Football Governance Bill [HL]

Committee (6th Day) (Continued)

20:40:00

Amendment 251

Moved by

251: Clause 53, page 43, line 19, at end insert— “(c) any interest charged under paragraph (b) may not exceed the rate of inflation, as measured by the Retail Price Index, plus 2 per cent.”Member's explanatory statement This amendment limits the rate of interest the Regulator may charge on unpaid levies.

My Lords, I rise to move Amendment 251 in my name and to speak to Amendments 257 and 258 from my noble friend Lord Parkinson. Amendment 251 seeks to place a limit on the rate of interest the regulator may charge on any unpaid levies. I think all noble Lords have agreed that we want to keep the regulator fees and cost burden on clubs as low as possible, so having a reasonable rate of interest seems helpful. The proposal is that we take the formula the Government currently use for tuition fees, and which is proposed for the tobacco levy, which is the RPI rate plus 2%. I am not absolutely wedded to that figure, but we believe there should be a figure we can all agree on. Amendment 257 from my noble friend Lord Parkinson would remove the provision whereby the regulator does not have to consult on changing the levy if it considers the change to be minor. We understand the intent behind that provision, but all sorts of discussions could then be got into about what is minor and what is not, so it is probably easier just to establish that it be properly consulted on if there is a change. Amendment 258 is pretty straightforward. It seeks to establish that if the regulator plans to change the levy rules, it gives six months’ notice before the chargeable period begins. We have said a number of times that we want clubs to improve their financial budgeting and planning, and this would help them to do that. With those simple changes, I beg to move.

I thank the noble Lords, Lord Markham and Lord Parkinson of Whitley Bay, for their amendments concerning the levy. On Amendment 251 from the noble Lord, Lord Markham, setting the rate of interest charged on non-payment of the levy is an operational decision for the regulator, which needs the flexibility to charge interest at a rate that deters non-payment. A rate that is too low could increase the incentive for non-payment and jeopardise the regulator’s ability to carry out its functions. The level of interest charged would be subject to the same consultation requirements as the levy itself. This will ensure a firm but fair level of interest. Amendment 257, in the name of the noble Lord, Lord Parkinson of Whitley Bay, would require the regulator to consult every regulated club and others such as the Secretary of State and the Treasury on minor changes to the levy rules. These would be immaterial amendments or replacements to levy rules, such as correcting mistakes. Going out to gather the views of all clubs feels like it would be a disproportionate burden on clubs and on the regulator. For material changes, the Bill already requires the regulator to consult as appropriate. No club, especially those in the National League, wants the administrative burden of unnecessary consultation. Finally, on Amendment 258 in the name of the noble Lord, Lord Markham, requiring the regulator to publish its levy charge six months before the chargeable period would create an operational challenge. The regulator would have to estimate a levy charge having only half a year’s costs to base it on. This could lead to inaccurate levy charges, which could see the regulator underfunded or clubs needlessly burdened. The current requirement of charges being publicised as soon as reasonably practicable strikes the right balance, we feel, between adequate notice for clubs and operational flexibility for the regulator to ensure an accurate and appropriate levy charge. I therefore hope that the noble Lord will withdraw his amendment.

20:45:00

I thank the Minister for her reply. As I say, these are not major things, but I must admit, I am a little surprised. The Government rightly see fit to set interest rates on all sorts of other things they deal with, such as student loans, tobacco and vapes, so it seems strange that they do not have a view on what should be an appropriate rate for the regulator to charge. I am not aware of that happening in other parts of the government network. On the final amendment, this is about the regulator behaving responsibly if it is going to change things. Here, there seems to be a pattern. We had a debate earlier about what happens if the regulator does not approve someone as being fit and proper within the right time period. Again, the Government were saying the regulator might not be able to do it, so that person is automatically deemed not fit and proper. All noble Lords would probably agree that we need the regulator to be a bit more on its game than this. We should be a bit tougher and say that there is no reason why it cannot work out its rules on a change to the levy and give clubs six months’ notice. If the regulator is asking clubs to be financially disciplined, it should be doing the same. I pose those as things for the Minister to consider but at this point, I will happily withdraw my amendment.

Amendment 251 withdrawn.

Amendments 252 and 253 not moved.

Clause 53 agreed.

Amendments 254 and 255 not moved.

Clause 54: Section 53: consultation and publication

Amendments 256 to 258 not moved.

Clause 54 agreed.

Amendment 258A not moved.

Clause 55: Duties to notify and consult the IFR

Amendment 259 not moved.

Clause 55 agreed.

Clause 56: Part 6: overview and interpretation

Amendment 260

Moved by

260: Clause 56, page 45, line 25, leave out “a specified competition organiser to apply to the IFR for” Member's explanatory statement This amendment is one of a series of amendments which mean that it is not only a specified competition organiser which can trigger the mediation process regarding the distribution of revenue.

My Lords, this is the first of a number of amendments in a very large group—enormous, in fact—but they all have at their core an impact on the way in which the independent football regulator could make financial distribution decisions. I will run through some of the more important ones briefly. Amendment 260 would mean that it is not only a specified competition organiser that can trigger the mediation process. Amendment 261 would provide for competition organisers to obtain consent before determining the distribution of revenue and would require the IFR to be satisfied that the distribution proposals comply with its general principles which are contained in Section 62(2). Amendment 267 would oblige the Secretary of State to consult people who represent the views of regulated clubs and the views of fans of regulated clubs before making regulations which specify the source or description of relevant revenue. Amendment 268 would amend the definition of distribution agreement. Amendment 269 is also part of this series and would mean that it is not only a specified competition organiser which can trigger the mediation process regarding the distribution of revenue. Amendment 276 seeks to provide that a competition organiser can apply to the IFR to trigger the resolution process if there has been a change to rather than any reduction in the revenue received by a competition organiser. Amendment 284 would require any notification that a competition organiser gives to trigger the resolution process regarding distribution revenues. Amendment 293 would insert an amendment to trigger the resolution process. Amendment 318 would narrow the circumstances in which the independent football regulator may revoke a distribution order where the competition organisers have agreed a distribution agreement to circumstances where that distribution order complies with Section 62(1)(a) or (b) or Section 62(4)(a) on the principles in general set out in that section. Why are these amendments necessary? It is principally because we require a degree of flexibility for the regulator. We want to ensure that the regulator can trigger a mediation process and impose its own deal if the parties fail to reach agreement by mediation. Currently, it seems to me that the regulator will be presented with a binary choice, and neither of those choices might be perfect. At the moment, the deal is primarily controlled by the Premier League. Overall, 88% of broadcast revenue goes to the Premier League and 7% of the remainder goes to clubs who get parachute payments, meaning that the remaining 5% is split between the next 138 clubs in the pyramid. I accept the case that has been powerfully made by the noble Baroness, Lady Brady, that the Premier League is a great league, that it produces incredible and impressive revenues and that those revenues have worked to solidify the excellence of the league and improve the quality of the clubs, the entertainment on offer and the players who are available to it. However, it seems to me that we ignore at our peril the rest of the pyramid. Currently, for every £1,000 that goes to a Premier League club, just £313 goes to a Championship club and, if you take it down to a National League South club, it gets just 14p. Yet, if you look at the attendance figures, 45% of football fans, roughly speaking, go to a Premier League match and the remaining 55% go to games in the Championship, League One, League Two, National League, National League North and National League South, so there is a case for better distribution. I am not saying what that distribution should be—that is obviously a matter for which the regulator will be responsible—but the regulator needs to be able to make that decision based on the best possible circumstances. So these amendments are designed to facilitate that and to allow the regulator to act freely, working with football industry bodies and ensuring that they have the best possible information. That is why my amendments seek to generate some flexibility and why a distribution deal must pass parameters set by the regulator, so that the gap between the various levels of football can perhaps be narrowed. It was never intended to be as wide as it is today. Initially, the gap between the Premier League and the Championship level was a lot narrower, and then again between the Championship and Leagues One and Two. It is the important development of football TV rights that has allowed the Premier League to become as rich as it has and to pay the wages that it can pay. International comparisons put the Premier League way ahead of any similar leading leagues. We have a strange situation where some 64 clubs in the top four divisions have gone into administration since the start of the Premier League. That is clearly an unhealthy situation and a better distribution deal that is properly regulated would begin to address some of the gaps and some of the disparities. That is the spirit behind these amendments.

The noble Lord will be well aware that the EFL has just signed a very great deal with Sky, with revenue coming in, and I do not believe that that money is distributed down the pyramid either. One hopes that the Championship and the EFL will continue to improve and get better deals. Does his amendment include the fact that perhaps that league needs to start looking to distribute and that if its income starts to increase, as we all hope it will do—we have heard that it is the sixth-richest league anyway—it is not just the Premier League that needs to be involved in this but the EFL itself? At the moment, it does not distribute any of the income from the money that it gets in from broadcasting. Perhaps it needs to look at distributing some of its income down the leagues as much as the Premier League does.

My Lords, the noble Baroness makes a compelling point. It is the case that the EFL is dominated by the Championship clubs. The noble Baroness is absolutely right that the EFL has secured a beneficial deal. It is not for me, her or anyone else in this Committee to say what the right sum of money is. I am merely pointing out that the distribution has changed over time. The available money for distribution has grown as the game has become more successful as a product unique to England and Wales, and it is for the IFR to get the distribution right. The point that the noble Baroness makes is that we should not be arguing the case for either the EFL or the Premier League; we should be arguing the case for football, because it is all of football that we want to see benefit, so that the pyramid truly acts as a pyramid and acts well in strengthening the national game.

My Lords, before I address the amendments in this group, I want to echo the comments made by the noble Lord, Lord Bassam. With 44 amendments in this group, it really is hard to get your head around them all. Although they are given the broad title of “Regulatory powers”, I do not think that is conducive to good debate.

21:00:00

We had a similar situation on Monday night with a miscellaneous group and a similarly large number of amendments. I hope all noble Lords would agree that the very point of Committee is to scrutinise and grouping so many amendments together is not conducive to that.

Many of the amendments are consequential. I have highlighted the main points for the benefit of the Committee and that was my objective so that it would get the message.

I appreciate the noble Lord’s efforts to do that. It was not specific to this group. There have been a number of examples which have been unwieldy, to say the least. I turn to Amendments 260, 269 and 293 in the name of the noble Baroness, Lady Taylor. They alter the backstop method to enable the regulator to trigger the resolution process. The current drafting permits only the competition organisers to trigger it. That is quite a profound change, if you think about it. To date, we have been saying that the regulator should step in only as a last resort if the competitions cannot reach an agreement among themselves. What we are saying here is that the regulator can step in—I guess, in theory even if the competition organisers have agreed—if it feels for some reason it is not quite happy with the agreement. That seems quite a shift away from the principles we were talking about earlier. Our concern would be that we are suddenly setting up a role for a quite muscular regulator which can interfere maybe not at breakfast, lunch and tea but quite a bit of the time, to say the least. Amendment 276 in the name of the noble Lord, Lord Bassam, states that the leagues can trigger the resolution process if there has been a change to revenue received by other leagues, as mentioned. Again, I think we could get into situations where a five-year deal has been put in place and a league is suddenly trying to reopen the deal. I am delighted that the Championship has a good Sky deal. Do we think that gives cause to reopen the deal? That would be a concern there. I am always a great believer that a deal is a deal is a deal. You live by that deal for that time and when it comes up again, that is the time to negotiate. Amendment 264 from the noble Baroness, Lady Taylor, and the noble Lord, Lord Bassam, again makes provision for multiple competition organisers to trigger the backstop and mediation process. In all of these, there is a general concern that instead of the backstop being the backstop, as it is called, it becomes almost the first stop and the first resort. It goes to the concern that noble Lords have mentioned many times that while we start with the principle of a light-touch regulator, very quickly we get into a scenario of a pretty heavy-touch, muscular regulator. That would be our concern. Amendment 261 provides that competition organisers must obtain the regulator’s consent before entering into a distribution agreement. Again, this adds another level of complexity. If the competitions have agreed between them, why do they need to get the consent of the regulator? It goes far beyond the original intentions of the backstop per the Dame Tracey Crouch report, in which she referred to it as the nuclear option, and how that would be the only case it would come up in. Instead, through these amendments, we would be setting up a lot of situations in which it would be the first resort. While I understand that the intentions of the noble Lord, Lord Bassam, are noble—as ever—I feel that this is another circumstance of mission creep and unintended consequences, where we would end up with a very muscular regulator. Those are our concerns.

My Lords, I am not very bothered by having a muscular regulator; I want an efficient one that gets things done and looks after the lower clubs. There is a disagreement between us that has been there all through this Committee. I regard the series of amendments from the noble Lord, Lord Bassam, as a smorgasbord from which we should select something that is actually going to get us to have a look at what is going on. There are lots of options and I have put my name to one of them. Making sure that we get the regulator right and get money going down to preserve something we regard as good is the primary objective. It is not just to take money off the Premier League; it is to make sure that the structures below survive. If the Government think these amendments are not the right way to progress, hearing why from the Minister would be sensible. Nobody is quite happy with the backstop power in the regulation structure at the moment. Everybody is a little bit upset about it. People who were happy are now not happy. The Premier League and EFL are having great fun not talking to each other or disagreeing. I have no real objection to a slightly more muscular approach. I do not think it is a light touch that is required; it should be efficient.

My Lords, the amendments in this group cover a wide range of issues relating to the backstop. While I understand the intentions behind many of these amendments, I fear that they collectively risk making an already contentious and divisive mechanism even more complex and counterproductive. I respect that Ministers believe they have designed a balanced mechanism that places incentives in the right place, but I think what we will come to unpack is that that is wholly mistaken. I believe this Committee will see that this backstop has not and will not incentivise industry-led agreements, which is supposedly its overreaching policy purpose. I believe we will see that it will not result in a balanced, pragmatic solution that will be good for football. It will instead drive posturing, game playing and the development of extreme and damaging solutions. We will see that this backstop is legally untested and uncertain, and it could sink football and the regulator into a legal and political quagmire that could drag on for years. Worst of all, we will see that this backstop has already poisoned, and will continue to poison, the well of football bodies’ relationships, when we all need to work together for our continued collective success. I will briefly address some of the amendments in this group. The proposal to expand the scope of the backstop to include multiple parties all at once—for example, the National League, or potentially the FA and, even in the future, the women’s game—is concerning. This risks creating division where none currently exists. The Premier League, far from being at odds with these stakeholders, has made intensive and carefully considered efforts to support them, just as it has with the EFL. Just a few months ago, the Premier League announced a £12.6 million package for the National League system over three years, a substantial increase on previous arrangements. For the women’s game, the Premier League has provided significant financial assistance, including a £20 million interest-free loan to help the new Women’s Professional Leagues Limited in its formative years. These are examples of proactive, voluntary agreements that demonstrate collaboration rather than conflict. This set of amendments would encourage all stakeholders to start competing, simultaneously claiming the Premier League’s revenues, fracturing relationships and introducing adversarial dynamics where none currently exist. This is not the way to build a sustainable and co-operative football ecosystem. Indeed, I will make a prediction: it is far more likely that the National League will seek to trigger the backstop in relation to the EFL, which does not provide any financial support to the leagues below it. The idea of the IFR triggering the backstop mechanism independently is particularly troubling. The purpose of the backstop, as described in the Bill, is to act as a last resort when the parties fail to reach an agreement; it is not supposed to be a front- stop. Allowing the IFR to bypass this voluntary process would undermine its very purpose and disincentivise genuine negotiation. The idea that any change—not even a reduction—in revenue received by one party could automatically trigger the backstop is, frankly, unworkable. Revenue distributions in football are dynamic and fluctuate according to complex interrelationships. The amounts change every year, almost always upwards. A mechanism that automatically treats any change as a potential trigger would, with the greatest of respect to the noble Lord, Lord Bassam, be absurd. It would trigger perpetual uncertainty, which is the last thing that football needs. Finally, and more positively, the suggestion that the IFR could impose its own settlement deserves careful scrutiny. I have tabled my own, slightly different amendments to that effect, which will be debated in a later group. I fully agree with noble Lords that the binary mechanism in the Bill is unworkable for football. However, with respect, I am not sure that this particular amendment would place incentives in the right place. To allow the IFR to impose its own settlement only where both parties’ proposals are inconsistent with the IFR’s objectives would allow parties to offer unrealistic proposals. It would mean they could anchor with a very extreme demand, knowing that the IFR would be forced to step in and create a compromise. This would further entrench division. What is striking about the amendments in this group is that they demonstrate a fundamental dissatisfaction with the mechanism in the Bill from all sides of the House, as well as the main competition parties involved. The Premier League has raised serious concerns about the divisive nature of the backstop, while the EFL has, I believe, inspired the amendments in this group. It too sees significant flaws in the process as designed. This really should give the Government significant pause for thought. Let us not forget that English football’s success has been built on collaboration and solidarity. UEFA has made this very point about the deficiencies of the current Bill’s mechanism. A backstop requires thoughtful, proportionate regulation that respects the autonomy of its stakeholders. These amendments, and indeed the existing backstop mechanism, would disrupt that delicate balance. I urge the Government to reflect carefully on whether the backstop as designed is fit for purpose. It should be fostering co-operation, not driving division. If that requires revisiting the mechanism, we should do so without hesitation. Football’s future really does depend on getting this right.

My Lords, I want to pick up one particular word that my noble friend Lady Brady raised: divisive. There is no doubt that this Bill has turned what was intended to be a backstop—a last resort or nuclear option, however it was described—into something that can be used pre-emptively. Some of the amendments proposed tonight—which would make it more aggressive and interventionist, and more able to be used pre-emptively—have behind them the sense that this is bound to be aggressive, antagonistic and adversarial. I want to contest that. The truth is that, wherever a club is in the pyramid of English football, it has an interest in the whole pyramid being strong. There is no benefit to the Premier League in keeping lots more money to itself and weakening the rest of the pyramid, because it depends on the pyramid; its strength is drawn from all the way through the pyramid. It is really important that we try to take ourselves away from the sense that there is a finite pie of limited size and so we should work out how to enable different parts of it to get more for themselves. English football—the whole pyramid—has seen tremendous growth. It had the huge challenges of the pandemic, but it survived and came out strong. As we have repeatedly said, the Premier League is not just the most successful football league in the world but the most successful sporting league in the world. The Championship is the sixth most successful and richest league in Europe. It is strong and it will grow more, but it will not do so if the whole mindset behind how this is constructed just puts one set of interests against another. The aim should be to ask how we grow the pyramid further and encourage the different parts of it to work together and see the mutual benefit, to make two plus two add up to five, rather than—as I fear the danger is in how this is constructed—add up to three. I urge the Government to take this away and look again at how it is constructed.

21:15:00

When Dame Tracey completed her review, she talked about the backstop as being a genuine last-resort backstop. We have already seen how the prospect of a much more interventionist approach has enabled parts of the pyramid to start to game the process in a way, hoping that, as a result of a deadlock, the 7th cavalry will ride over the hill to change the outcome. I hope that the Government will take this away. This is at the heart of so many of the concerns around what the Bill is about. To be frank, my dread is that we are doing something that will make less of this amazing thing—English football—instead of what should be the outcome, which is making more of it.

My Lords, it is relatively late in the evening and we have debated a lot of clauses and amendments, but I agree with my noble friend Lord Maude that this debate is at the heart of the Bill, at least as far as the Premier League, the Football League and the clubs themselves are concerned, I suspect. What will really get them going in relation to the Bill is not, for better or worse, net zero, diversity or any of those things but the money; it is what happens to the money and the success or failure of their clubs. When the Minister responds, she will make the best case she can for what is in the Bill—for the backstop—and I understand that. However, when we finish Committee and go on to Report, and when eventually the Bill passes, the debate will not be over; it is just beginning. Once the Bill is passed, as I assume it will be, my noble friend Lady Brady will continue to make her case broadly for the present arrangements and the noble Lord, Lord Bassam, will be back to make his case for what my noble friend Lord Markham called the front-stop, while the Government will defend the backstop—and so the debate will go on. One of the lobby groups that has an interest in the Bill said of it that the debate is over. I found that a remarkable statement, given that this House presumably has a duty to scrutinise legislation and the Bill has not even been down to the other place yet. My point at this stage is that the debate is not over. It will not be over in Committee, on Report or after Third Reading; it will just be beginning. I ask noble Lords to bear this in mind when we come back, later in Committee, to consider clauses that seek to review the Bill as a whole.

I thank my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton for their amendments on this important topic. I thank my noble friend for outlining why distributions are so important to the football pyramid. I will aim to take the amendments in a sensible order, with logical grouping where possible. In appreciating comments on the size of the group, I note that there is a logic to this, as outlined by my noble friend, and I say to the noble Lord, Lord Markham, that I do not think we have skimped on debate during Committee—though I agree with the noble Lord, Lord Goodman, both that the hour is getting late and that it does not feel like the debate has finished or will finish any time soon. I acknowledge the probing intent of the amendments and it is really helpful to have this debate. I know that subsequent groups will go into this a bit more as well. I agree with the noble Lord, Lord Addington, that it is important that we do our absolute best to work through the issues that noble Lords have raised and to get the regulator right, which was the point that he made. I reassure my noble friends that we agree on the importance of regulatory intervention on distributions— I appreciate that not all noble Lords have exactly the same view of this. Amendments 260, 269, 270, 293, 295 and 288 would broaden the powers that the regulator has to intervene by allowing it to trigger the back- stop process. I understand the intention behind the amendments, but we must maintain the backstop process as a last resort, to be triggered by the leagues only if they cannot come to an agreement themselves.

The noble Baroness keeps saying that, and I understand that it is what we hoped was going to happen, but I do not think that anyone in this Committee believes that it will be a last resort. From the briefings that all noble Lords—including, I am sure, the Minister—have had from all sides, we know that the backstop is likely to be triggered very early on by the regulator. I really hope the Minister can move from what we hoped might be the position to where I think we are, whether we like it or not, and look at these processes on the basis of what is likely to happen. This could be one of the first things that the regulator has to deal with. We have heard concerns about the nature of the conversations and the way that those might set up leagues against one another. I know that the Minister would hope that it was a last resort, as I think we all did, but I urge her to accept that if we are being genuinely honest—and other noble Lords may have heard differently from the various leagues we have all been speaking to—it seems to be a view that this is likely to happen. It would be much more helpful for our discussions if we could stop saying, “It’s a last resort”, and accept that it is very likely to happen quicker than we all wanted.

I appreciate that the noble Baroness, Lady Evans, may take a different view and I completely understand people’s concerns that it will be a front-stop—as a spoiler alert, and with apologies to my noble friend, I am not going to accept these amendments; we will come to that in a moment. However, we genuinely think that the model we have established is very similar, apart from the possible inclusion of the parachute payment—for want of a better word; it is not the phrase used in the Bill, but that escapes me for a moment—should the “state of the game” report suggest to the regulator that it needs to allow that to be taken into account. My view is that the model we have presented should incentivise the leagues and the parties to come to an agreement themselves, and that opportunity to do so does not go away once the regulator is established. That is the design of the model and an essential part of it, as it was in the previous iteration of the Bill, so this is absolutely intended as a backstop process. We can go on to debate that in later groups as well as in this group. I am happy to do that and to meet people individually to go through why we think this will be a backstop and not a front-stop whereby the minute the regulator sets off in motion, everybody will claim that they want to have the backstop triggered. However, there are things that the regulator will need to take into account if somebody asks for the backstop process to be triggered. It is not the necessarily the case that the regulator would have to accept that that process was set in motion. The whole model is designed around the principle of trying to get people to come to an agreement themselves. It is really important to ensure—

I thank the Minister for giving way. If she was right, we would have a deal in place by now. This has been the model for two years, so it is definitely a barrier to conversations. There is a view that whatever the Premier League agrees with the Football League, that, in effect, becomes its insurance policy. It then triggers the backstop and goes straight to the regulator, knowing that it will never get less than it has been offered and could get more. We will be in a perpetually revolving door of triggering mechanisms that will never give any club any certainty of its income, which will be very dangerous and very bad for football.

It is important for us to go through how the regulator’s backstop powers and power of last resort would work. I appreciate that the noble Baroness is entirely right that an agreement has not come into place, and that might be—or might not be—because of people waiting to see what form the regulator takes and the exact iteration of the wide range of views we have heard tonight and on previous occasions. If, under the Government’s intended model for the backstop, the relevant leagues cannot reach an agreement, they can apply to trigger the backstop—the noble Baroness is quite right on that. If certain high thresholds are met, of which the regulator must be satisfied, the backstop can be triggered, but let me go through what would happen first: the relevant leagues would enter a period of mediation and, if there was still no agreement, they would move to a final proposal stage.

I thank the Minister for allowing me to intervene. Rick Parry went before the Select Committee and said he would trigger the backstop in any event—even if he got more money from the Premier League in the meantime—because there is no risk to the EFL in the backstop.

I am not going to comment on what people did or did not say in that committee meeting at this point. The backstop would be applied only if certain high thresholds were met. The regulator will be an independent regulator and it will have strict measures to meet—high thresholds which it must be satisfied of if the backstop is to be triggered. If there is still no agreement, the parties will move to a final proposal stage and, at that point, the regulator would convene an independent expert panel and invite final proposals from both relevant leagues with accompanying analysis, and the independent expert panel would choose the most appropriate proposal. This model incentivises both parties to compromise, as unreasonable proposals would not be chosen. The whole model, which is almost identical in every detail to how the previous Government were planning to do this, is intended—

The Minister keeps coming back to the previous model. I think most of us here thought the previous model was nuts, and we still think it is nuts. We never discussed this in the House, so to keep saying that is quite insulting to quite a lot of us who always thought this was a bad idea. We are trying to engage with the Minister now about why we think it is a bad idea, and we would really like her to talk about the detail rather than keep saying, “Well, it was your Government”. Honestly, I would never have voted for this beforehand and, in my ex-position, that would have probably been quite a bad thing, but I am sorry, I would not have done so. I would like the Minister to focus on what we are talking about rather than keep using those issues to deflect from getting into the detail.

I am not sure how many times I have said that this evening, but it is really not very many. I am trying to establish that this model has been worked on and discussed for some time. I appreciate that noble Lords in this House did not get the opportunity to discuss it under the previous Government. It is a model that has been worked through, with examples from different organisations. It encourages compromise and tries to get people to reach a deal that everybody can work through and which meets the criteria of the regulator.

A model which creates tension does not get it right. We have already heard from Rick Parry that he would trigger it immediately. This is a model that does not work. We are trying to say to the Minister that Committee is an opportunity to take it away and rethink it. It really does not stack up to be a successful model for the future of English football.

21:30:00

I would really appreciate it if the Minister could take that away, think about it and come back to us with her reflections on everything she has heard this evening, from many people who are very knowledgeable about the future of English football and, indeed, its existence. I have real concerns that what is being proposed would be deeply damaging not only to English football but to the investment future of the game in England. Surely, she should take that into account.

Simply because one individual says that they would want to trigger it does not mean that the regulator would view the condition as being met.

With respect to the Minister, it was not just a random individual; it was a really significant player in the whole scheme of what we are talking about here.

I appreciate the noble Lord’s point, but if the EFL triggers the backstop or makes a proposal in bad faith, it could end up worse off if the Premier League’s proposal is more reasonable, so this does not encourage the EFL or Premier League to be confrontation or divisive. I am sure we will come back to this at a later stage, probably this evening, but definitely when we come back in the new year on Report. I am really happy to sit down with noble Lords and talk this through, but I will continue to use my speaking notes for some time and then, I hope, give some reassurance that we are considering this carefully. I am always happy to meet with noble Lords, as is the team that has been working on this. As noble Lords are aware, a number of the officials working on this have been doing so right the way through from the fan-led review, so this is a really good example of the consistency of advice both to this Government and the previous Government, notwithstanding the fact that not everybody here liked the Bill’s previous iteration. To return to my speaking notes—although I am fairly sure I have got slightly out of order now—we think that this approach encourages future collaboration. We might need to agree to disagree on that point and come back to that debate.

The Minister says that she believes that the mechanism will deliver collaboration. For my benefit, please could she name a single example of a binding final offer process working in UK regulatory terms, and its use in the UK to deliver the outcomes she is talking about?

The Competition and Markets Authority has used it. The process proposed by this group of amendments, excluding Amendment 260, would allow the regulator to intervene at its discretion and would require it to take into account the potential use of any revenue distributed. It is the Government’s view that this is regulatory overreach and a fundamental change to the intent of the process as drafted. The other amendments from my noble friends Lord Bassam and Lady Taylor seek to change the structure of the backstop process from a two-party mediation and final proposal/order process to one that could apply to any number of relevant parties. I understand the overall intent of these amendments and have chosen to address them as a group to ensure that that intent is understood comprehensively, and that the Government’s position is in turn communicated coherently. To clarify, the Premier League, the English Football League and the National League can all apply to trigger the backstop process. Any of the specified competition organisers can submit an application to trigger the process, and simultaneous instances of the backstop process could be triggered to cover the relationships between each of the leagues. The process is inherently designed as a two-party process. Fundamentally, distribution agreements are agreed between two individual leagues and the process is designed to facilitate these agreements. As the final offer process is set up and designed between two parties to facilitate a decision between two proposals on the basis of relevant principles, it would not be effective for the regulator to engage in this process with more than two parties. This is also, in part, why it would not be appropriate for the regulator to make a third offer. Without the incentive of the two-proposal process, parties are likely to stay at polarised positions, rather than find areas for compromise. However, when the two proposals submitted are the only choices, the pragmatic decision is to submit the most reasonable proposal possible. This is the incentive we wish to create. I now turn to Amendments 292, 296 and 314, tabled by my noble friends Lord Bassam and Lady Taylor of Bolton. While there is a slight difference between “special” and “compelling”, we are satisfied that the bar is set sufficiently high with the use of “special”, which is the more usual terminology in these sorts of provisions. There is likely to be no tangible difference in outcomes, and therefore these amendments would be minor, insignificant changes to the wording of the Bill. As such, the Government believe the current drafting is sufficient. This is also the case for Amendment 264. While we understand the intent behind this amendment, we are content that the current drafting in the Bill sufficiently captures all revenue relevant for consideration during the backstop process. The proposed drafting change would not capture any revenue sources not already captured by the existing wording. I turn now to Amendments 261, 262, 276 and 315. Amendment 276 seeks to significantly broaden one of the conditions by which the backstop process could be triggered. Condition 2 is specifically designed to be triggered by a material reduction in relevant revenue, as this poses a significant threat to the financial sustainability of the pyramid. Amendment 315 would, if the distribution process was ended due to incomplete or inconsistent proposals, require the regulator to issue a distribution order based on its expert panel’s own proposal, rather than ending the process. This would prevent the regulator ending the final proposal stage without an order, even if both leagues have chosen not to submit proposals. These amendments, and the others referenced, would increase the likelihood of an enforced rather than an agreed solution. The Government’s preference is for an industry-led solution. It is our view that the regulator should have a role in facilitating the final proposal process only where no agreement can be reached on distribution, and that the process should be the least interventionist it can be while remaining effective. This approach encourages future collaboration and prevents the leagues relying too heavily on the regulator in the future. I turn now to Amendments 284 and 286. While I agree that the state of the game report is a usual source of information to be considered as part of the distribution agreement process, it is our position that these amendments are unnecessarily prescriptive. As it stands, the Bill does not make specific reference to the report being included as a potential question for consideration. However, the existing drafting does not in any way exclude consideration of the state of the game report, and the regulator must have regard to it as part of its general duties. I would expect the state of the game report to be considered by both the leagues applying to trigger the backstop process, and the regulator, given its relevance. However, to include this expectation beyond what is already set out in primary legislation would be inflexible. Turning to Amendment 267, while the Government understand the broader intention to involve fans in as many areas of the Bill as possible, it would not be appropriate for the regulator to be mandated to consult a group which is neither directly financially involved nor a governing body. This is not to say that fans should not make their views known to the regulator, and there will be many instances, such as in the state of the game consultation, where we expect the regulator to be able to consider a number of perspectives. This includes the views of fans on the financial situation in English football. Furthermore, the proposed drafting requiring consultation with representatives of regulated clubs is duplicative, given that the Bill as drafted already requires the consultation of the leagues. Finally, Amendment 319 seeks to remove the provision that explicitly outlines that leagues can come to an alternative agreement at any time in the backstop process. The ability of leagues to come to an agreement independently has been protected in the legislation itself intentionally, to highlight that an industry-led solution is both preferred and encouraged. We believe this explicit protection will encourage the leagues to reconsider at every step of the process whether regulatory intervention is necessary, ideally bringing them closer to an independent agreement that works for all of football. I hope that my responses have reassured my noble friends and other noble Lords that the Government’s approach is appropriate and provides the necessary protections, and that my noble friends will not press their amendments.

My Lords, the noble Lord, Lord Markham, rumbled me early on in his comments when he worked out that these were probing amendments; that is what they were intended to be. The group is disparate—I did not author it; it was what we were handed. It has been useful because it has enabled me to hear from the Minister how she sees the regulatory arrangements working as far as distribution is concerned, and the extent of the regulator’s flexibility. I did not make this observation in my opening remarks but I think—the Minister covered this point—that the “state of the game” report will be critical when the regulator gets to grips with the distribution. The distribution of the revenues will be most important, because that is designed to make the game sustainable, to make sure that clubs do not go into administration, that we do not have clubs paying more than they actually earn in revenues, and so that clubs do not get to the point where they cannot properly trade. That is the most important thing for me. Although I appreciate that my amendments would appear to some to be a bit of regulatory overkill, I think the point was made that we need to make sure that the regulator can do its job properly. The Premier League should not be at all threatened by the powers that the regulator has. Given the amount of money there is in the game and the continuing success of the Premier League—and, for that matter, the Championship —the regulator should be able to get our national game to the point where it is much more financially in balance and there are not the big gaps and distortions in revenue distribution throughout the pyramid. I thank the Minister for what she said. Obviously, I shall study it very carefully. I think it unlikely that I shall return to these issues on Report, but obviously I will look at it very carefully before we come to that point. I beg leave to withdraw the amendment.

Amendment 260 withdrawn.

Amendments 261 to 262 not moved.

Amendment 263

Moved by

263: Clause 56, page 45, line 32, 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.”Member’s explanatory statement The amendment prohibits parachute payments from being included in the distributions of revenue resolution procedure.

Amendment 263 is in my name and that of my noble friend Lord Parkinson. Going on from the last debate, it talks about probably one of the most important elements in the whole make-up of the financial payment system: parachute payments. The amendment seeks to remove from the regulator the powers to impact or change those parachute payments. The reason for that is that parachute payments are a very common feature—I understand that just about all European leagues have parachute payments—and that is for a very simple reason. Any club that gets promoted is automatically in a situation where financially, it has a lot less money than other clubs in the Premier League or whichever higher division it is—parachute payments happen right the way through the pyramid—and they need to invest. They need to do that if they are to have any opportunity, any chance, to compete. If they do not invest, it is pretty likely that they will get relegated again straightaway, and any games that they take part in will be pretty uncompetitive and not very interesting to watch. But how do you get them to invest when they know that there is a decent chance that they will get relegated straightaway and go back to a situation where they have a lot less income? Of course, as I say, the common mechanism that all the leagues across Europe seek to put in place is the safety net of a parachute payment, so that clubs know that for a period of time—three years—they have that safety net, particularly in years one or two, because in the third year it falls away quite quickly from that. However, it is not just as a key measure for promoted clubs. Right now, if you are a Wolves fan and you are sitting second from bottom, what do you want them to do? You want them to sack their manager—they have done that; it cost them quite a bit to do that in terms of pay-offs and attracting a new manager—and you want them to invest in the January transfer window to get more players, to give them a chance of staying up for the rest of the season. That is the absolutely normal thing that you would expect them to do. That is what you want the whole Premier League to be doing: you want the teams to be really fighting to survive and competing in every game. That is what makes the game so interesting to watch. A lot of the fun towards the end of the season, when you know—maybe not this season—that Man City is going to win it again, or whatever, it gets really interesting around the bottom of the league. Why is it interesting? It is because those clubs still invest. So Wolves will no doubt invest in this window and a lot of the bottom clubs, which might be looking over their shoulder, worried about relegation, will invest. They will do that because they have the safety net of the parachute payments.

21:45:00

If you remove that, instead of investing more in players, they will be doing the opposite. They will be thinking, “My goodness, I had better get rid of some of these players. I had better make sure, because if I get relegated, I am absolutely stuck; my income is going to dramatically decrease and the responsible thing for me to do now is to offload players instead”. The net effect of that is, suddenly, we get a whole lot of games that become uncompetitive. They become walkovers. Those teams are now playing teams with a lot more financial resources, and they become much less attractive to watch. What does the whole game depend on? It is the attractiveness of all the games. That is what the TV companies all around the world pay for. That is why we get more money in the Premier League—double the amount that the other divisions in Spain, Italy, France, et cetera, are getting—because all the games are competitive, unlike in these other countries, where you get a few top teams and then a lot of teams that are not nearly so competitive.

All this will do is make those games less attractive to watch. It will mean that the TV rights for those games will go down, and all clubs will lose out. We will have exactly what my noble friend Lord Maude feared: less money to distribute, rather than more. I feel very strongly that removing the parachute payments will be counterproductive.

Again, I know the Minister understands this. Like all of us, she has the good of the game at heart. I know her team understand this as well. I look forward to hearing her on this very important issue. I beg to move.

My Lords, I support Amendment 263 in the name of my noble friend Lord Markham, which seeks to exclude parachute payments—the financial lifeline provided to relegated clubs—from the definition of “relevant revenue” under the backstop. This amendment is essential to addressing the profound risk created by the current drafting of the Bill. Parachute payments are not just a feature of football finance, they are a key part of the scaffolding that delivers the competitiveness, the investability and the financial sustainability of the English football ecosystem. Without them, relegation would become a financial free-for-all—a cliff edge that would devastate many clubs and their communities. Parachute payments are designed to manage the significant financial shock of relegation, where clubs can lose enormous amounts of revenue almost overnight, yet their overheads stay the same. I speak from some personal experience here. At West Ham United, we have known the daunting realities of relegation. Without parachute payments, the response in 2011 would have been wholesale disinvestment, a disorderly fire sale of players, job cuts, and a complete halt to critical investments in infrastructure. That is exactly how clubs start to spiral. Parachute payments do not come close to eliminating the pain of relegation but they provide some breathing space to make difficult but measured adjustments. Yet this Bill places the very existence of parachute payments on the table, making them a part of the binary backstop process that pits two competing visions of football finance against one another. This is an intolerable risk. The EFL has been explicit that its proposal in this process would be for massive reductions in parachute payments, based on the argument that the financial gap between the Premier League and the Championship should be closed. But this argument fundamentally misunderstands the problem. The central issue here is not the gap itself, which reflects the commercial realities of two very different leagues, but whether clubs can transition effectively between those levels, between those two leagues. Here the evidence is clear. Parachute payments work. If they did not exist, you would simply have to invent them. Crucially, parachute payments do not lock up promotion opportunities. Look no further than the examples of Luton Town and Ipswich Town from each of the last two years. Well-run, innovative clubs have every chance of success in the Championship, which is a highly competitive and appealing league. Parachutes are not a significant distortion but a significant stabiliser, providing clubs with the tools to manage transition responsibly and sustainably. The EFL’s proposal is essentially to level down the Premier League to meet the Championship; to stretch out the bottom half of the Premier League. But that would destroy the top-to-bottom competitiveness that makes the Premier League the most watched and admired league in the world. Enabling such a proposal, as this Bill now does, expressly privileges the Championship over the Premier League. That is an astonishing position to take. It risks reducing the quality of the game at the top of the pyramid and undermining the ability of clubs to compete both domestically and internationally. Let us also consider the impact on investment. Investors are rational. They are drawn to football because of its structures, parachute payments central among them, that provide clear pathways for responsible investment and sustainable growth. Without parachute payments, the Championship clubs become less investable. Why would anyone seriously invest in a club that cannot make the financial journey to the Premier League without risking complete collapse on relegation? The logic of the previous Bill was that, if there are challenges with parachute payments—challenges that the Government’s state of the game review may or may not identify—these can be addressed through increased solidarity payments. The exclusion of parachute payments in the previous Bill meant that the very existence of parachute payments was not placed at risk. It recognised the critical value of parachute payments to protect their role in managing these vital transitions. But now parachute payments are suddenly on the table. It is a hugely significant change of policy. I know that the Minister would prefer that I should refrain from pointing this out, but the process by which this expanded backstop mechanism has been introduced has been alarmingly inadequate. As we know, the Secretary of State held just one 30-minute meeting with seven hand-picked Premier League clubs between July and October. The backstop was one of the many things that were discussed at the meeting, but at no time during the meeting were we given any warning that this decision was even being considered, let alone added to the Bill. Those seven clubs wrote to the Secretary of State following the meeting, which was five or six months ago, and we still have not had a reply. We also know that UEFA explicitly advised Ministers to reconsider the previous mechanism before parachute payments were even included. But, instead of narrowing the scope, the Government have significantly broadened it. I ask again: why? Parachute payments do not create financial irresponsibility. They are its enemy. They do not distort competitiveness; they enable it. If you are Championship club newly promoted into the Premier League, you need to know that you can invest in your team to give you any chance to be competitive and to stay there. Clubs invest when they are promoted only because they know that they can rely on the parachute payment to cover some of the investments they have made in order to be competitive in the Premier league. Those investments are almost always in transfer fees and players’ wages. Clubs need that parachute to cover those things if they are relegated. If you do not have a parachute payment to soften the blow, you know that you cannot make the necessary investment in your team and in transfer fees when you get into the Premier League to try to stay there. You know your team will not be competitive enough, because you know that, if you are relegated without a parachute payment, you will face the real risk of administration. Parachute payments help soften the blow. Without them, you cannot cut your overheads in any way, because there is no cause to terminate players’ contracts—that is part of the PFA agreement. So this means that, if you get promoted into the Premier League knowing you cannot contribute to the competitiveness of the Premier League—the idea that on any day any club can beat any other—you are going to affect the competitiveness and the global appeal of the Premier League, as my noble friend Lord Markham said, but, most of all, you are going to damage your own club. Parachute payments do not reward failure. They allow clubs to recover, rebuild and stay financially sustainable. Frankly, I think that is the whole purpose of Bill. So I urge the Government to reconsider and to protect the stability of the football ecosystem, protect the ability of clubs to manage the transition between leagues responsibly, and protect the investment in both the Premier League and the Championship, which make English football the global success story that it is today.

My Lords, it is a pleasure to follow my noble friend Lady Brady, who speaks with passion and deep expertise. I support this amendment. I suspect I am not the only football supporter sitting in your Lordships’ House who had never heard of parachute payments until I started to get my head around the Bill. It took me a little time to get my head around the concept. I have listened very carefully to, and interrogated, the arguments for it, and understand them. The essence seems to me that it is simply a fact—an irrefutable fact and not readily to be changed—that there is a huge gulf in the financial rewards that come to a club in the Premier League compared with one that is in the Championship. One might regret that, but the only way you could possibly change it would be, as my noble friend said, by levelling down and reducing the competitive tension that there is in the Premier League. The arguments that my noble friends Lord Markham and Lady Brady made about how parachute payments can narrow the gulf between Premier League and Championship are powerful and compelling. But the truth is that, without the ability for clubs that have been promoted to invest to become competitive, you would not have the competitive tension within the Premier League that is part of what makes it so successful. We have said repeatedly, but it bears repeating, that the Premier League is the goose that lays the golden eggs that reward the rest of the pyramid. If we damage that, we inflict damage not just on the Premier League but on the whole of English football, and that is what we have to be incredibly careful of. There is a high degree of mobility within the Premier League. I say this with regret as a supporter of a club that is always regarded as in the top six but is languishing —temporarily, I hasten to say—in 10th. It is, as we know, the hope that kills you, not the despair. Nottingham Forest were promoted two or three seasons ago and are now fourth in the Premier League, in a Champions League spot—there is strong mobility. Could they have done that without the confidence to be able to invest and to grow the team and the players? This is part of the magic of it, and to suggest that this is somehow a game and a racket and that it should be put in jeopardy is not to understand the magic of a degree of competitiveness that exists in English football all the way through the pyramid. This is something that the clubs and leagues have themselves come up with, and it is something that works. The idea—frankly, this thought applies to quite a lot of what the Bill is about—that what has worked and been proven to work will somehow suddenly be improved by the introduction of a state regulator might turn out to be true, but all the evidence of history suggests that it will not.

22:00:00

The noble Baroness and others now sadly absent on the Government Benches have constantly said that we cannot really complain about this because it is basically the same Bill that our Government came up with. In the last group of amendments, we were talking about another way in which the Bill has been significantly changed and, from where I stand, made considerably worse. Turning the backstop into a front-stop, effectively —an aggressive, interventionist approach—and bringing parachute payments within the ambit of the regulator are two crucial approaches capable of inflicting grave damage on what we are trying to protect, support, sustain and help to grow.

So, for all that the Minister maintains that it is somehow improper for us to be questioning this, we have the Government bang to rights on this one. I therefore hope that she will take this away and give it careful consideration, because she is playing with something quite dangerous here. I am no longer a politician—I sit in your Lordships’ House—but I am still alert enough to the political dangers of getting something like this badly wrong, and I have to say to the Minister and her colleagues in the Government that, if this goes badly wrong, they are going to own it.

I support Amendment 263 and declare an interest as a supporter of Norwich City, who, over a number of seasons, endured the pain of relegation and then the joy of promotion on a regular basis. So, unlike my noble friend Lord Maude, I am well aware of the benefits of parachute payments, although unfortunately not for a few seasons now. As we have heard, parachute payments are a critical foundation for the competitiveness of the Premier League. They help clubs manage the financial impact relegation from the Premier League can cause and give a degree of stability at a time of significant challenge to allow them to adjust to their new financial and footballing reality. That is true of all clubs. Well-run clubs like Norwich City could not have survived, even with the benevolent owners they had, without the benefit of a parachute payment. A parachute payment does not, however, in any way ensure that clubs continually go up to the Premier League, as, unfortunately, the last few seasons for Norwich City have shown. I am sure a number of noble Lords will have seen the letter from Cliff Crown, chairman of Brentford FC, who said: “For Brentford FC the parachute payment model provided an essential safety net, enabling us to invest in the team and infrastructure when we secured promotion. This support was pivotal in ensuring we could compete effectively and establish ourselves in the Premier League.”. Like other noble Lords, I am concerned that the Bill as it stands may inadvertently incentivise bottom-half Premier League clubs and Championship clubs seeking promotion to significantly curb their investment over time, given the greater risk relegation would undoubtedly present. As my noble friend Lady Brady said, relegation would become a real financial cliff edge that would see clubs lose enormous amounts of revenue overnight, while having to continue to cover the costs predicated on their involvement in the Premier League. If that were to happen, the competitiveness of the Premier League would be severely weakened, and I believe the Championship would be significantly weakened too, undermining the very attributes that attract the revenues that sustain the game. I urge the Minister to look again at this issue and to carefully consider the concerns raised in our discussions today. In particular, if she has not already done so, I urge her to talk to the clubs whose first-hand experience of the stabilising effects of parachute payments surely must be central to any discussion of this issue. I really hope that their experience will not be dismissed out of hand.

I thank the noble Lord, Lord Markham, for this amendment and all noble Lords who have taken part with a degree of passion that shows their commitment to the game and to the legislative scrutiny process. First, I acknowledge that all noble Lords—I include myself in this—agree that parachute payments are a significant part of football’s financial landscape. I reassure noble Lords that the Government recognise that they play an important role in supporting the survival of relegated clubs. I agree with the noble Baroness, Lady Brady, that they can provide a lifeline. However, the regulator needs to be able to consider all relevant revenue sources as part of the backstop process to get an accurate picture of the proposal’s impact on financial sustainability. That is why parachute payments have not been excluded in this Bill’s definition of relevant revenue. We believe that allowing the regulator to make a more informed decision, rather than restricting what it can consider, will only help to achieve the best possible outcome for the future of the game. Notably, parachute payments will be reviewed as part of the process only if the regulator deems them a relevant consideration. The current drafting does not require that parachute payments be considered; it allows them to be so only if they are deemed relevant by the regulator. So, if it agrees with the point made by the noble Lord, Lord Markham, based on the state of the game report, it will act accordingly. What that means in practice—

The Minister talks about the state of the game report, which I completely agree is going to be extremely important, but the fact of the matter is that the backstop could be triggered before the state of the game report is published. From what I remember, it is quite a long time before it needs to be published. It could be that both leagues—the EFL and the Premier League, or whoever—will trigger the backstop before that, so parachute payments will be included. Unfortunately, the state of the game report may have no impact whatever on an initial decision by the regulator. The timescales simply do not work. I am not expecting a particular answer today, as the Minister can well say that she is not in charge of the regulator, but it is important to note that the timing of these things does not necessarily tie up, so unfortunately, reassurances like that are not really reassurances.

Clearly, it does not need to wait for the state of the game report to decide whether they are relevant. The approach we have adopted in the Bill means in practice that if the regulator has clear evidence, whether from a different source or from the state of the game report, that parachute payments are causing sustainability issues to the wider pyramid, it will now be able to address them. In our view, this was a potentially serious gap in the legislation that we feel has now been rectified. I stress “potential”.

What the Minister said would be fine if the regulator was making a balanced determination, but because the Government have created a binary process whereby one proposal can be accepted, it could choose to abolish them. The Government have created that risk, and it is an intolerable risk.

We went through in quite a lot of detail how the backstop mechanism would be triggered. I know we have more to come, as the noble Lord, Lord Maude, said, but in my view, it is not unreasonable for the regulator to be able to consider them. However, the regulator does not need to consider them. On the point raised by the noble Baroness, Lady Brady —clubs and planning, and how they can deal with their financial future if parachute payments could change as part of the backstop process—while the Government understand the desire to ensure that regulated clubs have as much time to adjust to change as possible, we acknowledge that significant time has already passed without a financial distribution agreement. Ensuring a timely and satisfactory agreement is in the interests of football and the wider public. The backstop process is a built-in transition period specifying that parachute payments cannot be reduced within one year of the distribution order coming into effect. We understand concerns around the future of clubs that may already have factored parachute payments into their forward-looking financial planning before a potential order that could lower payments had been issued. We would expect the leagues to maintain effective communication with clubs throughout the backstop process, which, alongside the built-in transitory provision, will mean that clubs should have ample time to adjust if parachute payments are deemed in scope. There will not be any sudden reduction in payments without warning. I feel that that should provide some reassurance to noble Lords and to the clubs. On the definition of relevant revenue, football is a fast-paced industry, so it would be erroneous to assume that the definition of relevant revenue might not need to change. If broadcast revenue ceases to be the primary source of revenue stream in the game, the definition would need to be amended to ensure the process remained a viable regulatory intervention. Furthermore, there are already significant safeguards in place to ensure that this power is not used incorrectly. For example, consultation with the regulator, the Football Association and specified competition organisations is required before the power can be utilised. With noble Lords’ indulgence, I want to say a bit about the consultation process. On a number of occasions it has been stated in your Lordships’ House that there has been insufficient consultation. Particularly in response to a point raised by the noble Baroness, Lady Brady, I want to put on the record that this Football Governance Bill is the culmination of years of work, including a huge amount of consultation. During that time, there has been extensive regular engagement with key stakeholders, including clubs that will be subject to the regulation. All clubs have been provided with a number of formal opportunities to share their views, particularly as part of the fan-led review and the formal consultation process on the football governance White Paper, where all 116 clubs in the top five leagues at the time were invited to give their views on the proposals. Over that period, DCMS Ministers and officials have had many hundreds of meetings with clubs, leagues, fan groups and other stakeholders from across football, and we continue to engage with the industry now, so this number is constantly growing. Clubs have had five years to write to or meet DCMS to make their position known. No club that has requested a meeting has not had one. Indeed, some Premier League clubs were recently invited to meet officials and turned down the invitation, which I stress is their right. We have met and continue to meet a range of clubs, at all levels of the football pyramid, that will be subject to regulation. The leagues have a role to play here. We would expect them to support their clubs in their understanding of the development of the regime and in their engagement with the Government, as well as to keep their clubs updated on any engagement that the leagues have had with the Government. Indeed, this is what has been explicitly asked of us at times by some of the leagues. Richard Masters, the CEO of the Premier League, Rick Parry, chair of the EFL, and Kevin Miles, CEO of the Football Supporters’ Association, have all praised the Government’s constructive approach to engagement with the clubs and the leagues. This is not the end of the process or of the consultation. There are still lots of opportunities for clubs to have their say as the legislation passes through Parliament and work continues to establish the regulator. Even once the regulator is established, its approach will be advocacy first, aiming to work constructively with clubs on an ongoing basis to resolve issues wherever it can. I have asked for an answer to the noble Baroness’s question about the response to the letter, and I will have to revert to her after the debate. Given the lateness of the evening, I have not been able to get a response on that.

Is that the letter I sent on 2 December about UEFA or the letter that the seven clubs sent to the Secretary of State to which she is going to reply? Maybe the Minister can tell me that afterwards. It is a statement of fact that the Secretary of State has met only seven clubs for half an hour. I am not talking about other officials. I have to say that there was zero consultation on including parachute payments in the Bill. There may have been other meetings, but between the two Bills that was a significant change that has caused lots of difficult conversations within the leagues. The Minister said that there was no deal in place. There is a deal; it has been in place between the Premier League and the EFL since 2018, and it has a three-year notice period—just so she knows.

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I will have to get back to the noble Baroness on the letter she said was sent by the Premier League following that meeting. Officials have not been able to get in touch with the correspondence team given the lateness of the evening, but we will endeavour to chase that up tomorrow. I am aware that there is a deal in place. One of the issues raised during the debate this evening has been the inability to reach a new deal. I hope that, at some point soon, the various parties will come to an agreement without us having to trigger the backstop. My main point was that simply referring to one meeting maybe gave the wrong impression of the extent of the consultation. I have spoken to officials who themselves have had more than 100 meetings with the Premier League. To me, that sounds like ongoing dialogue rather than consultation. However, we may need to pick that up outside this Committee.

In the spirit of trying to be helpful, and given that Clause 56 is a Henry VIII clause, would the Minister look favourably, potentially on Report, at bringing forward a government amendment which tightens up the wording of Clause 56(2)? Very strong feelings have been enunciated today by my noble friends around parachute payments. It is incumbent on the Minister to acknowledge that and perhaps come back on Report with government amendments that reflect that.

The noble Lord may not be surprised to know that I am not going to commit to doing that. We believe that the model in the Bill is the correct one. I am happy to meet the noble Lord and others to discuss this before Report, However, on the basis of the arguments I have made this evening, I urge the noble Lord, Lord Markham, to withdraw his amendment.

I thank all noble Lords for their contributions. We can all agree that everyone spoke with passion on this point. We are passionate because we know it really matters. I am grateful to the Minister for her acknowledgement of the importance of parachute payments. They really are critical. I echo the point made by my noble friend Lady Brady that, since parachute payments were brought into this, my understanding is that there has been only a 30-minute meeting with the clubs, where this was barely brought up. I urge the Minister to consult more with the clubs.

I asked officials to draw up the words that I said on consultation because, night after night, group after group, it has been said to me that there has been insufficient consultation on the Bill. I went back and asked whether I could stand up and say that there has been sufficient consultation on the Bill. What consultation happened? When has it happened? How has it happened? Who has it been with? I am confident there has been a huge amount of consultation on the Bill and I will continue to state that when I am asked. I will follow up things that people feel have not been followed up, but any club that wanted to have a meeting has had one, and some have said they did not want one. I will sit down and allow the noble Lord to finish, but I am not going to accept that there has not been sufficient consultation.

I am sorry to intervene, but I want to say again that on the specific issue of parachute payments there was no consultation with either the Premier League officials or the Premier League clubs that attended that meeting before this went into the Bill. I am not saying that there was not consultation on other areas, but this is a significant change to the Bill that had zero consultation with the Premier League or Premier League officials.

It may be that it should be a matter of fact and we can find out one way or the other. The question is: how much consultation has happened specifically on the parachute payments? Obviously, they have been a recent introduction. My understanding from my noble friend is that there was just that 30-minute meeting, at which this was barely raised. I would be grateful if the Minister could ask her officials directly.

I will intervene again, and I thank the noble Lord for giving way. Labour tabled an amendment on this in opposition, so I am surprised that there seems to be so much surprise that the Government have now put this in the legislation. I accept that perhaps it was not noted at the time.

The Minister will also know that Labour tabled a lot of amendments, many of which we are also now pushing, but are told they are not going to be considered. So, yes, but equally perhaps the Minister might like to look through all the amendments tabled by her colleagues in the Labour Party in the other House and see whether she is now prepared to accept them all.

I hope we can move constructively on this point. I welcome the Minister’s undertaking to give clubs as much time as they request. I appreciate the amount of time the Minister has given all of us in all this. It feels that that may be a point worth taking forward, particularly on parachute payments. To my mind, the biggest proof on all of this is the fact that 51 of the 92 clubs in the whole pyramid have been in the Premier League at some point. That is way over half. That speaks to how fluid the system is and how much it is working. Over half the clubs have spent some time in the Premier League. To me that speaks volumes. That is the biggest concern I have. We have a system that works; we have competition throughout the pyramid. The real fear from all my noble friends who have spoken on this, and why we speak with such passion, is the fact that we endanger all of that. I will withdraw my amendment.

Amendment 263 withdrawn.

Amendments 264 to 270 not moved.

Debate on whether Clause 56 should stand part of the Bill.

This goes to the principle of the redistribution amendments in the group. We have had two debates on this; I hope this will be the hat trick, so to speak, because it is talking about the general principle of whether the regulator should be involved in the redistribution of revenue. This goes to the whole of Part 6—Clauses 56 to 60—and stands in my name and that of my noble friend Lord Parkinson. As noble Lords have heard me say before, what it comes down to is that no other regulator—and I am still ready to stand corrected—is given powers to take money from one part of the system and give it to another. The FCA cannot take money from Barclays and give it to NatWest; Ofwat cannot take it from Severn Trent to go to Thames; Ofcom cannot move money from ITV to Channel 4. No other regulator can do that. It is unheard of. But that is what we are proposing here.

That is the point of the Bill.

No, I do not agree that is the point of the Bill. That is the fundamental difference. I would totally agree that there are certain protections about the European super league, about moving home grounds, as in the case of MK Dons, and about fit and proper owner tests. I would agree they are very good roles for a regulator to play. What I do not agree with is giving a regulator unparallelled power to take money from one part of the sector and give it to another. What are we trying to do here? Is the English Football League impoverished? Does it have so little money it cannot run itself? We know the answer to that is no. It recently had a very good Sky deal. The Championship is the sixth-richest league in the world. That point has been made before. We are saying that Belgium, the Netherlands and Portugal, which are very good footballing nations, and all the other leagues in the world apart from the top six, all manage to live on less money than the Championship. But we are saying we need to fix that. That is what I do not understand. We are trying to say we will give unparallelled power to try to fix a situation that has had unparallelled success and makes the Championship the sixth-richest league in the world. We cannot argue that is because clubs do not have enough money to be viable in that. If that was the case in the Championship, how do the Portuguese league, the Belgian league, the Netherlands league and all the other leagues cope? This is not an area I believe the regulator should be intervening in. There is no market failure there. What I have heard noble Lords speak about a lot is fairness or narrowing the gap. Well, I am sorry, but competition and sport are not about fairness, not about trying to narrow the gap or level down. We are not trying to equalise. The whole point of sport is that it is the most competitive thing out there. There is nothing more competitive than a game of sport. That is the whole lesson. It is not about trying to equalise. It is about winning and losing. What football has done is create that very successfully, with great fluidity. As I mentioned in the last debate, over half of clubs at some stage have succeeded in getting into the Premier League. This is something that is working. I do not see any evidence of market failure. So why are we asking the regulator to get involved in all this? I truly believe we will endanger the whole game and the whole income. Noble Lords have heard me say before: let us maximise the size of the cake before we argue how we distribute it. I fear here that by trying to equalise and level down, all we will do is make the games less interesting, the league less competitive, which will mean fewer people watching, less TV rights money and the result being less money to distribute. That is why I do not believe this is the role of the regulator to take, and this is why I feel strongly that all those clauses that seek to give this unprecedented power should be removed.

22:30:00

My Lords, I find my noble friend’s arguments very persuasive, and I will ask just one question. I do not know what the answer is, so others who know much more about this will correct me if I am wrong. My understanding is that no one made the Premier League make the already unprecedentedly large distribution from it down to the EFL. There was no regulator or Prime Minister threatening legislation that forced that to happen. It was because the Premier League saw it as in its interest to have a strong pyramid. It did not see this as “us against them”; it wanted competition within the pyramid but not between the segments and the different layers. I therefore question the idea that you somehow have to force a better distribution when it is plainly in the Premier League’s interest—and the way it has historically behaved illustrates that it understands that it is—to commit, through a voluntary agreed distribution, to the money trickling and cascading down through the pyramid. That illustrates that this is not necessary. The danger is that the money that is creamed off by the regulator to sustain it—and is drained off from the clubs to comply with its demands—will mean that there is less to distribute. That money is already efficiently and pretty fairly distributed by agreement, so I am persuaded by my noble friend’s arguments that this part of the Bill is not only unnecessary but potentially very harmful.

My Lords, I rise to speak to Amendments 271, 307 and 316 in this group. My noble friend Lord Maude is right: the Premier League’s distribution outside our ecosystem is the highest amount of money of any other sporting competition in the world, and no regulator has forced the Premier League to do that. My amendments seek to embed principles into the backstop mechanism. My aim in doing so is to ensure that it operates in a way that is proportionate, legally defensible and fit for purpose. At the heart of the amendments lies a simple but critical idea: any intervention by the IFR on this issue must be guided by clear, fair and transparent principles. The backstop mechanism in its current form lacks sufficient criteria to direct the IFR in exercising its powers. It dictates that the IFR must choose the proposal that is “more consistent” with its principles. But what are those principles? The first is to “advance the IFR’s objectives”, and we have already discussed at great length how nebulous those objectives are. The second is not to place any “undue burden” on the parties’ commercial interests. The third is to ensure that relegated clubs have a one-year transition for any changes to parachute payments. That is it. There is no other guidance for the regulator in making this enormous and binary choice. This is quite incredible, and it creates huge risks, not only for the clubs and the leagues but, more importantly, for the very integrity of the regulatory process itself. Let me begin with a fundamental principle of protecting property and contractual rights. It is vital to understand that the revenues subject to redistribution under the backstop are not collective funds but revenues generated solely by the Premier League and the Premier League clubs. So the backstop is not a neutral act; it is interference in the property rights of Premier League clubs only. Under Article 1 of Protocol 1 in the Human Rights Act—A1P1—any interference with those rights must therefore be justified on clear and compelling public policy grounds, and adhere to principles of proportionality and necessity. There are concerns that this crude mechanism, with so few transparent criteria, is legally challengeable under A1P1, even more so now as a result of parachute payments being included, and that is not a good thing; it is in everybody’s interests for this backstop to be legally defensible. But without robust principles to guide the IFR’s decision-making, any determination risks being challenged, leaving the IFR open to judicial review and the entire system mired in uncertainty and delay. A1P1 case law also emphasises the principle that less intrusive measures must be considered before more significant interventions are imposed, so this is also enshrined in my proposed amendment. The backstop mechanism, as drafted, establishes a binary process that compels the IFR to choose between two competing proposals, but it provides no framework for the IFR to tend towards the least intrusive option, particularly in relation to respecting the Premier League’s property rights as the sole funder of financial redistribution. That is a very dangerous oversight. Without explicit guidance to the IFR that it should tend towards the least intrusive measure, particularly in its treatment of Premier League revenues, there is a real risk that the backstop could lead to legal overreach. Including this principle in the Bill would provide the IFR with a clear steer, reflect the unique role of the Premier League as the funder of any distribution order and ensure that the mechanism operated in a way that respected property rights. The principle of good faith is another cornerstone of these amendments. The binary nature of the backstop mechanism incentivises brinkmanship rather than genuine negotiation. These amendments seek to create a framework that rewards constructive engagement and discourages posturing. Without this principle, the backstop risks becoming a tool for division rather than collaboration. Another critical safeguard in the amendments is the requirement that any backstop decision must not force clubs into breaching their own league’s or UEFA’s existing financial rules and covenants, including profit and sustainability rules or the IFR’s own licence. A sudden and drastic redistribution could reduce Premier League clubs’ revenues, which in turn could destabilise their own business plans, which in turn leads them to breach the profitability and sustainability rules in their own leagues. That would lead to fines, sanctions or even points deductions for Premier League clubs. It would be a remarkable irony if a mechanism intended to promote sustainability instead penalised clubs for failing to meet their own financial obligations. Finally, let me address the amendment tabled by my noble friend Lord Maude, which would ensure that the backstop could not be used as a first resort. The IFR must first regulate clubs in the EFL to ensure that they are financially responsible and not conveniently reach for the Premier League’s revenues before it has even sought to impose those controls. If the IFR cannot deliver sustainability through its own regulatory tools, what confidence can we have in its ability to manage a redistributive mechanism fairly or effectively? My noble friend’s amendment rightly prioritises the use of all other tools before triggering the backstop. These amendments would provide the IFR with the steers that it will desperately need to navigate one of the most consequential issues in football. Without these amendments, or something very similar, the backstop risks sinking into a legal and political quagmire. We should all be aligned in preventing that outcome, so I hope the Minister will listen carefully and sympathetically to these arguments.

I thank the noble Baroness, Lady Brady, and the noble Lord, Lord Maude of Horsham, for these amendments, and the noble Lord, Lord Parkinson of Whitley Bay, for giving notice of his intention to oppose that Clauses 56 to 60 stand part of the Bill. I will start with Amendments 271 and 316, from the noble Baroness, Lady Brady. I thank her for clearly stating some of her core concerns about the backstop process through these amendments and hope to reassure her that the existing drafting of the Bill already addresses her concerns without the need for this additional clause. First, I will cover her concern regarding the explanation of suitable alternative regulatory solutions when I address subsequent amendments. On her other concerns, current drafting of the Bill already requires the regulator to trigger the process only if its ability to advance its objectives would be threatened if it did not. Final proposals are already required to advance the regulator’s objective of ensuring financial sustainability and resilience. They also have to ensure that they do not place an undue burden on the commercial interests of either league. We have been mindful of property rights when designing the backstop, which is why the process can be triggered only in specific circumstances and why, even when the high threshold for triggering the process is met, commercial interests must still be considered. We consider this to be a suitably high bar to ensure that the regulator takes adequate consideration of regulated clubs’ property rights and commercial interests. I understand that the noble Baroness is especially concerned about the issuing of a distribution order that may force clubs into non-compliance with the league’s own internal rules. We would expect the regulator’s decisions to be internally consistent in terms of advancing its objectives, so we cannot see a scenario where the regulator would issue a distribution order that required a club to become non-compliant with its licence conditions. However, there may need to be some adaptation by regulated clubs and competition organisers to renew the regulatory landscape. If a distribution order issued to ensure the financial sustainability of football put a club at risk of breaching a league’s rules, we would expect competition organisers to work with the club in question and the regulator to understand the decision and its impact. Just as we may expect adaptation by clubs transitioning from unregulated to regulated, we may also expect to see the adaptation of competition organisers. The amendment implies a scenario where a distribution order results in clubs becoming non-compliant with existing financial regulations. The regulator is already required, as part of its decision on whether to trigger the process, to consider whether the lack of arrangement has arisen as a result of bad faith. Therefore, we are confident that the existing drafting of the backstop proposal process is sufficient to ensure that the regulator already considers the factors outlined in this amendment. I turn to Amendment 307. While I understand the desire to ensure the proposals chosen at the final proposal stage of the backstop process meet the objectives of the regulator, I believe that the existing drafting already suitably addresses this concern. Final proposals are already required to advance the financial sustainability and resilience of the football pyramid, under existing Clause 62(2)(a). I do not think that the proposed change in wording would lead to significant altered proposals or subsequent distribution orders; therefore, I do not consider that the change is necessary. I turn to Amendment 288A, from the noble Lord, Lord Maude of Horsham. I understand the desire to ensure that the backstop process is triggered only as a last resort, as this is how the process has been designed and is intended to be used. However, one of the existing conditions that must be met for the regulator to trigger the process in response to an application is that its ability to deliver at least one of its objectives would be jeopardised if the backstop was not triggered. We would expect that, as part of the assessment under this condition, the regulator would review whether existing financial regulations and other regulatory tools could be utilised to better effect instead. While in service of the same goal, the wording of this amendment is unnecessarily restrictive, requiring the regulator to exhaust all possible other regulatory approaches, and it adds a regulatory burden by requiring the consideration of an expansive array of approaches without prioritisation. This forces the regulator to spend additional time and resources considering options unlikely to resolve the conflict in question. We believe that the current wording already allows the regulator to make its own considered assessment of relevant options before triggering the process. I now turn to the clause stand part debates and will respond to the noble Lord, Lord Markham. Part 6, of which Clause 56 is the first clause, relates to financial distributions and the backstop mechanism in its totality. I understand the desire on both sides to apply appropriate scrutiny to a part of the Bill that could significantly impact the future financial landscape of football. I hope that, throughout the debate on the backstop process on this and future Committee days, I will be able to demonstrate that the approach taken in Part 6 is the most proportionate and effective approach possible. These backstop powers have been introduced to help ensure that an agreement can be reached between the leagues in regard to the distribution of revenues from the selling of TV broadcast rights. An agreement of this nature is vital to ensure the future financial sustainability of the football pyramid. The process has been designed to incentivise reasonableness, encourage industry solutions and tackle any bargaining imbalance between leagues. The design of the process is a final offer mechanism, a process that has been shown to incentivise negotiation. It achieves this by removing the ability of the negotiating parties to rely on the third party, in this case the regulator, to design a solution for them. We do not want football to become reliant on the regulator to decide its agreements.

22:45:00

The clause sets out an overview of the backstop powers and outlines some key definitions which are important for setting out clearly the scope of these powers. Relevant revenue is one of the key terms defined in this clause. It expressly includes broadcast revenue, because this is the predominant source of revenue for the relevant leagues and of any redistribution. This clause allows the Secretary of State to specify other kinds of revenue to be included as relevant revenue. This is to future-proof the policy—for instance, if broadcast revenue is no longer the main source of income for the leagues. However, there are safeguards on the use of this power. The Secretary of State must consult the regulator, the FA and the relevant leagues. Critically, they can use this power only where there has been a material change of circumstances.

Previously, the Bill explicitly excluded parachute payments from the definition of relevant revenue, as noble Lords are aware. This version of the Bill no longer makes that distinction, allowing the inclusion of parachute payments where relevant. This change was made to ensure that the regulator can consider all aspects of revenue as it makes a financial assessment of the game. However, it is important to note that this new inclusion is proportionate, as parachute payments will be assessed only if the regulator considers them to be of systemic risk to the game’s financial sustainability.

Clause 58 outlines the process by which the backstop mechanism will be triggered. Only the relevant leagues will be able to apply to trigger the backstop. While we understand concerns that this regime is perceived as interventionist, it is important to acknowledge that the regulator cannot trigger the process itself without receiving an application. This is similar to the approach used in other jurisdictions—for example, with news publishers and big tech in Australia. The clause sets out that a relevant league can apply to trigger the process if they cannot agree privately on any specific issues relating to distributions.

In order to apply to trigger the backstop, at least one of the four conditions outlined in this clause must be met. For example, one of the outlined conditions is that a specified five-year period has passed since the last distribution agreement came into force. This prevents the industry going for an extended period without a deal. Each of the conditions is designed to mitigate a specific risk to the sustainability of the pyramid in this way, whether it be a reduction in distributed revenue or a significant change in circumstance. We think these conditions present a suitably high threshold for triggering the process, ensuring that it is used as a last resort and the leagues are encouraged to find a football-led solution in the first instance.

Clause 58 sets out a clear process for relevant leagues to follow when making an application. Before making an application, the relevant league must first notify the other relevant league and the regulator of their intention. This prevents either league being blindsided by the process being triggered. As part of this, they must set out the issues they wish to be resolved, explain why one of the relevant conditions in Clause 57 is met, and invite representations from the other specified competition organiser. This act in itself may help trigger useful discussion between the leagues, as clearly outlining the issues preventing an agreement moving forward will bring the leagues closer to compromise.

After the other relevant league has had a chance to make any representations, the relevant league may apply to the regulator to trigger the process.

I have listened very carefully to the debate and to what the Minister has said. I understand that UEFA asked the Government to carefully reconsider the backstop mechanism, since when it has become much wider in scope and more likely to lead to the most extreme outcomes. I wonder whether she has discussed it with UEFA. Can the Minister update the Committee on the outcome of those discussions?

I have had no direct meetings with UEFA, but the Minister for Sport in the other place has. I cannot confirm what was said in the meeting, but I will endeavour to establish whether this was part of the discussion. What did or did not happen at that meeting has not been part of my conversations with people, but I will endeavour to find out. I suspect I will not get an answer to the noble Lord tonight.

Will the Minister kindly write to the Committee? This is very important indeed. The backstop has been introduced into the Bill and UEFA has expressed very serious concerns about it. Unless this can be resolved, it could threaten the existence of English clubs playing in UEFA competitions. I hope that this has been high on the agenda of discussions between UEFA and the Government. Having listened carefully to what the Minister has said, all I ask is that she write to the Committee, or early in January inform the Committee, on how UEFA has responded to this significant expansion of the effect of the backstop, which it was originally very concerned about.

To be clear, I do not speak for UEFA. It is an international organisation that is able to speak for itself. I am not aware that UEFA raised issues about the backstop specifically in the meeting with the Minister for Sport, but I will endeavour to find out. I understand from the expression of the noble Lord, Lord Moynihan, that he may have more information about UEFA’s concerns than I do. However, without expecting this to be an ongoing dialogue, I will endeavour to establish the information that he requested.

I asked whether it was raised in the letter from UEFA, which sadly the Committee cannot because it is private correspondence, but it is right at the heart of this legislation. If it was raised in the letter, or in subsequent correspondence, would my friend the Minister kindly confirm that to the Committee? It would help us in our deliberations moving forward.

UEFA raised no concerns about the backstop in its most recent meetings with DCMS and the Minister for Sport, including those held since the Bill has been introduced. I hope that reassures the noble Lord on this point. As I say, I do not speak, will not speak and cannot speak for UEFA; I speak for the Government. Ultimately, the clause is about creating transparency, which sets the tone for the rest of the backstop process. Clause 59 introduces high statutory thresholds that must be met in order for the backstop to be triggered. In particular, it sets out that the regulator must have reasonable grounds to suspect that its ability to advance at least one of its objectives would be jeopardised if the backstop was not triggered. As stated, an implicit part of this consideration would include an assessment of whether other regulatory tools could be utilised to better effect instead. The regulator can consider what the distributed revenues will be used for and, if the basis for the backstop application is that there is no distribution agreement in place, whether this has arisen as a result of bad faith. This helps to incentivise the leagues to try to reach an agreement in good faith before turning to the regulator, and ensures that the backstop is used only where absolutely necessary. The regulator must make its decision within 28 days, although it can extend this by a further 28 days if absolutely necessary. Once the regulator has made its decision, it must notify the relevant leagues of its decision to ensure transparency throughout the process. As we have made clear, the Government’s strong preference is for a football-led solution to issues around financial distributions. As such, the mediation stage outlined in Clause 60 grants the relevant leagues an opportunity to reach an agreement before the regulator delivers a solution as part of the final proposal stage. The mediation stage has been designed to facilitate meaningful negotiation and compromise between the parties. To this end, it encourages the leagues to appoint a mediator they both agree on, but ensures that the regulator will appoint somebody with the appropriate skills and experience if they cannot. The leagues can end the mediation process for multiple reasons, most notably if an alternative agreement is reached. However, the mediator can also end the process if it is not producing meaningful good-faith negotiations or if it reaches the 28-day deadline. I thank noble Lords for their amendments and the well-natured debate on this important part of the Bill. I hope my reasons have reassured noble Lords and that they will not press their amendments. I ask that these clauses stand part of the Bill.

I thank noble Lords for their contribution to this debate, and again I thank the Minister for her response. I noticed that she went into the detail of the backstop mechanism but I did not hear in that the more fundamental point about why she believes that the regulator needs to be bestowed these unparalleled powers to redistribute income where there are no examples of market failure. In fact, there are the examples of the very healthy Premier League and Championship, which are respectively the first and sixth richest leagues in the world—and all the result, as my noble friends pointed out, of a voluntary agreement and distribution between them all. However, the whole prospect of the backstop happening is creating the reverse. As I understand it, those negotiations have stopped. Of course, it is entirely rational from the EFL’s point of view to stop them, because why reach an agreement when suddenly you are going to have more negotiating leverage because you have a regulator which will come in? So, again, it is perfectly rational behaviour on the part of the EFL to reach the best agreement it can with the Premier League but then instead of finally agreeing with it, appeal to the regulator in case it can get more because it has already banked what it has got from the Premier League and there is only an upside to doing that. So I am afraid that I believe this whole mechanism will actually create more friction and more disputes, rather than less, and will mean that it is less likely to reach a voluntary agreement. In addition, as I mentioned before, I still have not heard why we feel that the regulator needs these powers in the first place when we have a successful situation in place already. As a result of that, I believe that these powers will endanger the whole size of the cake that is available for distribution. It will endanger the success and the revenue gained from that, which will result in a loss to everyone. We will definitely return to this on Report but at this stage I beg leave to withdraw.

Clause 56 agreed.

Amendment 271 not moved.

Clause 57: Applications for resolution process to be triggered

Amendments 272 to 279 not moved.

Amendment 280

Moved by

280: Clause 57, page 47, line 32, leave out “five years” and insert “the applicable period (see subsections (7) and (8))”

My Lords, Amendments 280 and 281 in my name seek to reinsert the ability for the Premier League and the EFL to agree distribution arrangements for longer than five years without triggering the automatic availability of the backstop mechanism. These amendments are essential to restoring common sense, legal certainty, aligned incentives and, crucially, to restoring trust between football’s governing bodies. When I first read the revised Bill, I thought I must be mistaken. “Surely”, I thought, “no Government would propose that two consenting parties mutually agreeing a long-term financial arrangement should be actively disincentivised from doing so by the automatic availability of a dispute mechanism”—and yet, astonishingly, here we are. Removing the freedom of football stakeholders to agree arrangements for more than five years by mutual consent cannot possibly be about fairness, transparency or sustainability. This is purely a device enabled by an active decision of the Government to turn the backstop into a ratchet. It ensures that no long-term agreement between the Premier League and the EFL, no matter how mutually beneficial, can ever provide genuine stability or be truly relied upon.

23:00:00

English football’s success is built on its ability to plan strategically for the long term. From collective solidarity arrangements to investments in youth academies, stadiums and infrastructure, this success depends on stability. The current arrangements, which have a three-year notice period for either party, are products of long-term frameworks that give clubs across the pyramid the confidence to invest. By explicitly restricting the duration of those agreements, the Government are not incentivising the continued success of English football; they are actively undermining it.

Let me put this into context. Throughout 2023, both the Premier League and the EFL were engaged in serious discussions about a transformative generational settlement. Those negotiations were centred on an ambitious and innovative plan, one that incorporated many of the EFL’s own ideas. It would have permanently aligned the incentives of both leagues, including through the joint selling of international broadcast rights, pooling each other’s organisation, revenues and costs, and creating a long-term framework to permanently share in each other’s collective success for the long term. With this revised Bill, I am sorry to say, that vision is now dead. How could the Premier League even consider such a long-term commitment under a system whereby any agreement lasting more than five years risked triggering the backstop? This change has not just disincentivised ambition; I am afraid that it has sabotaged it. It delivers permanent short-termism and senseless destabilisation within the financial ecosystem of English football.

I do not blame the EFL; its rationale is plain enough. This restriction makes the backstop mechanism more accessible, increasing its leverage in negotiations with the Premier League. I am sure that its approach would be that any new deal offered to it, in effect, becomes, as I said previously, its insurance policy. After all, if it accepts a new, better deal and then triggers the backstop—as Rick Parry said in committee he would do in any event—it will presume that the regulator will not give it less than it has agreed, so it can result only in a new improved deal being further improved. For the Government to acquiesce in this and endorse this approach is to take sides in football’s internal politics. It is extraordinary. It is the privileging of one stakeholder at the expense of the pyramid as a whole—and it has happened with no consultation whatever.

This decision risks undermining trust between leagues and stifling innovation and long-term thinking, and it erodes the very relationship that English football needs to thrive. The consequences will be predictable: investors will hesitate; clubs will lose confidence in their financial arrangements; and negotiations will become ever more fractious, as both sides prepare for the inevitability of regulatory intervention.

If the Premier League and the EFL wish to agree on a 10-year or even 12-year distribution arrangement, and both parties believe it is a positive deal, why should the backstop mechanism interfere? This is an unjustifiable intrusion into football’s financial affairs, where the Government simply do not belong.

The Premier League and the EFL are equal stakeholders and not adversaries, yet this version of the backstop recasts them as combatants, ensuring that every negotiation becomes a proxy battle for regulatory intervention. I urge the Government to reconsider and restore the ability of football stakeholders to agree long-term solutions without the unnecessary intrusion of the backstop. Let us not see the Premier League as a magic money tree to be shaken for short-term redistribution, but instead empower it to remain a driver of sustainable investment for the entire football ecosystem.

We cannot afford to risk the stability of English football at the altar of short-term considerations and political convenience. We will live to regret it. We should think again. I beg to move.

My Lords, I rise to speak to Amendments 280 and 281, which my noble friend Lady Brady has set out admirably. She established the case for her amendments very well and raised a number of points that I hope the Minister will answer. These amendments work in tandem to allow competition organisers to contract out of the backstop. Under this amendment, leagues would be able to agree a period for which a distribution agreement would last. Of course, they may not reach such a deal. In that case, the applicable period would be five years—the period that is currently the default in the Bill. Allowing leagues to have a greater flexibility to negotiate the length of time for which an agreement has to be in place before it can be renegotiated would establish better principles in the backstop. Surely, we should not preclude leagues from acting cordially, if they are able to, and agreeing a period for distributions. I fear that the Bill, as the Government have presented it, might discourage constructive working relationships where they may arise. I am conscious that this is the last opportunity I will have to intervene on this final group before the Christmas Recess and I want to thank noble Lords across the Committee for the hard work they have put in. I know that noble friends on my side of the House are missing Christmas parties and wedding anniversaries this evening, and noble Lords across the House have been doing similar. Everyone is here because they care very deeply about the future of football—even if, like football fans, they disagree volubly on some of the details. In particular I thank the Minister, who has responded to pretty much every group. Today was the first day that she did not, and even then she had only a brief time off the pitch. She has taken many interventions, she has been generous with her time outside the Chamber as well and she has written us a number of letters. I know we have asked her a few more questions and she will be writing to us further, but, in the meantime, I wish her and all noble Lords across the Committee a very merry Christmas and express my thanks to everyone for their work in scrutinising the Bill.

I thank the noble Baroness, Lady Brady, for her amendments and for her introduction to what was, thankfully, at this time of the night, with apologies, a very short debate—so far. These amendments are intended to allow leagues to reach an agreement to extend the time that must pass before the backstop can be triggered. While I entirely understand the desire for negotiations to be a league-led process, the timeframe outlined in the Bill has been chosen to ensure that the regulator can intervene in cases where an agreement has not been reached for a significant period. We believe that it is the correct amount of time to get a good view of how potential agreements have affected sustainability, while ensuring that a new agreement is reached in a timely manner. Crucially, many noble Lords have talked about certainty in the regime. We consider that five years provides enough certainty to all parties. Finally, we have concerns that allowing industry to come to a different timeframe could lead to an element of coercion towards much longer agreements, nulling the presence of the power. The Government’s view is that the five-year timeframe is critical to the effective functioning of the backstop as a regulatory intervention. For the reasons I have set out, I am unable to accept the amendments and hope that the noble Baroness will withdraw Amendment 280. But, first, I also wish all noble Lords a very happy Recess. I genuinely look forward to continuing the debate in the new year and thank the noble Lord, Lord Parkinson, for his kind words.

My Lords, I thank the Minister for her response and for engaging with the points raised in this debate. However, it will not surprise her that I remain completely unconvinced. This decision does not deliver certainty: quite the opposite. It enshrines short-term thinking and locks football in a perpetual cycle of instability, with both sides forever negotiating under the shadow of the backstop. As I said, it is a recipe not for certainty but for fractiousness and mistrust. The Minister also referenced the nature of football’s landscape as the reason to limit agreements, but I am not sure that can be right. I urge her to think again. This new backstop is the Government’s gamble that the Premier League has achieved escape velocity and can absorb anything that even its own Government can throw at it. However, the Premier League is not a cow to be milked. It is a national treasure to be protected. English football deserves much better. I am sure that we will be discussing this issue again on Report, but, for now, I beg leave to withdraw my amendment.

Amendment 280 withdrawn.

Amendment 281 not moved.

Clause 57 agreed.

Clause 58: Applications under section 57: procedural and other requirements

Amendments 282 to 288 not moved.

Clause 58 agreed.

Clause 59: Decisions by the IFR on applications under section 57

Amendments 288A to 292 not moved.

Clause 59 agreed.

Amendment 293 not moved.

Clause 60: The mediation stage

Amendments 294 and 295 not moved.

House resumed.

House adjourned at 11.11 pm.