Clause 2 - Key definitions

Football Governance Bill – in a Public Bill Committee am 2:00 pm ar 16 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Question proposed, That the clause stand part of the Bill.

Photo of Christopher Chope Christopher Chope Ceidwadwyr, Christchurch

With this it will be convenient to discuss the following:

Clause 3 stand part.

Schedule 1.

Clause 4 stand part.

New clause 1—Reporting requirements (women’s football)—

“(1) The Secretary of State must, no later than five years from the date on which this Act is passed, carry out a review of the professional tiers of women’s football to determine whether the competitions specified by the Secretary of State under section 2(3) should include women’s football competitions.

(2) For the purposes of subsection (1), the review should take account of—

(a) the State of the Game Report,

(b) the risk of financial failure in women’s football, and

(c) such other considerations as the Secretary of State considers appropriate.

(3) The results of the review must be published and laid before Parliament.”

This new clause would review whether or not women’s football should be added to the scope of the IFR.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, Parliamentary Under Secretary of State (Department for Culture, Media and Sport), Parliamentary Under Secretary of State (Department for Business and Trade) (Minister for Equalities)

Clause 2 sets out the key definitions used in the Bill. It also gives the Secretary of State the power through a statutory instrument to specify competitions. Those specified competitions then define the regulated population—the clubs and competition organisers in scope of regulation. Defining the scope in that way is important in future-proofing the Bill. In particular, it will allow the regulator’s regime to adapt to future innovations in the market like those that we saw when the old First Division became the Premier League in 1992, or when the Football League was expanded and rebranded in the years that followed.

I turn to clause 3. Owners of football clubs play a pivotal role in the sport; without their efforts and investment, English football would not be the success that it is today. Owners have an immense responsibility not just to their club, but to fans, local communities and businesses in the surrounding area. While current league rules outline a requirement to declare who controls a club, the fan-led review identified concerns with the application of the role, in particular where clubs are owned or controlled by offshore entities or complex company structures. Fans have also expressed concerns about the opaque nature of who owns their club. Fans deserve to know who has ultimate responsibility for the club they support, and the clause will ensure just that.

Clause 3 signposts to schedule 1, which defines when a person is an owner of a club. The clause also defines a club’s ultimate owner or owners as those who have the highest degree of influence or control over the activities of a club. When a club applies for a provisional operating licence, it has to identify its owners and ultimate owners to the regulator in a personal statement. Clause 51 requires licensed clubs to publish their personal statements.

Defining the ultimate owner of a club and requiring clubs to declare who they are will be a crucial step in improving transparency and accountability in the game, and in ensuring that fans know who owns their club. Schedule 1 defines owners for the purposes of the Bill and equips the regulator to apply this definition in different real-life circumstances.

It is crucial that owners are suitable in order that the sport can be placed on a more sustainable footing. An ownership chain may be long and complex with many links. To ensure that clubs have suitable custodians, the regulator needs to identify the person with actual control at the very end of that chain, rather than the holding companies or the legal structures that are just links along the way. That is why, under the Bill, only individuals or registered societies are defined as club owners.

Registered societies are specific legal structures defined in clause 91. They must be run as co-operatives or for the benefit of the community. When used by fans for collective ownership of professional football clubs, they are typically “one fan, one vote” organisations in which control is split equally between hundreds or thousands of members. As such, they do not concentrate influence or control with just a few individuals.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee, Chairman of the House of Commons Members' Fund

This is a really important clause. There have been so many problems in so many clubs where actions have happened but there is some mystique about who is responsible. The mystique is often deliberate, to hide the real owners and what they are doing.

Although this will be the rule from now on, one issue that I can see arising is about what happens when a league wants to look at who was responsible for the actions of a club in past months and years. Will there be a trail to discover who the owner was in past months and years, so that that sort of action can be taken by the leagues?

Photo of Stuart Andrew Stuart Andrew Assistant Whip, Parliamentary Under Secretary of State (Department for Culture, Media and Sport), Parliamentary Under Secretary of State (Department for Business and Trade) (Minister for Equalities)

That would probably be an issue for the leagues. This is about setting up the statutory obligations and the powers that the regulator will need, and will have, to be able to identify the specific owner. The hon. Gentleman is absolutely right: I have heard time and again from fans that trying to identify who the specific person is has been almost impossible. As we are now putting this measure on a statutory footing, the clubs themselves will be obliged to identify who that person is, but I think retrospective work would be something for the leagues to deal with. If the hon. Gentleman will permit me, I will have a further think about the point and come back to him in writing.

I was explaining why ownership chains can end with registered societies without those societies needing to identify the named individuals behind them. The Bill’s definition of an owner is designed to apply to those at the end of ownership chains, no matter how complex the chains are. It draws heavily on precedent from other legal regimes where ownership can be complicated or opaque, including the “persons with significant control” regime in the Companies Act 2006. It is designed to capture those who have significant shares or rights in or other forms of significant influence or control over clubs. The definition also includes owners who meet one of those conditions at arm’s length, such as via a trust or similar body. This robust and comprehensive definition of owners recognises that clubs have different ownership structures. Part 3 of schedule 1 allows the definition to be amended to ensure that it is future-proofed.

Ultimately, the definition enables the regulator to look behind ownership structures to find the person who is actually responsible. That means that owners cannot simply evade regulation by creating ever more complicated ownership structures. Having a clear definition of an owner that reflects those who have influence or control over a club means owners can be identified, tested and held to account as custodians of the club.

I turn to clause 4. The Bill will introduce two key things that are missing in the industry at present: transparency for fans and accountability for decision makers at clubs. Central to both those points is clarity about who the decision makers are. Officers and senior managers must be clearly defined within the new regime so that regulatory requirements and enforcement can bite on the right people and fans know who is running their club. The clause defines an officer and a senior manager of the club for the purposes of the Bill. The definitions have been drafted in recognition of existing legislative precedent, including the Companies Act 2006 and the Financial Services and Markets Act 2023. It also uses the definitions currently used in the football industry.

The purpose of the clause is therefore to appropriately define the people who run or have a significant level of direct influence over the day-to-day running of the club. Other provisions in the Bill will require regulated clubs to publicly set out who their officers are and which persons carry out specified senior management functions. Officers of the club are subject to legislative requirements, including owners and directors tests. Senior managers will be accountable for the aspects of the club’s affairs that they are responsible for. The regulator may take enforcement action against a senior manager if the club commits a relevant infringement that is connected to a senior management function carried out by that individual or individuals.

Moving on to new clause 1, I understand the intention of the hon. Member for Barnsley East is to ensure that the list of specified competitions is kept under review. That is why we have ensured that the scope is appropriately future-proofed and could be amended in future if necessary. That is precisely why there is a power to specify competitions through secondary legislation. We do not believe it is necessary to have a statutory instrument requirement for the Secretary of State to undertake a review of women’s football to determine whether it should be brought into scope. More broadly, even without a statutory review of requirements, there is nothing to stop the Government or industry from looking into women’s football and the unique challenges it faces.

As I have set out, the Government remain absolutely committed to supporting women’s football at every opportunity. The women’s game is at an exciting, pivotal stage and should be afforded the opportunity to self-regulate in the first instance. That is why it is not part of the Bill’s intended scope. We therefore do not think the statutory requirement is needed. Should it be appropriate for women’s football to be brought into the scope of the Bill in future, that can be done, as I say, through secondary legislation. Ahead of any decision to expand that regulation, I would expect a public consultation on the issue and a robust evidence base to be built up. That was standard practice when developing policy, and is how the current intended scope has been arrived at.

For the reasons I have set out, I am not able to accept the new clause and hope the hon. Member for Barnsley East will therefore withdraw it.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport) 2:15, 16 Mai 2024

I will begin by addressing clause 2 and my new clause 1 before looking briefly at clauses 4 and 3 with schedule 1. Clause 2 provides important definitions that will help make sense of the Bill. Most of the definitions are relatively straightforward, so I will focus on the Secretary of State’s ability to designate which specified competitions will fall under the remit of the regulator.

It is widely understood that the Government’s intention is to identify step 5 and above of the men’s football pyramid as being within scope. That choice is the right one as long as the regulator’s enforcement is proportionate to ensure that clubs in the National League and lower tiers of the EFL are not burdened by compliance. Indeed, at this early stage it is important to set out that regulation does not necessarily need to result in burdensome compliance requirements. As long as the Bill is done right, that will not be the case.

It is important that we leave room for the competitions in scope to be amended in future should circumstances change. I appreciate the Minister’s comments on my new clause 1, but I am sure the Committee will allow me to outline the arguments on why I tabled it.

We should pay close attention to ensuring the healthy growth of the women’s game and whether it should be brought into the regulator’s remit. Despite its recent soaring success, as shown by the historic achievements of the Lionesses and sustained by the growth in support for the Women’s Super League and Championship, the women’s game faces a wide range of issues. The Carney review, commissioned as a result of the need for parity identified by the fan-led review, brought many of those issues to light.

The review raised concerns, for example, about the growing gap between those at the top of the elite game and the rest of the women’s football pyramid. Indeed, the annual turnover in the Women’s Super League, featuring teams such as Chelsea and Manchester City, peaked at around £7 million. Meanwhile, in the Women’s Championship, where teams such as London City and Sunderland play, sides are recording turnover as low as £150,000.

Further to that, the review noticed that there has not been enough progress on ensuring minimum professional standards. Players have been reported as being treated as second-class citizens rather than elite athletes, with everything revolving around the schedules of the men’s teams. Also, women players are three times more likely to suffer an anterior cruciate ligament injury—a serious rupture that strikes top players out for around a year—than their male counterparts, and there is no guaranteed access to even a basic level of mental health support even for those who might be seriously struggling.

Finally and perhaps most relevant to the Bill, the review also identified that the costs of sustaining participation in the women’s game are much higher than the revenues being organically generated by women’s teams. That is true even with the growth of broadcasting audiences and sponsorship revenue. Rather than bringing women into scope of the independent regulator at this stage, however, Karen Carney’s review concluded that women’s football would benefit from the opportunity to incentivise investment and self-regulate first.

Given that the IFR has been designed with the failures of the men’s game in mind, I agree that the women’s game and NewCo should be given the chance to take learnings and to proactively address issues so that it can run on its own two feet. However, I also believe that the option of an independent regulator must remain on the table, not least so that if it is needed, the regulator can act at an earlier point than it has been able to in the men’s game. That is why I tabled new clause 1.

Players, fans and the whole country want to see healthy growth of the women’s game and NewCo, and they now have the opportunity to see just that with the right investment, support and approach. However, if issues prevail, as they have done in the men’s game, it is right that we be proactive rather than reactive this time.

The Government agreed to all the Carney review’s strategic recommendations, but I believe there has been only one meeting of the implementation group. Parity of importance must be given to change in the men’s and women’s game, and I hope the Minister can provide an update on the Department’s progress either in this debate or in writing.

Clauses 3 and 4 and schedule 1 set out some of the other key definitions in the Bill, particularly of owners and officers, and I welcome their clarity. Due to the complex ownership structures of some clubs, it has not always been clear who or what might count as an owner, ultimate owner or indeed who can be held accountable as officers.

The fan-led review identified the example of Birmingham City, who at the time were alleged to be in £100 million of debt. They were in breach of profit and sustainability rules and in a situation where the club and ground were owned by two different people under a complicated offshore ownership structure. Trying to untangle and resolve such difficulties without being able to understand where accountability lies in an opaque structure is no easy task. The detail in clauses 3 and 4 and schedule 1 on how calculations will be made in relation to shares and the like is therefore welcome. In combination with the duty in clause 16 on clubs to provide a personnel statement, the Bill will improve transparency and ensure that the regulator is able to operate from a much clearer standpoint.

I have one question on behalf of the Football Supporters’ Association, which is concerned that the definition of “senior manager” might include football-related posts that were not intended to be within scope of the Bill, such as team managers. Can the Minister confirm that that is not the case and that football-specific posts will not be covered?

Photo of Stuart Andrew Stuart Andrew Assistant Whip, Parliamentary Under Secretary of State (Department for Culture, Media and Sport), Parliamentary Under Secretary of State (Department for Business and Trade) (Minister for Equalities)

I completely agree with the hon. Lady on ensuring that clubs, specifically those further down the pyramid, are not over-burdened. That is why we have been careful throughout the drafting of the Bill to ensure that it is proportionate and that our approach is dependent on the size of the club and where they are in the pyramid. I do not think there should be anything for many of those clubs to fear. We heard from witnesses in the evidence sessions that many of those clubs rely on volunteers to do a lot of the paperwork, and we have taken that into account.

I absolutely welcome the hon. Lady’s comments about the women’s game. We all want to see healthy growth in the women’s game, and it has been incredible to see how popular it has become. That is precisely why we brought about Karen Carney’s review, and I put on the record my thanks to her for the work that she has done in this area. What has been useful about that—rather than just doing it through the IFR—is that it has enabled there to be a much broader approach to the women’s game; and she rightly highlighted health and wellbeing as a really important aspect. Although the implementation group has only met once, it was an important meeting for us to set out the questions that need answering, and work is going on behind the scenes in preparation for the next meeting to ensure that we see progress. As she acknowledged, we support all the recommendations of Karen Carney’s review. We want to now ensure that progress is made in implementing them.

The hon. Lady is right that we need to learn from the men’s game at a much earlier stage, which is why we are looking at all aspects, but should we get to the point where it needs to be looked at by the independent football regulator, provisions are in the Bill for that purpose. On the issue of owners, as we have described in the Bill, it is those with a controlling decision-making process within the club that will come into scope.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 4 ordered to stand part of the Bill.