take the multifaceted approach that the Government think is best suited to the nuanced issue of club heritage. The importance of fan voices being heard is why the regulator spells out a number of protections for heritage assets, such as the home brand and home shirt colours, among others. Any breach of these duties would qualify as a relevant infringement by the club. Although we expect that the regulator will take an advocacy-first approach, a range of sanctions will be available.
Although the Government understand that the intention behind new clause 14 is to further entrench these duties, this legislation has been designed so that the duties apply across the clubs, with the regulator ensuring compliance. Amending articles of association can be resource-heavy and require shareholder agreement. It also does not guarantee that there will be compliance. This is not something that the Government see as an appropriate or necessary step to require all clubs to take. Instead, the Bill will protect fan consultation through other means. For those reasons, I am unable to accept the amendments.
Mr Betts
I just want to ask a simple question: why has “the Football Association” suddenly appeared at this point in the Bill? It has not been part of the requirements on the regulator until now. If I am right, it was not in previous iterations of the Bill—I may be wrong. I would have thought that the view of fans is most important. The FA does excellent work on many issues in football, not least trying to engage with England fans, but in this respect, are the fans of the club not more important?
Mr French
Clause 49 introduces a duty on regulated clubs to safeguard key aspects of what the Bill defines as club heritage. This specifically relates to changes in a club’s name, its badge and its home shirt colours—things that may seem cosmetic to the outsider, but which football fans know are part of the heart and soul of a club.
Whether it is the famous black and white of Newcastle United or the immense history of Deepdale in Preston, these things mean more than just the colour of the top or where people watch football. They are integral parts of footballing communities. They symbolise membership of something bigger than oneself. The club colours, the club badge and the home ground are all ways in which fans identify themselves as being part of a footballing family. They must be protected.
This clause is an important recognition in statute that football clubs are not just commercial entities, but cultural institutions, symbols of community identity and civic pride. As such, changes to these heritage elements should not be made casually or without due regard to those whose lifelong support gives clubs their very meaning, often across generations.
We welcome the inclusion of clause 49, which we believe is essential, but we do not believe it goes far enough. That is why we tabled amendment 111.
Mr French
Yes, I am happy to and will come on to that point. Amendment 111 would require the majority of fans to approve any such changes to a club’s official name, its badge or its home shirt colours, not just to support them. “Support” can be vaguely defined. It can be skewed by a few loud voices or specific interest groups, rather than being a genuine exercise in democracy. While consultation is important, it is ultimately no substitute for consent.
Football clubs are, by their very nature, multi-generational institutions. Most are older than the companies or corporate vehicles that now own them and some are even older than the Labour party that now seeks to impose this regulator. They existed before many of their current directors were born and will, we hope, outlast all of us.
The badge on the shirt is not simply a badge: it is a symbol of place, of pride, of glory and heartbreak, of a historic past and a hopeful future. The name of a club is not simply branding: it is geography, history and memory all in one. And the home shirt, whether it is red, claret, blue or black and white, is more than a colour scheme—I apologise if I missed any; orange for Wolves, maybe, but I am sure hon. Members get the point. It is part of the club’s identity, part of the community’s fabric.
When clubs change these things, particularly when they do so without the blessing of their supporters, they do more than upset tradition. They erode trust and sever the cultural connection that keeps that team and the English game alive. Let us not forget that when Cardiff City’s owner unilaterally changed their home shirt from blue to red, the backlash was enormous, because it was not Cardiff’s colour. Cardiff’s owners, much like the electorate, came to regret switching from blue to red pretty darn quickly. Will the Minister confirm whether clause 49 would prevent what happened at Cardiff or whether such a change could still be pushed through after a period of consultation, however superficial?
The clause imposes a duty on clubs to consult fans before making changes to heritage elements. That is better than nothing, but is quite a low bar. We have all seen what consultation can look like in practice—a web form, a vague email or a one-off survey. Then the changes proceed regardless of overwhelming opposition, with clubs claiming that consultation has been completed.
I think most hon. Members would agree that that is not meaningful engagement and it certainly does not reflect the degree of ownership that supporters rightly feel over the identity of their home club. That is why we support the amendment to move the requirement from consultation to majority fan approval—that is, in other words, a vote, or a similarly binding expression of fan will, overseen through whatever supporter representation structure the club has in place. Will the Minister set out what the Bill actually means when it states,
“the club has taken reasonable steps to establish that the changes are supported by a majority of the club’s fans in England and Wales.”?
Lincoln Jopp
The shadow Minister is making a completely reasonable amendment. We have the emblem, colours and name. Does he agree that it would be helpful if the Minister explained why the name has been taken out for different treatment from the emblem and the colours?
Mr French
I am sure that the Minister will have heard that contribution from my hon. Friend and will be able to pick up on that in her comments. He is right to identify that such a distinction has been made in the Bill.
What does this mean? For example, will an hour-long Twitter poll on what a club should do be sufficient? We have seen how clubs have sought to use X in some quite funny ways at times, but on something as serious as this, we need proper consultation. Instead, does the Minister expect that clubs will engage in a full, proper and open consultation with their fans, such as one that includes a call for evidence, votes on different proposals and genuine engagement from the clubs themselves? Otherwise, this all risks just being for show, rather than real consultation.
Why stop at just consultation? If a proposed change is sensible, justifiable and supported by a club’s reasoning, why would the club not be able to win over the majority of its fans, if the fans agree it is in the best interests of the club? Why are the Government, in this Bill’s drafting, afraid of allowing fans to have a real and final say on these matters? This is not about allowing fans to micro-manage a club; it is about recognising that the symbols, colours and names of clubs are all held in trust, not owned in a transactional sense.
Football club owners are, in truth, temporary stewards. Their role is not to reshape the soul of a club but to protect it and hopefully strengthen it before passing it on. Far too often we have seen the reverse: owners who arrive with branding ideas and marketing consultants, determined to reshape the club’s visual identity to fit a certain commercial strategy, often with little or no understanding of the local footballing tradition in that community. Supporters have had to campaign, protest and plead to get what should have been theirs almost by birthright: a say in the symbols of their club. Does the Minister agree that clause 49, if limited to just consultation, risks becoming just a tick-box exercise, particularly in clubs without strong fan representation models in place?
There is a precedent for this kind of requirement. In Germany, the so-called 50+1 rule ensures that fans retain majority voting rights over key aspects of club identity and operation. In Spain, the socios model does so too. To be clear, we are not calling for full fan ownership, but we are saying that, on issues of identity, the final word should ultimately rest with the fans. Let us remember that this amendment would apply only to three specific heritage areas: the club’s official name, the badge—or crest, depending on how we want to describe it—and the home shirt colours. This is not about banning innovation or marketing altogether. It is simply saying that, when it comes to fundamentals, supporters should have a say.
Max Wilkinson (Cheltenham) (LD)
We have seen in the past things such as the renaming of St James’ Park in Newcastle to the Sports Direct Arena, and other fans groups around the country have been furious when historic stadium names have been changed to sponsors’ names. Would the shadow Minister extend the sentiment that he is now expressing to those circumstances as well?
Mr French
I appreciate the hon. Gentleman’s contribution, and that is the point that we were discussing earlier with the hon. Member for Sheffield South East. We were seeking clarification from the Government on how that would affect the consultation of fans on the relocation of stadiums or a change in their ownership. I agree that it is crucial that fans have a say in the naming and history of their ground.
Max Wilkinson
The hon. Member for Great Yarmouth (Rupert Lowe) once fell foul of this when he attempted to change the name of the Dell to the Friends Provident stadium. Perhaps we might consult him on his learnings from that experience after we have completed this Committee.
Mr French
I am not sure how to answer that. How Members decide to use their time is a decision for them, but the hon. Gentleman has made the point well. Without wishing to put off Government Members, the argument behind my amendment is deeply Conservative in some ways; it is about tradition, continuity and community. It is about respecting the past while also securing the future. It is about recognising that football is strongest when it listens to the people who love it most.
The clause is a step forward, and we think its inclusion in the Bill is important. Without our amendment, however, we are concerned that the clause will lack the legal bite required to safeguard the symbols that matter most to supporters. In truth, clubs that respect their fans would already seek that approval; the amendment would simply ensure that those who do not are held to the same standard. To be clear, no one should be able to change the name of Barnsley FC, the badge of Wigan Athletic or the home colours of Aston Villa without the backing of the very people who built the stands and carry the soul of the club every single week across multiple seasons.
I urge the Minister and colleagues across the Committee to back the amendment. Football’s future must be modern and well run, yes, but it must also be anchored in tradition, and the tradition belongs to the fans.
Stephanie Peacock
We will come on to enforcement, but a range of enforcement options will be available to the regulator, if it feels that a club is not doing what it asked the club to do.
Mr French
To add to the point made by the hon. Member for Sheffield South East, if a club—the Minister gave the example of Hull—decided that it wanted to go ahead and change its name to “Hull Tigers”, but the regulator felt that the fans had not been consulted thoroughly enough, could the regulator deduct points from a club?
Mr Betts
I hear what the Minister said, but I want to think about that. I know what her good intentions are, but I also know there may be some people out there with bad intentions; it is about making sure that they come in line with the Minister’s good intentions. I am holding back to see what further discussions we have, but this is really important. It is a wider issue: there are so many clubs with so many disparate fan groups, and owners will pick and choose if there is not certainty. That is why I raised the issue, which I think we ought to come back to, of a clear role for the Football Supporters’ Association, the body that oversees fan groups in this country. It has a neutral view of which groups are the most important and relevant in different clubs, and it can help the regulator enormously in what, in some cases, will be a challenging process of trying to identify the fan groups who really speak for fans in those clubs.
Mr French
I will not put the hon. Member for Sheffield South East at risk with his own side by talking too fondly about the comments he just made—I will not make it sound like we are trying to do a double act—but we have heard a lot of concern in our debates on the clause, and the amendments tabled to it, about how it will work. The hon. Member mentioned that some club owners—one would hope only a minority of them—would seek to expose loopholes in the Bill. That is why we tabled amendment 111, which would introduce a safeguard by requiring a clear vote and the approval of the majority of fans.
There are a number of risks for the Government with this Bill, but one of the biggest is this: if it does not protect the things it is designed to protect—in this case, the heritage of a football club and a say for fans—what is its purpose at all? If one of the examples we have discussed plays out in future, that question will be asked of the Government. In our future debates on the Bill, perhaps they can provide more clarity about their thinking, and perhaps they will incorporate some of the arguments we have made today.
Stephanie Peacock
I am grateful to hon. Members for their contributions. We believe that we have strengthened measures in the Bill to put fans and communities back at the heart of the game and to protect football heritage. All regulated clubs will now be required to have an effective framework in place to meet and consult regularly a representative group of fans on the specified relevant matters, including any proposal to relocate the home ground and some of the issues we have just discussed. We expect that the regulator will be best placed to understand the circumstances of individual clubs across the country. It will produce guidance to support clubs in meeting its requirements, and it will take into account things like precedent and ensuring proportionality.
Question put and agreed to.
Clause 49 accordingly ordered to stand part of the Bill.
Clause 50
Duty to notify of changes in circumstances relevant to the IFR’s functions
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
The clause places a duty on all regulated clubs to notify the regulator of any material change in circumstances that is relevant to the regulator’s functions, as soon as reasonably practicable. The regulator will need a complete picture of each club in order to effectively regulate. Full transparency and timely updates will allow the regulator to stay up to date on any relevant changes in real time.
The duty to notify in the clause is an ongoing duty on regulated clubs. By contrast, the annual declaration mandatory licence condition applies to licensed clubs only. The annual declaration is about creating an annual touchpoint for clubs as part of the licensing regime, rather than requiring an annual licence renewal. It will allow clubs to declare a summary of any matters that they notified, or should have notified, over the past year.
Mr French
I will not rehash the Minister’s description of the clause, but it raises a number of questions about the interpretation of the clause and the requirements on clubs. What guidance will be provided to clubs to determine what constitutes a “relevant” change in circumstances, because that is very open to interpretation? What might such a change look like? We are not trying to micromanage, but we think clubs might find it helpful to understand, even if it is via a list of frequently asked questions from the regulator, what constitutes a change of circumstances so that they do not accidently fall foul of well-intentioned drafting.
Could the duty to notify a change in circumstances be accidentally disproportionate to lower league clubs? We have discussed at length that those clubs generally do not have the same administrative resources as the big clubs. Will the regulator look to have a more flexible approach to clubs lower down the pyramid that may not have the ability to notify as quickly as those at the top?
Stephanie Peacock
We expect the regulator to look at this on a case-by-case basis. As we have said throughout, we very much intend for the regulator to be proportionate depending on where a club sits in the pyramid.
Question put and agreed to.
Clause 50 accordingly ordered to stand part of the Bill.
Clause 51
Duty to keep fans informed of insolvency proceedings
Question proposed, That the clause stand part of the Bill.
Stephanie Peacock
The clause places a duty on all regulated clubs in relevant insolvency proceedings to keep fans informed of the progress of the proceedings. Any fan that has experienced their club going into administration can attest that it is a worrying and often confusing time. Although the regime will look to best protect clubs, it cannot be zero-failure. However, the clause is intended to make the process more transparent for fans when the worst happens. The duty will apply only as far as is reasonable and will not fall on the administrators or any body not regulated by the football regulator. The clause was added to the Bill in order to mitigate unnecessary worry and confusion for fans.
Mr French
I have a few questions. How will the regulator assess whether a club has sufficiently fulfilled its duty to keep fans informed? Could the requirement to disclose information during insolvency proceedings create additional reputational or financial risks for clubs? How will the clause be applied consistently while respecting confidential obligations to creditors? We have spoken a lot about insider information. If the Minister does not have the answers today, it would be helpful to get them in writing in order to understand how some of these complex legal matters might work.
Stephanie Peacock
I am happy to write to the shadow Minister. I appreciate that we added this clause; it was not in the previous iteration of the Bill. That is why I was keen to talk about reasonability. We appreciate that insolvency is a complex, fast-paced, changing and challenging situation, but we also appreciate—Members have talked about different clubs that have gone into administration—the worry for fans, so we want to keep them as informed as reasonably possible. The shadow Minister asked me for something further in writing and I am very happy to provide that.
Stephanie Peacock
The clause requires licensed clubs to prepare a personnel statement and submit it to the regulator for approval. Alongside the statement, clubs must provide an explanation as to why they consider it to be accurate. The owners and officers who control and run football clubs are vital to their sustainability. Therefore, the regulator needs to know who is running the show behind the scenes in order to implement its regime effectively.
A personnel statement must outline each of the club’s owners and its ultimate owner, as we have discussed; its officers, with a job description for each; and its senior managers and their roles. Once the statement has been submitted, the regulator will review it and decide either to approve it or to modify it. Any modification to the statement must be made in consultation with the relevant club to ensure that the statement is accurate. Once the statement is approved by the regulator, the club must publish it online, increasing transparency and accountability in football. Subsequent statements must be submitted to the regulator if an old statement becomes out of date—for example, after the departure or hiring of an officer.
Let me also highlight the role of the Secretary of State’s guidance in providing clarity to owners about who meets the definition of someone who exercises significant influence or control. We committed in the other House to producing the Secretary of State’s guidance before clubs are required to identify owners who meet that definition to the regulator. I commend the clause to the Committee.
Question put and agreed to.
Clause 52 accordingly ordered to stand part of the Bill.
Clause 53
Duty to pay a levy
Mr French
I beg to move amendment 133, in clause 53, page 42, line 3, at end insert—
“(1A) But the IFR may not require a club with fewer than 10 full time equivalent employees to pay the IFR a levy in respect of a chargeable period during which the club is a licensed club.”
This amendment would exempt clubs with fewer than 10 full time equivalent employees from having to pay the levy.
The Chair
With this it will be convenient to discuss the following:
New clause 5—Opportunity for levy exemption for clubs below the Football League—
“(1) The Secretary of State must by regulations make provision for a process whereby a licensed club may apply for a full or partial exemption from the levy established under section 53 if—
(a) the club’s first men’s team competes in the National League or any lower tier of the English football pyramid, and
(b) the club demonstrates, to the satisfaction of the IFR, that paying the levy would pose a significant risk to its financial sustainability.
(2) The IFR must report annually on the number of exemptions granted and the rationale for each decision.”
This new clause allows clubs in National League North and National League South to apply for a levy exemption under specific circumstances.
New clause 24—Levy exemption procedure for clubs in administration—
“(1) The Secretary of State must make regulations establishing a procedure under which a regulated club that has entered administration may apply for an exemption from the levy provided for by section 53.
(2) The regulations under subsection (1) must include provision for the IFR to determine whether an exemption from the levy should be granted.
(3) Provision under subsection (2) must require the IFR—
(a) to take account of the circumstances under which the club entered administration, and
(b) only to grant an exemption from the levy if the IFR is satisfied that the owners of the club have not taken a decision to enter administration in order to secure an exemption from the levy.
(4) In this section, a club has ‘entered administration’ if an administrator of the club has been appointed under paragraph 22 of Schedule B1 to the Insolvency Act 1986.”
This new clause requires the Secretary of State to establish a procedure for clubs in administration to apply for an exemption from the levy. The IFR would only be able to grant an exemption if satisfied that the club had not deliberately entered administration as a means of securing the exemption.
Mr French
It is my pleasure to speak to amendment 133. Clause 53 introduces a duty on regulated clubs to pay a statutory levy to the Government’s new regulator—a mechanism intended to fund its operations and ensure its independence from Government and industry influence. The principle is not unreasonable. If clubs are to be regulated, one could argue that it is fair that they should contribute to the costs of said regulation.
However, we have two initial concerns. First, as the initial costs incurred are to be borne by the taxpayer, that does not ensure independence from Government—quite the opposite; it creates a reliance on the Government for funding and therefore for direction and sponsorship of activities. According to the Government’s own impact assessment, the regulator will cost taxpayers around £106 million until the levy provided for by the clause is up and running.
To put that in context, that money could fund the Lionesses futures fund, which the Government have scrapped, more than three times over. In what should be a fantastic and inspirational year for women’s sport, the Government are choosing to spend money on regulating men’s football instead of investing in the growth of the women’s game. I make that comparison with quite a lot of regret because I believe that it is the wrong decision by the Government, but I will stick to the Bill.
Secondly, many clubs have not asked to be regulated, and they might ask why they should pay for a regulator that seeks to stifle their operations or interfere with their performance and make them uncompetitive in the competitive world of sport. I have asked the question the Minister in previous sittings what would happen if a club chose not to apply for a licence. I am a bit unclear how that would look. According to the Government’s own impact assessment, the yearly cost to all regulated clubs in the English football pyramid will be up to around £142 million, with up to £1.2 million in one-off familiarisation costs, ongoing compliance costs of up to £35.8 million every year following the first year, and operational costs, which will be incurred every year. As I mentioned earlier, the operational costs will be funded initially by the taxpayer, before an industry levy is introduced.
That is an extraordinary amount of money to be leaving the game, especially as the Minister has recognised that money leaving the game in agents’ fees, for example, is detrimental to the sustainability of English football. The costs that the Government are imposing on clubs through the regulator clearly threaten the sustainability of some clubs, as a stand-alone issue. Moreover, as the Minister’s own impact assessment states, the costs are not expected to fall equally on each club; proportionately, they will be greater, and felt more greatly, further down the pyramid.
The impact assessment also states that factors such as
“existing levels of compliance impact the level of activity required”
by the regulator. We all know that that means more work and higher costs for lower-level clubs over the wealthiest. They will have more catching up to do than the big clubs in most instances, leaving them to bear the brunt of the Government’s regulator. It is vital that, as Opposition Members have said throughout this Committee, the regulator is not captured either financially or politically by any one interest group. However, that will now prove difficult with the appointment that the Government have made.
Although we support the broad purpose of clause 53, we must interrogate its fairness, proportionality and impact on smaller clubs. That is why I tabled amendment 133, which would exempt clubs with fewer than 10 full-time equivalent employees from the statutory levy. Regulators do not run on good will alone, and this one certainly will be no different. They need staff systems and legal support, but costs must be borne fairly and in a way that does not threaten the institutions that the Bill seeks to protect.
Clause 53 allows the regulator to determine how much is paid, by whom and how often, subject to regulations approved by the Secretary of State. It is a wide power and an open-ended one. As it is drafted, the Bill does not place any cap on the amount or impose any statutory criteria on proportionality. Will the Minister confirm whether the Government intend to introduce guidance or a statutory cap on the total amount that might be levied by the regulator, either per club or across the sector?
Given that the proposed appointee to the role of chair donated to the Secretary of State, can the Minister confirm that the Secretary of State will not make any decision on how much money can be levied in the future? As it stands, the clause effectively allows the Secretary of State to write a blank cheque to a regulator run by a person who donated directly to her leadership campaign. That alone creates the perception of a conflict of interest, for which the current Secretary of State, as we all know, is under independent investigation.
Although some Premier League clubs might be able to absorb the costs, the same cannot be said for smaller, lower-league or community-based clubs such as Barnsley, Bromley or Wigan. My amendment would create a simple, fair exemption. Any club with fewer than 10 full-time equivalent employees would not be required to pay the levy. That is not just an administrative fix; it is a recognition of football’s diversity and, in true footballing spirit, would champion the underdogs by allowing them to focus on their squads or stadium improvements that would benefit fans. A club with eight employees is not in the same universe, financially or structurally, as a Premier League club with a commercial team, global brand and multimillion-pound payroll.
Mr French
That is a fair challenge. To be clear, we are not talking about five-a-side teams. To give a straight answer, we are talking about backroom staff affected by the administration. We can see that in the wage bill at opposite ends of the pyramid in 2022-23, with the Premier League’s wage bill running at more than £4 billion and League Two’s wage bill sitting at just £96 million, or 2.4% of the Premier League’s total.
Mr French
To be completely up front, I do not have that answer in front of me, but I will find out—the team has drafted this amendment.
Without this amendment, clubs in both the Premier League and League Two could find themselves subject to the same regulatory levy. This risks creating a two-tier burden, where the most vulnerable clubs are saddled with costs that they cannot pay for a regulator that many of them do not want.
Why have the Government chosen not to introduce an automatic exemption for the very smallest clubs, and has an exemption based on staffing levels or turnover been considered? We already accept differential treatment in other areas of public policy—for example, small businesses are treated differently from large corporations, and community amateur sports clubs benefit from separate tax and regulatory frameworks. We believe that the same logic could apply here.
James Naish (Rushcliffe) (Lab)
I am sure the shadow Minister is aware that many top-flight footballers are effectively self-employed through independent companies that they set up. Does he not recognise that this amendment would create a loophole that enables football clubs to split into multiple organisations to fall short of having 10 full-time employees?
Mr French
I understand the hon. Gentleman’s point, and I know that certain players have sought to do that through advertising and other financial arrangements. We are talking about clubs at the lowest level, and we do not believe that is a particular risk of this amendment.
One of the key failings of the football system in recent years has been the concentration of financial risk at the lower levels of the pyramid. Clubs overextend themselves chasing promotion, owners gamble recklessly to stay afloat, and supporters ultimately bear the costs when that does not work and when clubs collapse. The last thing we believe we should be doing is introducing a new statutory cost that could tip the balance for smaller clubs already running on the thinnest margins. This amendment is not about letting anyone off the hook; it is about recognising scale, and recognising the difference of scale in the football pyramid.
Will the Minister please commit to publishing a full impact assessment of the levy’s distribution before regulations are laid? Without that, how can Parliament be sure that the burden will not fall disproportionately on those least able to bear it? One of the justifications for the levy is to secure the regulator’s operational independence, which is a principle that we support, but independence should never mean insulation from scrutiny. If clubs are paying the regulator’s bill, they should at least know where the money is going and have confidence that it is not being wasted.
The Minister has maintained that football regulation cannot be one size fits all, and we understand that is her reason for leaving the wording of the Bill quite open-ended in places. Clause 53 is sound in many ways, but in practice it risks imposing an undue burden on the very clubs that the Bill is supposed to help—those rooted in their communities, run on small budgets and kept alive, more often than not, by volunteers, not venture capitalists. In that spirit, I will be pressing this amendment to a vote.
Max Wilkinson
It is a pleasure to serve under your chairship, Ms Butler. Earlier in our deliberations—I cannot remember how many sittings ago—the Liberal Democrats made the case for extending the Bill’s scope to the sixth tier, the National Leagues. Effectively, we feel that helping those clubs up the pyramid would be useful, and on a cross-party basis, we have discussed support for the National League’s 3UP campaign, which we can take forward after Committee as a group of Members who are interested in football.
This amendment is quite simple, as it is about extending the Bill’s scope to the sixth tier. It would give clubs in National League North and National League South the opportunity to apply for an exemption from the levy, were it to be extended to that level. Clubs at that level may well not have the capacity to take on the administration associated with regulation. Such increased financial protections for lower-league clubs—those in the National League and National Leagues North and South—would align with the principles of the Bill.
Stephanie Peacock
I am grateful to the hon. Gentleman for taking the words out of my mouth, because I was going to conclude by drawing the Committee’s attention to a letter placed in the Libraries of both Houses when the Bill was in the other place. The letter, dated 6 March, was sent by Baroness Twycross, who took the Bill through the Lords. I will not detain the Committee by reading out the letter—Members can look at it—but it breaks down the proportions. Obviously, costs are based on the impact assessment and are indicative, so they are not meant to be prescriptive; it is meant to be an indicator. The letter may be helpful if the Committee would like more detail.
Mr French
I have listened carefully to the Minister’s arguments, and she has made some helpful clarifications. However, due to the lack of a cap, as my hon. Friend the Member for Spelthorne said, it is difficult to rely on the letter for what club certainty might look like in the future. We have discussed at length how well-intentioned plans can easily spiral, which is why we believe amendment 133 is important in helping to safeguard the clubs with the smallest means and those lowest down the pyramid.
Question put, That the amendment be made.
Mr French
I listened very carefully to the Minister’s explanation of these amendments, which have been introduced at a fairly late stage. I hope she can provide some clarity on a number of questions.
First, was it always the Government’s intention to have these separate streams of funding, as she has described, or is this a way of expanding the IFR’s powers to charge the levy? I am unclear about why the change has happened now, because we have obviously been through a lot of consultation and the Bill has been in the other place for some time. It is not necessarily clear why these changes have come about at this stage, so I would appreciate an answer.
Lastly, when the Minister described the charges as non-leviable, the natural question was, “Who picks up the bill?” Are we talking about taxpayers, and if we are, what are those costs? Exposure to risk would obviously be a major concern for taxpayers and, I suspect, a number of Government Departments following the spending review. I appreciate her comments about how the Government believe that the functions may not be used or required, but there needs to be an answer about the risk of those non-leviable payments and what that might look like in the future.
Stephanie Peacock
I am grateful to the shadow Minister. First, it is certainly not about expanding, and we have been very clear that we do not want scope creep. He asks “Why now?” We have always maintained that we want the best legislation and the best outcome. We very much listened to the debate in the other place. We reflected on that, and we believe that this is just a simpler, less complex way of going about it.
On his last question, I can very much assure him that it is quite the opposite. By making these changes, the costs will not have an impact on taxpayers. We are clear about that.
Mr French
I am still unclear on that point, but I am happy to have the answer in writing. Who will pick up the bill when the levy cannot be charged to clubs, and what will that bill look like? I am not at all clear about how that will play out in practice. I am not sure whether I am misunderstanding the Minister, and I am happy to have it in writing, but I am not clear what it means.
Stephanie Peacock
I say gently that I think the shadow Minister is misunderstanding, and I am happy to write to him. The amendment means that all functions can now be covered by the levy, whereas previously there were two funding mechanisms in the Bill. It is a technical change.
Stephanie Peacock
Yes, that is the intention.
Amendment 18 agreed to.
Amendments made: 19, in clause 53, page 42, line 13, leave out “leviable functions” and insert “functions under this Act”.
This amendment is consequential on Amendment 22.
Amendment 20, in clause 53, page 42, line 14, leave out “leviable functions” and insert “functions under this Act”.
This amendment is consequential on Amendment 22.
Amendment 21, in clause 53, page 42, line 19, leave out “leviable”.
This amendment is consequential on Amendment 22.
Amendment 22, in clause 53, page 42, line 26, leave out subsection (4).—(Stephanie Peacock.)
This amendment removes the definition of “leviable functions” so that the IFR may charge a levy for all of its functions under the Act.
Mr French
I beg to move amendment 105, in clause 53, page 42, line 42, at end insert—
“(6A) Once the IFR has established a levy under subsection (1) and made the required payments under section 96, the IFR must only fund its functions under this Act through its own revenue streams.
(6B) For the purposes of subsection (6A) the IFR’s ‘own revenue streams’ are any amounts payable to the IFR from regulated clubs under subsection (1).”
This amendment requires the IFR to be self-funding through the industry levy, but after it has paid its initial costs and the Secretary of State’s establishment costs to the Treasury.
The amendment would require the Government’s new regulator to be self-funding through the industry levy, but after it has paid its initial costs and the Secretary of State’s establishment costs to the Treasury, so that it is entirely self-sustaining. That is not unreasonable; taxpayers are already being squeezed by this Government, so it would be ludicrous to suggest that they should foot the bill for the Labour Government’s regulator. That is why I tabled the amendment, which seeks to place a clear financial obligation on the regulator to ensure that, after covering its start-up and establishment costs, it becomes entirely self-funding through the industry levy.
The principle behind the amendment is simple: if we are to create an independent regulator for football, its independence must extend beyond structure to include financial independence from the taxpayer. The clause gives the Secretary of State discretion to determine the mechanics of the levy, but it leaves unanswered an essential question: who ultimately pays—we have had a bit of discussion about that—and for how long? The amendment provides a clear and reasonable answer: the taxpayer may support the regulator’s launch, as might be expected, but once that is done, the regulator should stand on its own two feet.
Let us not forget the purpose of the Bill: the regulator is intended to be arm’s length, neutral and shielded from political interference. However, the Government have gone to great lengths to compromise that independence through their appointment, as we have discussed, and the principle would be fully compromised if the regulator remained financially reliant on the Department for Culture, Media and Sport, or the Treasury for that matter. Independence is not just about who makes the appointments, but about who signs the cheques.
If the regulator is to carry out its duties credibly—overseeing financial discipline, enforcing ownership standards and planning across the football pyramid for the long term—it must operate free from any perception of ministerial influence. That means being self-funding. The idea that the British taxpayer should continue to fund the ongoing operations of this new body is simply not justifiable, particularly at a time when families are feeling the squeeze and public services are under pressure. If clubs need a regulator—and the Government have decided that they do—then clubs, not pensioners in Bexley or shop workers in Barnsley, should pay for that regulator.
The amendment would also introduce discipline into the regulatory model. It would ensure that the Government’s regulator lives within its means, plans sustainably and operates efficiently, just as it will expect clubs to. We must avoid the slow drift we have seen with other public bodies, where what begins as temporary state support gradually hardens into permanent public subsidy with no sunset clause or accountability.
By requiring the regulator to repay its start-up costs and then operate independently, we would make a clear distinction between initial public investment and long-term industry responsibility. It is not unreasonable to ask that football, having accepted the need for regulatory oversight, for which many have lobbied, now contributes to that oversight on a permanent and self-sustaining basis.
That gives rise to a number of questions for the Minister. Is there a timeline for when the regulator is expected to be self-funding, or will it continue to draw on the public purse for a number of years? What provision, if any, has been made to recover the taxpayers’ outlay once the regulator begins to collect levy income? I would be grateful, as would taxpayers across the country, for reassurances from the Minister that those issues are being addressed, and that the taxpayer will not be left to subsidise the industry without a clear exit plan.
My amendment would protect the principle of independence. It would safeguard the public purse and ensure that those who arguably benefit from oversight are the ones who pay for it. Football is told that it will get a strong, credible and financially sound regulator, but taxpayers deserve clarity, discipline and fairness in how that regulator is funded. I therefore urge the Committee to support the amendment and make the regulator accountable to the industry it oversees, not dependent on the Government that created it. Let us build something that is self-sustaining, responsible, and fit for the future.
Stephanie Peacock
During our debate on the technical changes proposed by the Government, we discussed the removal of the non-leviable functions. That means that everything will be levy-funded, so there will be no cost to the taxpayer. We absolutely agree with the hon. Gentleman’s points about the regulator being self-sustaining and self-funding. The Government also agree that the regulator should not be able to borrow money at its own discretion, which is why it is already prevented from doing so in paragraph 37(2) of schedule 2, which sets out that the regulator cannot borrow money unless explicitly permitted to as part of the financial assistance from the Secretary of State. We expect that that would occur only if absolutely necessary and in extreme circumstances, and would be provided only subject to conditions set by the Secretary of State.
There is no need for the restriction to be duplicated. We absolutely agree that the regulator should be fully funded through the levy, and that is exactly what the levy is designed to do. I will come on to that in more detail when we discuss the levy under clause 53 stand part. The Bill ensures that the regulator’s source of funding for all regulatory functions is the levy. Any financial penalties it imposes through enforcement action can also be used to offset any litigation costs and reduce the burden on compliant clubs.
Mr French
I appreciate that the Minister said that she will come on to that subject in a later debate, but can she be clear about start-up costs and their recovery for taxpayers? How is it envisaged that those costs will be repaid? I appreciate the point she makes about levy contributions, but how will the start-up costs that have been incurred now, along with the cost of the shadow football regulator, be recovered, if at all?
Stephanie Peacock
I would like to address that later, if possible. I have heard the question, and will make sure the hon. Gentleman gets an answer. For the reasons I have set out, I hope he will withdraw his amendment.
Stephanie Peacock
Before I speak on clause 53, I draw the Committee’s attention to a procedural matter. In preparing for the debate, officials identified some inconsistencies in the impact assessment published on the Bill’s parliamentary web page and gov.uk. It appears that as figures were updated during the development of the impact assessment, they were not reflected in the summary of costs on one page at the beginning of the paper, which was related to the compliance cost and operational cost. The figures are correct in the main body of the impact assessment, and the total cost that those figures added up to is still correct. The inconsistencies also featured in the version submitted by the previous Government. For full accuracy and transparency, we have now corrected it, and the impact assessment on gov.uk was updated last night. We have notified the Public Bill Office to ensure the parliamentary website is updated as soon as possible, and there will be an updated version in the Library shortly.
Having provided that clarification, I will now discuss clause 53, which enables the regulator to charge a levy to licensed clubs that covers the regulator’s running cost. That follows the precedent of other regulators such as the Financial Conduct Authority, the Competition and Markets Authority and Ofcom. The levy methodology is an operational assessment that the regulator is best placed to make independently. By making football clubs more sustainable in the long term, the regulator will be providing a service to the industry. It is only fair that as a wealthy industry, football, as opposed to the taxpayer, should cover the cost of regulation, as has been well discussed by the Committee this afternoon.
The cost of regulation would represent just a tiny fraction of football’s more than £6 billion annual revenue. The industry will also benefit from regulation, which will deliver a more stable pyramid of sustainable and resilient clubs, and so help protect the commercial value of English football. The legislation puts robust checks and balances on the regulator. It will be limited to raising funds to meet a set of tightly defined costs that are necessary for regulatory activity only. It is clear in the clause what the levy covers and how the money will be used, ensuring the regulator’s transparency. As I alluded to in the discussion on Government amendments 18 to 26, all costs can now be funded through the levy.
However, the regulator will not have a blank cheque. It will be subject to numerous safeguards including annual auditing by the National Audit Office, and its annual accounts will be laid before Parliament. That and other safeguards, such as the Department for Culture, Media and Sport’s responsibility as a sponsor, will provide the necessary transparency and scrutiny to deliver value for money.
In addition, as I set out when we discussed the previous group of amendments, the clause also requires the regulator to have regard to a club’s individual financial position when setting the levy charge. Specifically, that covers the financial resources of a club and the league in which it plays. That should ensure a proportionate approach where no club, big or small, is asked to pay more than what is fair and affordable. That will be aided by the requirement for the regulator to consult all licensed clubs, which I will speak to in more detail in the debate on the next group of amendments. In addition, once operational, the regulator will have a legal requirement to set out its levy charges annually and consult all regulated clubs on its methodology.
Question put and agreed to.
Clause 53, as amended, accordingly ordered to stand part of the Bill.
Clause 54
Section 53: consultation and publication
The Chair
With this it will be convenient to discuss amendment 103, in clause 54, page 44, line 10, leave out
“As soon as is reasonably practicable”
and insert “Six months”.
The amendment requires the IFR to publish levy rules six months before the chargeable period.
Mr French
The clause sets out the consultation process that the Government’s new regulator must follow before introducing or amending the rules governing the industry levy that clubs will pay to fund the regulator’s operations, as we discussed on clause 53. The clause is designed to ensure that any such changes are not made in a vacuum and that the regulator consults the right people, provides a draft of the rules and gathers feedback before finalising anything. On the face of it, this is a welcome safeguard, but, as is so often the case with this Bill, the detail deserves much closer scrutiny.
Let us be clear: the industry levy is not a trivial matter. It is the mechanism by which clubs will fund the regulator, and the amount of levy and the method by which it is calculated or collected could have serious financial consequences, especially for clubs operating on tight margins, as we have discussed. We are talking about a compulsory statutory payment, not a voluntary contribution or a negotiated fee. Any change to the rules governing the levy must therefore be subject to robust scrutiny, proper stakeholder input and full transparency.
The clause requires the regulator to consult a named list of stakeholders as well as any others it considers appropriate. It also requires a draft version of the proposed levy rules to be published as part of the consultation. So far, so good. But—this is a significant but—the clause also includes a major loophole.
The clause states that the Government’s regulator does not need to consult at all if it considers the proposed changes to the levy rules to be “minor”. Crucially, the regulator itself is to determine whether such a change is minor. Why is the regulator being permitted to define what counts as minor without any external check, threshold or approval? That creates a dangerous conflict of interest where the Minister’s regulator becomes the judge and jury in its own process. What is minor to the Government’s regulator may be highly significant to lower league clubs, such as a League Two or National League club trying to manage a tight budget.
Once again, the Bill has a significant risk of regulatory mission creep. We must consider the cumulative effect of so-called minor changes: one small rule adjustment may seem harmless, but several such changes made without consultation could over time significantly alter the levy framework, placing new burdens on clubs without ever facing proper scrutiny. That is how regulatory creep begins, and that is precisely what the clause should be guarding against, but, as drafted, it does not.
Would the Minister consider amending the clause to define “minor” changes more clearly, perhaps by setting out objective criteria or requiring approval from the Secretary of State, Parliament or an independent panel? Alternatively, would she consider a threshold mechanism where changes with a financial impact above a certain level must trigger consultation regardless of her own regulator’s view?
I suspect that the answer to those questions will be no, which is why I tabled amendment 102, which would remove the regulator’s power to skip consultation when it determines a change to be minor. The intent behind the exemption may be practical and be—to avoid unnecessary bureaucracy—but in reality it gives the Government’s regulator unilateral power to decide whether stakeholders should be consulted on changes that could have material financial consequences.
Crucially, the definition of “minor” is left entirely to the regulator’s own judgment, as I have said. There is no objective test, no threshold and no review. Will the Minister explain why the Government believe it is acceptable for a statutory regulator to decide, on its own authority, when it is allowed to bypass the requirement to consult clubs and stakeholders that will be legislated for by Parliament? In every other walk of regulated life, such exemptions would be expected to come with clear limits or external oversight, yet in this instance we are effectively giving the Government’s regulator the ability to mark its own homework.
Let us not forget that the levy is not an optional contribution but a statutory obligation. Clubs will have no choice but to pay whatever is set, which means that even small changes could have big consequences, particularly for those lower down the pyramid. What may seem minor to the regulator may not seem so minor to a National League club balancing its books.
Does the Minister recognise that cumulative so-called minor changes could, over time, significantly increase the regulatory burden on clubs without ever triggering a formal consultation? That is the risk of leaving this loophole in the Bill. It is not just about what the Government’s regulator might do today; it is also about what a future regulator—possibly a more activist regulator, although I hope not—might decide in years to come. We need to close the door now before that risk becomes reality.
If clubs are to have confidence in the new regulatory regime, they must feel that major financial decisions will not be made without their involvement. Even the perception that the Government’s regulator could tweak the levy regime unilaterally using the exemption for minor changes could erode trust, particularly among the smaller clubs that are already concerned. Consultation must not be seen as optional; it must be the default, not the exception.
That leads me to amendment 103, which aims to improve the clarity of the Government’s regulator’s approach to any levy that it seeks to impose. The specific issue that it seeks to correct is that, under the Bill as drafted, the regulator must publish details of the levy as soon as is reasonably practicable before the start of a chargeable period. My amendment would require the Government’s new regulator to publish the levy rules at least six months before the beginning of the chargeable period to which they apply. It is about financial certainty, about clubs being able to plan and about not changing the rules on the eve of a new season.
We know that many clubs, especially further down the pyramid, operate on tight annual budgets. They finalise player contracts, ticketing strategies and community programmes months in advance. A late change to the levy rate or calculation method could throw all that into confusion. The amendment would help to give English football clubs the clarity that they need to prepare. It would ensure that levy changes are not imposed at short notice and it would enforce a principle that reasonable regulators should provide advance notice of costs.
What safeguards, if any, will the Government establish to ensure that levy changes are communicated to the affected clubs in good time? If the answer is that it will be left to guidance or good practice, that will simply be not good enough. Good intentions are no substitute for legislative certainty. Both amendments are modest, reasonable and—we believe—entirely consistent with the Government’s stated ambition to build a trusted and transparent regulator that works with clubs, not over them. We must get the process right.
Clubs must know when a charge is coming and how much it will cost them and their fans, and they must be given a chance to respond. That is what the amendments would provide—nothing more and nothing less. Removing the minor change loophole would ensure that no future regulator could bypass scrutiny at its own convenience, and the requirement to provide six months’ notice would guarantee that clubs are not left scrambling to deal with cost changes with no time to prepare. This is about good governance, fair process and fiscal discipline.
Clause 54 provides the procedural backbone for how the Government’s regulator will engage with the industry when amending leverage rules.
Lincoln Jopp
Let me provide some context. I will not name the team, but there is a team in the National League whose cash at hand in 2020 was £25,000, and by 2022 that had reduced to £9,802. We are talking about clubs with an incredibly tight financial structure. I completely agree with my hon. Friend the shadow Minister that changes may be minor to the regulator, but they will not be minor to such teams.
Mr French
I thank my hon. Friend for that valuable contribution, which gets to the heart of the amendments and what we are seeking to do. As I have said, they are designed not to undermine the regulator but to give transparency and fairness to clubs, so they can prepare their finances accordingly.
As I was saying, clause 54 leaves too much discretion in the hands of the regulator, particularly through the vague and undefined minor change exemption. We cannot create a system in which financial rules that affect the entire English game can be altered without oversight simply because the Government’s regulator says that the change is small or minor. If we want confidence, we need consistency. If we want accountability, we need clarity. Let us ensure that the Government’s regulator consults not just when it wants to, but when it needs to.
Stephanie Peacock
I appreciate the hon. Gentleman’s point, but refer gently to my earlier comments. We are talking about typos and very minor changes. I give that example to show that the regulator is accountable for what it considers minor.
On amendment 103, requiring the regulator to publish the information on costs laid out in clause 54(4) six months before the chargeable period would create an operational challenge and would simply not work in practice. The regulator would have to estimate its costs for a chargeable period, having only half a year’s costs to base it on. That could lead to inaccurate levy charges, which could see the regulator underfunded or clubs needlessly burdened. The current requirement to publicise charges as soon as reasonably practicable strikes the right balance between adequate notice for clubs and operational flexibility for the regulator to ensure an accurate and appropriate levy charge.
For the reasons I have set out, I cannot accept the amendments.
Mr French
I listened carefully to the Minister’s response, which was fairly limited. I do not have enough confidence in her replies to withdraw the amendments. We are concerned about the impact on clubs and about the loophole in the interpretation of minor changes. I am not clear on the regulator’s accountability to stop scope creep. I suggested a number of options that the Government might look to adopt instead and did not hear any response to them. On that basis, and linked to some of the comments made by my hon. Friend the Member for Spelthorne, I wish to press the amendments to a Division.
Question put, That the amendment be made.
Stephanie Peacock
To achieve its objectives, which include a club financial soundness objective, a systemic financial resilience objective and a heritage objective, the regulator will need information from the relevant competition organisers. The clause places a duty on the competition organisers to provide that information, and in the event that they do not, they would be liable to be sanctioned.
A competition organiser must notify the regulator if there is a risk that the regulator may not fulfil its objectives. That is with regard to the club financial soundness objective or the regulator’s systemic resilience objective. In addition, the organiser will need to notify the regulator if it is in breach of a commitment it made as an alternative to a financial discretionary licence condition, or if a club has breached the rules of a specific competition run by the organiser.
The organiser will also have to consult the regulator if it proposes to change its own rules. That is necessary given the interaction between the regulator’s regulation and that of a specified competition organiser. The regulator wants its own regulation to be necessary and proportionate and not to overburden the clubs. It is therefore important to understand any changes in other rules that clubs need to abide by, given that they may increase or decrease the financial risk of clubs.
In all cases, the relevant information will act as an additional source of data to inform the regulator of risks within the industry and whether the regulator needs to impose additional regulation or proceed to enforcement and sanction to ensure the long-term financial sustainability of the industry. I commend the clause to the Committee.
Mr French
The clause sets out a series of duties that require various football stakeholders, including leagues and governing bodies, to notify and consult the Government’s new regulator in certain circumstances. At its core, the clause is intended to improve co-ordination and to prevent regulatory surprises, which in principle is reasonable. We all agree that where the governance of the game affects financial sustainability or club integrity, the Government’s regulator should be aware and engaged.
I will focus on subsection (6), which is a far more consequential provision than it might first appear. I believe it strikes at the very heart of one of the most sensitive and important issues in football governance: the independence of sport from Government control. Subsection (6) imposes a statutory duty on specified competition organisers to consult the regulator when they either add or remove a relevant rule of a specified competition, or vary a relevant rule of a specified competition. I note the comments of the hon. Member for Sheffield South East about when the regulator is involved in a competition and when it is not, with regard to the FA Cup. Some clarity on that would be much appreciated.
In short, the provision means that competitions such as the Premier League, the EFL and the FA Cup would be required—based on the wording of this part of the Bill—to consult the Government’s football regulator every time they change or amend a rule deemed to be relevant by the regulator itself. That might sound innocuous, but let us be clear about what it means in practice: for the first time, a politically appointed regulator, accountable to the Secretary of State, who has received donations from that regulator, would be given a formal, statutory role in the internal rule-making processes of English football competitions.
This is not a light-touch oversight mechanism; we fear it might end up being a direct institutional influence. As we know, it is not compatible with UEFA’s requirements on the non-interference of Government. UEFA statutes are clear that national football associations and their affiliated leagues and competitions must be free from political or Government control. The relevant rule is article 7bis (2) of the UEFA statutes, which states:
“Member Associations shall manage their affairs independently and with no undue influence from third parties.”
Article 9 goes on to state:
“A Member Association may in particular be suspended if state authorities interfere in its affairs in such a significant way that...it may no longer be considered as fully responsible for the organisation of football-related matters in its territory”.
It is pretty clear that the FA will no longer be considered fully responsible for the organisation of football-related matters in its territory should the Bill pass with this provision. Moreover, FIFA echoes that approach in its regulations, particularly in article 14 of the FIFA statutes, which ensures that member associations, such as the FA, remain autonomous and free from governmental or political influence. Article 15 of the FIFA statutes further requires members to be neutral in matters of politics and religion, to be independent, and to avoid any forms of political interference.
Subsection (6) brings us dangerously close to the line, if not across it. Unfortunately for the Minister, the Government seem to be on the wrong side of that line. I will press the Minister on that point, because however carefully the clause may have been worded in terms of consultation, in reality it inserts the Government’s new regulator into the core rule-making processes of the football pyramid. Once that principle is established, the scope can grow.
We know that there are international concerns about scope creep, as I mentioned when speaking to amendment 97.
“UEFA is concerned about the potential for scope creep within the IFR. While the initial intent of the IFR is to oversee the long-term financial sustainability of clubs and heritage assets, there is always a risk that, once established, the IFR may expand its mandate beyond these areas”.
Those are not my words.
Will the Minister confirm whether UEFA has been consulted on the drafting of the clause, and whether the Government have received written assurances that this level of regulatory involvement is compatible with UEFA’s independence rules? If she has, will she place a copy in the Library? If she has received any correspondence to the contrary, will she also place that in the Library so that the Committee has confidence ahead of Third Reading and can scrutinise the provision properly? What safeguards are in place to prevent this from being interpreted—either in Brussels or somewhere else—as a breach of sporting autonomy?
This is not theoretical—it is a real and dangerous risk for English football. Let us remember, in recent years, that other countries have faced disciplinary threats or warnings for perceived interference in football. We have seen federations sanctioned before. National teams and clubs have been threatened with exclusion from competitions. For example, Greece was briefly suspended from international football in 2006 after the Greek Government passed a law that interfered—that was the term used—with the autonomy of the Greek football federation, in violation of UEFA and FIFA regulations. In 1999, Moldova’s clubs and national team faced a ban from UEFA competitions, after it was deemed that there was political interference in the running of its football federation. In 2002, FIFA suspended Zimbabwe and Kenya from international competitions due to perceived Government interference in the football administrations of those countries.
Max Wilkinson
We recognise the numbers—although we Liberal Democrats now outnumber the official Opposition—so we will not press this to a vote. However, it is worth considering that, in future, we might end up in a situation where some of our bigger clubs start to try to negotiate on their own for their broadcast revenue. The Minister did not reassure me that that could not happen. As I understand it, we do not have legislation that would stop that. There is nothing in the game to stop that apart from Arsenal, Manchester United, Chelsea and Manchester City deciding to play together nicely.
Although we are not reassured, there is no point in forcing this to a vote. But we hope that the comments may be taken forward and taken into account by the regulator in future, and perhaps we will have this discussion again as and when those big clubs decide that they are going to kick up a stink and try to ruin the rest of football for everyone else. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr French
I beg to move amendment 124, in clause 56, page 46, line 3, leave out subsection (2) and insert—
“(2) In this Part, revenue received by a specified competition organiser is ‘relevant revenue’ if—
(a) it is revenue received as a result of the sale or acquisition of rights to exploit the broadcasting of football matches included in a competition organised by the specified competition organiser, and
(b) it is not revenue that the specified competition organiser distributes to a club by virtue of a team operated by the club being relegated from a competition organised by the specified competition organiser.”
Clause 56 introduces the framework for the resolution process, which is a formal mechanism through which the Government’s new regulator may intervene to help to resolve disputes between football authorities, competitions and clubs in certain prescribed areas. The clause is important because it sets the boundaries of when and how the Government’s new regulator may be invited, or, in some cases, compelled to step into the room on issues that until now have been managed internally within the football pyramid.
We understand the intention behind this process. It reflects years of unresolved tensions in the game between different tiers of the pyramid, between governing bodies, and, most notably, between the Premier League and the EFL. Clause 56 and the following clauses in part 6 provide the bones of a system for dispute resolution, in the hope of reaching consensus where negotiation has failed. In principle, that has merit. However, we believe that the clause as drafted risks crossing a line—not into oversight, but into interventionism. It risks turning the regulator from a referee into a participant, and that risk becomes very real when we consider what types of decisions might fall within that process.
That is why I have tabled amendment 124, which would exclude parachute payments to the regulated clubs from the scope of the resolution process, as was the case in the Bill that the Minister supported during the previous Parliament. Clause 56 is not procedural, but foundational. It defines who can apply to trigger the resolution process, namely certain governing bodies and competition organisers, and what is meant by the term “relevant revenue”. In subsection (2), this is revenue received
“as a result of the sale or acquisition of rights to exploit the broadcasting of football matches included in a competition organised by the specified competition organiser, or…from any other source specified, or of a description specified, in regulations made by the Secretary of State.”
In essence, the provisions allow disputes over financial redistribution to be brought before the Government’s new regulator, which may then facilitate a resolution or, in some cases, take further steps to impose one. The specific issue we have with the clause, which was introduced by the Government, relates to the parachute payments of financial support offered by the Premier League to clubs that are relegated to the EFL to help them adjust to the significant drop in broadcasting and commercial income. This is obviously an important point, given the wage bills and so on when clubs go down, but it is never far from being controversial. Some see the payments as being necessary to ensure financial continuity and competition in the Premier League on the way up, while others argue that they distort competition in the Championship on the way down, solidifying clubs as so-called yo-yo clubs that go up and down regularly.
Bringing parachute payments within the scope of the regulator’s resolution process, as clause 56 does, takes a significant step towards Government involvement in revenue redistribution among private members of the competition. That is not regulation; it is reallocation. In our view, it is an inappropriate function for a state-backed regulator.
The amendment does not oppose the resolution process in principle; it supports it, and in fact returns the Bill to what the Minister previously supported. Can she tell us what has changed, and why she felt the need to make the change when she previously had no issue with this part of the Bill? My amendment seeks to make sure that the Government’s regulator does not intervene in areas that are already managed by mutual agreement between competitions.
Parachute payments are, by their nature, a Premier League solution to what is often a Premier League problem. They are not imposed on the EFL or funded by it, and although their knock-on effects may be debated—I have my own views on that—they should not be subject to arbitration by a third party.
If we allow the Government’s regulator to adjudicate disputes over parachute payments, we risk setting a precedent that any form of commercial agreement, no matter how internal, can be referred for outside resolution. We believe that that would be a mistake, and would likely undermine the willingness of top-flight clubs to continue sharing revenue in any form at all. If the Minister starts this process off on the wrong foot with clubs and this is not done in the right way, we fear that resentment would set in from day one. With the top flight already questioning—
Jon Pearce
Does the shadow Minister agree that parachute payments are a very important financial factor in the EFL? From my experience as a Derby County fan—many things go back to this—I know that we ended up in administration because we chased and tried to compete with clubs that had parachute payments, and ultimately could not stay within the financial fair play regime. How does the shadow Minister see that being tackled? It is a fundamental flaw and it is driving clubs much closer to administration, and to the wall, in many cases.
Mr French
I recognise the hon. Gentleman’s experience with Derby, and I understand his point. That is why I said there are a number of opinions, and this a very controversial subject. I have engaged with EFL clubs as part of this process, and we get a variety of opinions, even before we get to asking the Premier League clubs for their opinion, so I absolutely understand his point. This amendment is about trying to exclude parachute payments from this part of the Bill, rather than trying to take a decision on what parachute payment levels should be in any shape or form. That is the distinction we seek to make with the amendment, and I commend it to the Committee.
Stephanie Peacock
I thank the shadow Minister for the amendment, as it gives me the opportunity to speak to one of the key changes made in the new version of the Bill that this Government introduced. The amendment would take parachute payments out of the scope of the backstop, as they were in the previous Government’s Bill. The regulator needs to be able to consider all relevant revenue sources as part of the backstop process to get an accurate picture of any proposal’s impact on financial sustainability. That is why it was right to amend the definition of “relevant revenue” to ensure parachute payments could be considered as part of the backstop if necessary.
The shadow Minister pointed out that I supported the Bill when in Opposition, but I draw his attention to an amendment I put down then to this effect. We have had a clear and consistent view on this issue throughout the passage of both Bills through Parliament. We believe that allowing the regulator to make more informed decisions, rather than restricting what it can consider, will help to achieve the best possible outcome for the future of the game.
Stephanie Peacock
I begin by acknowledging the comments from my hon. Friend the Member for Sheffield South East. I appreciate him putting that on the record. Of course, we will have a fuller debate on the broader change later, so as I said, I will reserve my wider comments till we get to that point.
The backstop aims to ensure that where the industry cannot resolve the issue, revenue is distributed between the leagues in a sustainable way that furthers the regulator’s objectives. As I will set out in more detail when we debate clauses 57 and 58, it allows the leagues to apply to the regulator to intervene and help them to resolve specific issues that are in dispute between them. The issues that need resolving are referred to in the Bill as the “questions for resolution”. We will further discuss the process for triggering the backstop when we come on to debate clauses 57 to 59.
Put briefly, the triggering process requires a league applying to the regulator, showing that certain conditions listed in clause 57 are met, and putting forward a set of proposed “questions for resolution”. The other relevant league has a chance to respond to that proposal. The regulator will then consider the application and the response, and will decide whether to trigger the process. If it decides to trigger, it also decides exactly which questions must be taken forward and resolved through the backstop process. Therefore, the questions for resolution are set out at the very beginning and carry through, determining the scope of the whole process. They are the questions that the leagues discuss in mediation, as we will see when we debate clause 60, and they limit the scope of any regulator distribution order—something that we will discuss further when we come on to debate Government new clauses 3 and 4—to issues of financial sustainability.
Setting the questions for resolution is therefore a very important step that demands a clear statutory process and a rigorous approach by the regulator. That is even more important in the light of the proposed changes that Government new clauses 3 and 4 will make. Those new clauses propose a new model for the backstop—a staged regulator determination. They move away from the binary, winner-takes-all, final-offer model and increase the regulator’s discretion to devise its own solution for distributions. Because of that increase in discretion for the regulator, it is important that the scope of the distributions process is well defined from the outset, so that all parties are clear about what the regulator will and will not rule on if the leagues ultimately cannot agree to an industry solution themselves.
These amendments therefore strengthen and clarify the process for—[Interruption.]
Stephanie Peacock
I have indeed—clearly.
These amendments therefore strengthen and clarify the process for setting the questions for resolution. They highlight the importance of a league proposing specific questions for resolution when it applies to the regulator. They emphasise that if the regulator agrees to trigger the backstop, it will not take a sweeping approach and try to rule on every possible aspect of distributions. It must set out specific questions that it will resolve, and its powers are then restricted to resolving those questions.
These amendments make it clear that questions must meet certain tests in order to be resolved through the backstop. Those tests are twofold. First, the regulator must consider that leaving the questions unresolved presents an apparent threat to the regulator’s objectives. Then they must consider that the questions could not be resolved within a reasonable time by the regulator exercising any of its other functions.
The amendments clarify that the regulator need not take forward all the questions proposed and that the regulator can modify the proposed questions. They will also require the regulator to take into account representations from the other league that accompany the application. That will give the regulator the flexibility to pick out which questions it is appropriate and within its remit to address, without forcing it to either accept every element of an application or reject the whole application outright.
The amendments also set out procedural requirements. They require the regulator to consult the FA before setting the questions for resolution, ensuring that the national governing body has a chance to raise any views about the scope of the backstop process. They will also ensure that the regulator transparently sets out what questions it has chosen and how it made that decision. The questions for resolution will then be taken forward into the mediation phase. That will ensure that all parties understand the specific aims of the mediation stage.