Clause 8 - The IFR’s regulatory principles

Football Governance Bill – in a Public Bill Committee am 2:45 pm ar 16 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport) 2:45, 16 Mai 2024

I beg to move amendment 2, in clause 8, page 5, line 33, at end insert—

“(iv) supporters and supporters’ organisations”.

Photo of Christopher Chope Christopher Chope Ceidwadwyr, Christchurch

With this it will be convenient to discuss the following:

Amendment 9, in clause 8, page 5, line 33, at end insert—

“(iv) football fans,

(v) football supporter organisations,

(vi) any local community groups that the IFR considers relevant,

(vii) employee groups and unions with members employed by football clubs, and

(viii) professional football players and their representatives.”

This amendment expands the list of those whom the IFR must engage constructively.

Amendment 20, in clause 8, page 5, line 33, at end insert—

“(iv) representatives of major club employee groups such as player or staff unions

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

It is good to be able to discuss the issue of who the regulator is to work constructively with in the context of my amendment 9 and amendments 2 and 20, which were tabled by my colleagues.

I of course welcome the principle that on the whole the regulator should co-operate and proactively and constructively engage with existing structures in the footballing industry. That is incredibly important if we are to ensure that the landscape of football governance runs as smoothly as possible. However, currently the list of people or groups that that obligation applies to is limited to clubs’ owners, officers and competition organisers. Those are all vital groups that the regulator will have to work well with, and I am pleased they are included, not least if the regulator is really to employ an advocacy-first approach. However, there is no explicit mention of fans, supporters’ trusts or local community groups who might be engaged with constructively. That seems a strange omission given the rhetoric surrounding the Bill—namely, that it will ensure that football is for the fans—and the fact that its purpose is to serve the interests of fans.

[Mr Clive Betts in the Chair]

Of course, there are measures in the Bill that require clubs to consult fans on certain issues. However, the principles do not require the regulator to be constructive with fans, or even with representatives of fans such as the Football Supporters’ Association. I am keen to hear from the Minister why that is. There are provisions for clubs to listen to fans, so why should the regulator not be required to have a constructive working relationship with fans? This is not just a matter of moral conscience. Fans and supporters’ groups know their clubs inside out and have the potential to act as useful resources to get an insight into the issues that a club might face and how those issues are impacting local people.

Similarly, as the Bill is drafted, there is no reference to players as a group the regulator should co-operate with. That reflects a broader concern about the Bill that I raised on Second Reading on behalf of the PFA. There is not a single mention of players, even though they are the main employment group within the regulated clubs. This means that the decisions that the regulator makes could have a tangible impact on their employment. For example, if the regulator exercises its powers to withdraw approval for a competition or refuses a licence to a club owner, there would be a direct consequence on the contracts of and conditions for players.

On the other hand, the regulator could benefit from engagement with players. The PFA identified that players, alongside other club staff, are often the first to experience the warning signs that a club is facing financial issues. Therefore, they could act as a useful resource to prevent more serious issues occurring. Just as with fans, the professional game could not exist without players, so will the Minister explain why players are not mentioned in this part or elsewhere in the Bill?

Finally, the Bill does not currently recognise that there are cross-governance structures that work well within the game and with which it might be beneficial for the regulator to work constructively.

Photo of Robin Millar Robin Millar Ceidwadwyr, Aberconwy

I am really sympathetic to the notion of a redistributed ownership of the game; I have always struggled with the idea that the ownership sits, for example, with the Premier League. The Bill makes provision for consultation or constructive engagement with clubs. Is it the hon. Member’s contention that that is not satisfactory, because many clubs do engage with fans and, obviously, will talk to their players?

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

No. The point I am making is that, as we heard in the evidence sessions, lots of clubs have lots of good structures and some best practice that we can learn from, but this particular part of the Bill lists the groups that the regulator should have a relationship with, and I am simply suggesting that we could strengthen that. I am interested to hear what the Minister has to say.

Photo of Matt Rodda Matt Rodda Shadow Minister (AI and Intellectual Property)

My hon. Friend is making an excellent point about the importance of fans and players, and indeed, by implication, football club staff. As we heard this morning, fans, players and others have suffered from enormous challenges when there have been problems with ownership. It is difficult to describe the full level of stress and pressure that many fans of clubs have suffered over long periods, sometimes for more than one season. I believe that my hon. Friend is making a very worthy and important point, which I hope the Minister will consider.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

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

Photo of Rachel Hopkins Rachel Hopkins Llafur, Luton South

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

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

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

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

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

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

Photo of Tracey Crouch Tracey Crouch Ceidwadwyr, Chatham and Aylesford

I am not unsympathetic to the hon. Lady’s point about supporters and the fan community, but given that the Bill establishes an independent regulator to look at the long-term financial sustainability of the game, what does she think the other people listed in her amendment would practically contribute to, for example, the owners and directors tests or some of the licence conditions?

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

We are not suggesting that they will all be able to contribute to every element. I gave an example where, for example, football clubs are in the early stages of suffering financial problems and issues. Often, the groups that I refer to are the first to recognise and realise that. We are simply attempting to make sure that the legislation is as strong as it can be and that the regulator has the most thorough and useful list of people to work with constructively.

[Sir Christopher Chope in the Chair]

Photo of Ian Byrne Ian Byrne Llafur, Liverpool, West Derby

My amendment 2 builds on what my hon. Friend has just spoken about. The principles are all fine, but there is a glaring omission. We are here today because of supporters. It was the supporters that defeated the European Super League. If the reports are true, the then Prime Minister met the chief executive of Manchester United and there was not much of a furore around the European Super League politically. That suddenly changed when the fans rose up from every single club that was involved, much to the consternation of the owners —I know this personally. They thought that the fans of the said clubs would be delighted at the riches that were going to be pouring into their clubs and at ensuring their success, but that was not the case. It was the supporters of the six clubs and also the pyramid that rose up and defeated the European Super League.

Photo of Robin Millar Robin Millar Ceidwadwyr, Aberconwy

The hon. Gentleman and I see eye to eye on this, but it would be remiss of me not to point out, from the Government Back Benches, that the Prime Minister at the time was well aware of the objections and concerns that were felt across our constituencies.

Photo of Ian Byrne Ian Byrne Llafur, Liverpool, West Derby

That is a fine point. I am not excluding anybody, because there was outrage across the piece. Setting this regulator up is welcome, but it must have supporters at its heart. The regulatory principles should include supporters, so I hope the Minister takes on board what we have outlined and adds that one word, which would make a huge difference. It would reinstate trust in the whole process if supporters were listened to.

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

I was thinking of moving my amendment from the Chair and then I could have directed the Minister to agree with it. [Laughter.] This proposal would feel very strange, as Ben Wright from the PFA said this morning, without the two groups of people who are absolutely key to football. We can manage without owners and directors, but we cannot manage without fans and players, and they are not mentioned in this part of the Bill. Will the Minister give us some comfort at least about how that particular point will be addressed?

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 recognise the intent behind the amendments, which is to add further groups to the list of persons the regulator should co-operate and proactively and constructively engage with. However, we do not think that is necessary, and we believe it would alter the intention and effect of the regulatory principle in question. We have always said that the regulator should take a participative approach to regulation, which means to co-operate constructively with the regulated industry where possible.

The principle’s original intention was to guide the regulator to take that approach, which might not otherwise have been implicit, since the natural instinct for regulators may be not to co-operate with the persons they are regulating. By contrast, for other groups such as fans and members of local communities, it is implicit that the regulator should engage with them where appropriate, not least because the sustainability objective of the regulator is in the very interests of fans. Indeed, fans and local communities are the key consumer group that the regulator is established to protect. They feature in the very purpose of the Bill in clause 1.

My concern is that to list every possible stakeholder that the regulator should engage with during the course of regulation would be a slippery slope that could impact on the effectiveness and, crucially, the speed of the regime. That is not the intention of this principle, nor is it necessary detail for the face of the Bill.

I absolutely recognise that players and fans have a huge role to play in football. It will be for the regulator to engage with those stakeholders during the appropriate process. That is why, absolutely, where collaboration is working well, we would expect the regulator to continue that. Having a comprehensive list might mean that we miss out a group that we would like the regulator to consult. It might also mean that the regulator then feels obliged to consult that entire list on everything, whether appropriate or not, clogging the regulator up, if we are not careful.

Photo of Damian Collins Damian Collins Chair, Draft Online Safety Bill (Joint Committee), Chair, Draft Online Safety Bill (Joint Committee)

I am following what the Minister is saying carefully. Does he believe that it would be appropriate for the regulator to require the clubs to engage effectively with their fans, as the Bill asks them to do, and to ensure the welfare of their players, and that the regulator should stipulate that the clubs set out how they will do that through their corporate governance statement, as part of the licensing regime? When we consider schedule 5, it might be appropriate to reference some of those points specifically in the Bill as part of the licensing condition.

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)

My hon. Friend makes some interesting points. We will come to those measures later. I am slightly nervous about having a prescriptive way of engaging with fans. Depending on which club it is, it might be that the way a club engages its fans absolutely meets what the fans want. They might recognise that it is a good working relationship, which achieves the objectives they want. What we want is a minimum standard. Perhaps that is what he is alluding to.

Photo of Damian Collins Damian Collins Chair, Draft Online Safety Bill (Joint Committee), Chair, Draft Online Safety Bill (Joint Committee)

I think my right hon. Friend is right. I would not suggest a prescriptive requirement, but simply a requirement for the club to state its policy.

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)

Absolutely, and we will come to that later in the Bill. I take on board the point made by the hon. Member for Barnsley East about the health regulator, for example. We do not need to tell that regulator to co-operate with the very people it is designed and obliged to protect the interests of, so we are following the same pattern here.

Photo of Rachel Hopkins Rachel Hopkins Llafur, Luton South

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

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

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport) 3:15, 16 Mai 2024

I appreciate the Minister’s response. He said that it could be quite burdensome to engage with every stakeholder, but that is not what this amendment seeks to do; it aims to lay out what we see as the most important ones. That includes players and fans, without which we could not be here. I think the Minister said that that is implicit. Why not make it explicit? Going back to that argument around burdens, the Bill mentions engagement so far as is “reasonably practicable”, so there is already that safeguard for the regulator. For that reason, I would like to press amendment 9 to a vote.

Photo of Ian Byrne Ian Byrne Llafur, Liverpool, West Derby

The Minister spoke about a stakeholder list, but actually the amendment was just about supporters. They asked for that single word, “supporters”, just to be on the face of the Bill. I think it would make a huge difference to supporters across the land if it was enshrined in the regulator’s principles. I think it would genuinely make a massive difference, so I do hope the Minister considers that at the next stage.

Amendment, by leave, withdrawn.

Amendment proposed: 9, in clause 8, page 5, line 33, at end insert—

“(iv) football fans,

(v) football supporter organisations,

(vi) any local community groups that the IFR considers relevant,

(vii) employee groups and unions with members employed by football clubs, and

(viii) professional football players and their representatives.” —

This amendment expands the list of those whom the IFR must engage constructively.

Rhif adran 1 Football Governance Bill — Clause 8 - The IFR’s regulatory principles

Ie: 6 MPs

Na: 9 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

The Committee divided: Ayes 6, Noes 9.

Question accordingly negatived.

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

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)

The regulatory principles outlined in this clause are designed to guide the regulator to exercise its functions appropriately and in the manner intended by Parliament. They are hugely unobjectionable but fundamental principles that should help to establish the regulator’s mode of operating and culture. The regulator must have regard to these principles when acting. The first principle encourages time and cost-efficiency in everything that the regulator undertakes, encouraging swift action and value for money. The second principle encourages a participative approach to regulation, where the regulator should look to co-ordinate and co-operate with clubs, individuals at clubs and competition organisers. This reflects that the ideal regulatory environment is one where all stakeholders are working towards the same goals. The third principle encourages proportionality. The regulator should always look to choose the least restrictive option that delivers the intended outcome, and be able to justify why any restriction or burden is worth it for the benefits expected.

The fourth principle encourages the regulator to acknowledge the unique sporting context it is regulating within. For example, it should consider the existing rules and burdens clubs are subject to, and that market features—such as transfer windows—impose unique constraints on clubs.

The fifth principle encourages the regulator to apply regulation consistently, while still ensuring requirements are appropriately tailored to a club’s specific circumstances. A Premier League club and a National League club operate in very different ways and face different risks. The regulator must take this into account when regulating. When clubs are equally risky, they should face equivalent requirements.

The sixth principle encourages the regulator, where appropriate, to hold the individuals responsible for making decisions at a club accountable for the actions of the club and its regulatory compliance. For too long, clubs and fans have suffered the consequences of bad actors and mismanagement by the individuals calling the shots.

The seventh and final principle encourages the regulator to be as transparent as possible in its actions. While the regulator will handle some sensitive information that should not be shared, it should look to provide and publish appropriate information on decisions wherever possible. It is important that the regulator, and its regime, are open and accessible to the industry, fans, and the general public.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

I am pleased to welcome this clause, which sets out the principles with which the regulator will regulate. Along with clear objectives and duties, as well as the guidance which we will go on to discuss, the principles will provide the regulator with clear direction and transparency in its dealings, which have long been missing from football governance. In particular, I would like to welcome the principle of proportionality. This principle should be very reassuring to well-run clubs who may otherwise have feared an over-burdensome regime. The proportionality requirement will ensure that where clubs are running sustainably, with low risk of harm, the regulator will have less of a role. In return, any restriction that the regulator does impose will be linked to a beneficial outcome.

It is also good to see the importance of consistency recognised, so that the regime is applied fairly, while acknowledging the relative circumstances of clubs. It is important that regulation is applied in the same way, where circumstances and risks are also the same. However, there may very well be differing conditions at the very top of the Premier League, in comparison to the National League, where I know there are fears about the burden of compliance, as we heard in our evidence earlier this week. The principles should help to alleviate any fears that the regulator will act without nuance on these differences. It will be an appropriately tailored regime, while maintaining a fair application of the rules overall. This is something that I am sure we will revisit multiple times in Committee.

I have a few questions I would like to clarify on these principles, including how the principles have changed since the White Paper. The initial document set out 10 proposed regulatory principles that were described as “basic and fundamental rules” for the regulator to follow. In the Bill, however, we are left with just seven. Some of this is due to condensing the principles into a smaller number. I understand the desire to not be over-wordy, but I do question whether that was necessary. For example, although the concepts of coherence and being context-specific overlap, each deserves an individual consideration.

Perhaps more concerning is that, looking closely at what has changed, some of the principles have been left out altogether. One clear omission is the principle of bold enforcement. The White Paper described how this principle would work as follows,

“When advocacy is ineffective, or in critical situations, intervention and enforcement should be bold. Sanctions should be strong and aim to deter future non-compliance.”

I am interested to hear from the Minister why this has been left out of the Bill. It is, of course, incredibly important that the regulator is not unduly heavy handed but, given the requirements for proportionality and constructive working, it is interesting that this is not complemented by the principle of bold enforcement, when this is actually necessary in critical situations.

Another omission is the principle that all decisions taken by the regulator should be evidence led. In the White Paper this was framed as being important so that all the regulator’s decisions can be defensible under scrutiny, being backed up by data, investigation, and information. Could the Minister give a reason as to why we would not want to see a regulator that puts data and evidence at the core of decision making? That is surely the intention of the Bill, and we cannot have regulation based on whims alone.

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 have to say that some things are not appropriate for the face of the Bill. Office of the Parliamentary Counsel advice tells us that to have bold enforcement does not do anything legally. Much of the work that the hon. Member alluded to, such as the advocacy-first approach and looking at the evidence—we will come on later to the sanctions a regulator will have at their disposal—involves trying to work with clubs to adhere to the conditions, and to get them on a stable footing before we get to that stage.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.