Clause 26 - Part 4: overview and interpretation

Football Governance Bill – in a Public Bill Committee am 10:45 am ar 21 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

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 Government’s White Paper laid out several failings of the existing owners and directors tests conducted by the football authorities. The tests are conducted on a self-declaration basis, and have allowed owners with long histories of business bankruptcies and owners later imprisoned for crimes including money laundering. To address such shortcomings, the Bill includes strong statutory owners and directors tests, a vital part of the new Independent Football Regulator’s regime.

Part 4 gives the regulator the power to test the suitability of prospective new owners and officers of regulated clubs. In certain circumstances, it also gives powers to test incumbent owners and officers. The clause provides an overview of part 4, and signposts the rest of the clauses in this part.

One element of the regulator’s tests is the fitness criteria for individual owners or officers. They will ensure that custodians have the necessary characteristics to run or own an important community asset. Subsections (7) and (8) of the clause specify the fitness criteria: having the requisite honesty and integrity; being financially sound; and, for officers only, having the requisite competence for their role at the club. Alongside other elements of the test, ensuring that owners and directors are suitably fit for their roles will better protect each club against unsuitable custodians, ensuring the sustainability of English football over the long term.

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

I am pleased to have reached the part of the Bill where we can discuss the owners and directors tests. Football clubs are historical institutions with deep community ties; thus we must be careful to ensure that owners are people who view themselves as caretakers of an asset that has existed long before them, and we hope will continue to exist for years afterwards. As such, it is right that owners and directors are subject to fitness tests to ensure that the custodians of beloved football clubs meet certain standards.

At the moment, the tests are operated by different authorities depending on the league a club plays in. The Premier League, the EFL, and the FA on behalf of the National League all administer owner tests and have powers to disqualify unsuitable individuals. While those tests have been in place, many successful owners have been appointed, making selfless and sustainable investments in their clubs, which have brought about rewards on the pitch. However, not all owners have the same outlook, fortune, capacity or capability. Despite ownership tests, too many clubs and fans still have to deal with malicious, absent or incompetent ownership.

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

I commend what my hon. Friend is saying. She knows full well the issues of my local club, Reading, which sadly was bought by the current owner. He was disapplied from buying Hull City but went on to buy Reading, despite a history of being involved in two clubs that went out of business overseas. I hope the measures in the clause will address this and stop other football clubs around the country getting in a similar predicament; I would not wish that on anyone. I am grateful to my hon. Friend for speaking about the issue.

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

I appreciate my hon. Friend’s comments and his work with his local club. I have met its supporters, and that is one example, although not a lone one, because it has been confirmed, in another example, that both Bury FC’s owners, Stewart Day and Steve Dale, passed the EFL tests. The fan-led review took a number of such case studies into consideration, concluding that things needed to change.

Alongside other measures in the Bill, which will be vital in giving owners a better landscape in which to operate and invest, the review made some distinct suggestions regarding the owners and directors tests, such as: ensuring a consistent and independent approach across all men’s football; giving tests the backing of the regulator to enable access to information not otherwise available to competition organisers, such as that from the National Crime Agency; splitting the tests into two parts to recognise the difference in the obligations and duties of owners and directors; and strengthening the qualification criteria to ensure that prospective candidates have integrity and the intention of running a club sustainably. Overall, I think the clause and this part do a good job of achieving those aims and recommendations.

I have one brief question at this stage. The EFL has indicated that it will stop conducting its owners and directors tests once the regulator is running its tests. However, Richard Masters told the Committee that the Premier League would continue to run its tests alongside those of the regulator. Putting aside the issue of clubs paying twice for the same regulation and the lack of efficiency involved in duplicating structures, a dual system could pose a dilemma. If two tests yield different results, whose decision would ultimately be adhered to? That is difficult to tell from the Bill, and I hope that this is something that the Minister can confirm for us today, or that he will write to the Committee about.

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

I asked Richard Masters that question when he gave evidence to the Committee and he was clear then that it would require two green lights, as he put it: a person has to pass the Premier League’s own test as well as the test set by the regulator.

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

That clarity is welcome, but I would still be interested to hear the Minister’s comments. Nevertheless, I am pleased to welcome the clause and I look forward to discussing it in detail.

Photo of Tracey Crouch Tracey Crouch Ceidwadwyr, Chatham and Aylesford 11:00, 21 Mai 2024

I rise to speak briefly about this particular part of the Bill, because although the fan-led review—and indeed the Bill, the explanatory notes and the evidence that we have heard from fans—have of course referred to some poor owners in the Football League over many years, it is really important that we also recognise that there are a large number of very good owners in football. I do not think that they necessarily get the credit they deserve, because we so often focus on those who have not done the game any favours.

Personally, I often think that, despite my love of football, I would not dream of wanting to be an owner, because at the end of the day someone can be a fantastic owner who cares passionately about the long-term financial stability of their club, but if they do not actually buy that left back during the summer transfer window and ultimately the club does not do as well as fans expect it to—I speak as a lifelong Spurs fan—expectations and reality are very different.

Being a club owner can really be very stressful. I do not think that running a football club, wherever that club is in the football pyramid, is a particularly easy thing to do. I also think that most people purchase a football club with the right intention for the club, its fans and the local community, but we have seen some poor examples of ownership in the past and that has really driven the Bill. I just wanted to place on the record my sincere thanks to all those custodians of football clubs who have not driven away their fans, who engage with others regularly, who do their very best to support the local community and who very much have the best intentions of their football club at heart.

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

The hon. Lady is absolutely right—there are many good owners of clubs in football. I refer immediately to Milan Mandarić, who came into Sheffield Wednesday when we were virtually bust, put the club on a sound financial footing, wrote the debts off, took the club forward and got it promoted, with Paul Aldridge as chief executive. They worked together. Mandarić then sold the club on, because he believed that he could not take it any further at that time.

There are other owners who do not necessarily have bad intentions—I think the Bill exists to stop those who have bad intentions—but just make mistakes. This Bill will not make every club successful and it will not make every owner make the right decisions, and we should always remember that. The Bill is to stop people from deliberately doing things that undermine the future of their club.

Photo of Tracey Crouch Tracey Crouch Ceidwadwyr, Chatham and Aylesford

The hon. Gentleman makes a really important point. During the fan-led review, Mel Morris gave evidence to us. His is an example that illustrates the point that the hon. Gentleman just made. As a panel, we asked Mel Morris whether, if the Bill and the regulator had existed with real-time financial monitoring, he thought the same mistakes would have been made. He said that fundamentally he thought that if these interventions had been in place, Derby would never have got itself into the situation that it did.

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

That is a really helpful point. The Bill is about stopping people from doing the wrong things for the wrong reasons, as opposed to stopping people from making mistakes because they are trying to do the right thing but get things wrong. We will never be able to stop that completely.

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

I echo what my hon. Friend the Member for Chatham and Aylesford said. Part of the problem with the lack of oversight of spending, particularly in the Championship, is that club owners who go in with the best of intentions find themselves competing against other clubs that are spending over 100% of their annual revenue on salaries. They therefore make mistakes in trying to compete with someone else who is already trading in breach of the league’s rules.

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

Absolutely. Trying to keep clubs in line with the league’s rules, so that others do not over-compete to match them, is vital. We will come on to parachute payments later, including how they can drive these processes.

We cannot go back and undo all the problems of the past. My concern about new clause 3 is about owners who, for whatever reason, have decided to separate the ownership of the club from that of the ground. I know that in future that will require proper consultation and approval from the regulator, but this is being done in some clubs. My own club, Sheffield Wednesday, is one. Derby County has done it, and I think Aston Villa and Charlton have as well—it has happened at quite a few clubs, for various reasons. For Sheffield Wednesday and Derby, it was a way to try to get round the financial restrictions on clubs. Wednesday just made a mess of theirs and got the timing wrong, so they got a points deduction anyway.

New clause 3 is an attempt to say that although we cannot go back and reverse that decision—we cannot force the owners to sell back the grounds to the same organisation that owns the club—we can say that if the club is to be sustainable, the owner has to demonstrate that the ground will be available. A club cannot play without a ground; if it does not have a ground, it is not sustainable. I hope that the Minister will take that point seriously. If he cannot accept the new clause, because there is some—

Photo of Anna Firth Anna Firth Ceidwadwyr, Southend West

I am very pleased that we have got to this important part of the Bill, which deals with owners and directors tests. I am conscious that we may be about to come on to the provisions that I am about to support. I would be grateful if I could say my piece now, and then not come back to it. Perhaps you could guide me, Mr Sharma.

Photo of Anna Firth Anna Firth Ceidwadwyr, Southend West

It relates to clause 37, so I will wait.

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)

Everyone is obviously getting so excited that they are getting ahead of themselves. To be fair, I understand why. It is important to acknowledge what my hon. Friend the Member for Chatham and Aylesford said about the many people who put themselves forward to support their local football club to build and become competitive. They are hugely important to the local communities in which they are based. We should acknowledge that there are many who do that well and with the best of intentions—even those who make mistakes, as the hon. Member for Sheffield South East said. Their intention is right.

We are focusing on ensuring that owners and directors tests get to the heart of the detail that we need. The test will be much stronger with the regulator, which will have access to information from statutory organisations such as the National Crime Agency, as the hon. Member for Barnsley East mentioned. She asked about the Premier League continuing with its own owners and directors test. It can continue with it if it wishes. I note that the EFL has made a different decision, because it recognises that the tests that the regulator will provide will get much more detail and information than the leagues may be able to. Because the tests will be statutory, they will take primacy.

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

I appreciate that clarity. I also appreciated the intervention from the hon. Member for Folkestone and Hythe. Richard Masters’s comments to the Committee about two green lights are welcome, but it is important that the Bill is clear on this point and that we are clear about it in Committee, so the Minister’s comments are welcome.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.