PARLIAMENTARY DEBATE
Football Governance White Paper - 23 February 2023 (Commons/Commons Chamber)
Debate Detail
Let me start by offering my deepest condolences to John Motson’s family. John had an incredible impact over his 50 years working at the BBC, and his legacy as a legendary commentator will not be forgotten.
With your permission, Mr Deputy Speaker, I will make a statement on the Government’s reform of football governance. As I am sure many Members on both sides of the House will agree, in this country football is more than just a sport. It is part of our history, our heritage and our national way of life, bringing communities throughout the country together week in, and week out. We invented “the beautiful game”, and the Premier League and the English Football League are true global success stories, with matches exported and watched in 188 countries across the world and streamed into 880 million homes.
Despite this global success, however, it has become clear in recent years that there are systemic issues at the heart of our national game. Since the premier league was created in 1992, there have been 64 instances of clubs collapsing into administration. Some are historic clubs that we have lost forever, taking with them chunks of our history and heritage, and leaving huge holes in their communities. Bury football club is one example. Over its proud 134-year history, it managed to survive world wars, countless economic cycles and 26 different Prime Ministers, but it was driven to the wall by financial mismanagement, which damaged the local economy and left behind a devastated fan base. Those fans are still coming to terms with the loss of their beloved club. But it is not just Bury that has been affected: the same is true of Macclesfield Town, another century-old club, and of AFC Rushden & Diamonds. Countless others, such as Derby County, have been driven to the brink after stretching far beyond their means.
Despite the global success of English football, the game’s finances are in a parlous state. The combined net debt of clubs in the premier league and championship is now around £6 billion. Championship clubs spend an unsustainable 125% of their revenue on player wages alone and some clubs face annual losses greater than their turnover. Many, if not most, club owners are good custodians of their clubs, but all too often we hear of flagrant financial misconduct, unsustainable risk-taking and poor governance driving clubs to the brink. Owners are not just gambling with fans’ beloved clubs, but threatening the stability of the entire football pyramid.
Aside from the financial roulette putting clubs’ futures at risks, this is also about the way that fans have been treated. Over the past two decades, too many lifelong supporters have been let down, ignored or shut out by their own clubs. That has included the decision to move their stadium to a different part of the country, as happened with Wimbledon FC, or to change kit or badges without fan approval, such as when Cardiff’s owners tried to change the traditional kit of the Bluebirds, from blue to red. We also saw it with the European super league, when a small group of club owners planned, without any engagement with their fans, to create a closed-shop breakaway league, which goes against the very spirit of the game.
Football would be absolutely nothing without those fans, and yet too often their voices have not been heard. But we have heard them. That is exactly why I made sure that my first meeting as Minister for sport was with fan groups. I heard at first hand how poor ownership and governance can leave clubs at the mercy of careless owners. In our manifesto, we committed to a root-and-branch review of football, with fans at the very heart of that review. That review, excellently chaired by my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), highlighted a number of key issues that urgently needed resolving in football, and today we are acting on its recommendations, with the most radical overhaul of football governance since the rules were first invented in a London pub back in 1863.
With this White Paper, we will do five key things. First, we will bring in a new independent regulator to make sure that clubs are financially resilient. The regulator will operate a licensing system for all clubs in the top five tiers of English football. Those clubs will have to show that they have sound financial business models and good corporate governance before being allowed to compete. They will also be tasked with ensuring the stability of the wider football pyramid.
Secondly, we will strengthen the owners’ and directors’ test, to protect clubs and their fans from careless owners. There will be greater tests on suitability and on the source of funds. Thirdly, we will give fans a greater say in the running of their clubs. This will include stopping owners from changing vital club heritage, such as names, badges and home shirt colours, without consulting the fans first. Likewise, clubs will have to seek regulator approval for any sale or relocation of the stadium, and fan engagement will be a crucial part of that process.
Fourthly, we will give the regulator the power to block clubs from joining widely condemned closed-shop breakaway leagues, such as the European super league. Finally, we will give the regulator fall-back powers over financial redistribution. Supporting the pyramid is crucial and this Government have already committed £300 million of funding to support grassroots multisport facilities in England by 2025. When the financial health of the football pyramid is at risk, and football cannot sort out this issue, the regulator will have the power to intervene and protect the game. In short, we are protecting the long-term success of our national game, and restoring fans’ position at the heart of how football is run.
I want to reassure Members that this is not about changing the fundamentals of the game, or imposing unnecessary and burdensome restrictions on clubs. In fact, we would not naturally find ourselves in this space—having to regulate an industry that has enjoyed huge success without Government intervention over many years. However, despite the scale of the problems, and the huge harm that those problems can cause, the industry has failed to act, despite repeated calls for reform, so we have been forced to step in to protect our national game. This is about taking limited, proportionate action to maintain the premier league’s position as the strongest league in the world. It is also about safeguarding clubs across the country, from the biggest to those single- club towns where football sits at the very heart of the community.
This Government have proven time and again that we are on the side of fans. We committed to this review in our manifesto. We stepped in during covid to make sure that English football was one of the first leagues back across Europe. We got fans back into stadiums quicker than almost any other country, and we took action under competition law to support broadcasting revenues during one of the most difficult periods that sport has ever faced. That secured £100 million of funding for the game. We stepped in once again to block the European super league—a competition no fans wanted. When fans have needed us, we have been in their corner. Now we are putting them right back at the heart of football, and I commend this statement to the House.
Football clubs are at the heart of our communities. Football is a key pillar of our culture, society and economy, but it has long been in need of reform. Too often, decisions affecting our clubs have been made without reference to the fans, without whom football would be nothing. Historic clubs have collapsed because of the reckless actions of owners, and the perverse incentives created by pyramid finances. The longer we wait for change, the more clubs are at risk. Even now, Southend United is in crisis, facing a winding-up hearing next week. There is still no agreement between the Premier League and the English Football League on financial redistribution. Rumours continue about revised proposals for a new European super league. We are regularly reminded that this is an urgent issue.
Labour’s support for football reform and a fan voice has featured in all our manifestos dating back to 2010. That is why Labour welcomes the measures set out in the White Paper. We will look at the detail, but we strongly support the key proposal for the creation of a fully independent regulator of English football. Indeed, we backed the implementation of all the recommendations of the fan-led review from the beginning. Once again I thank the hon. Member for Chatham and Aylesford (Tracey Crouch) for her leadership in getting us to where we are today, but I must ask the Minister why it took us so long to get here.
The excellent fan-led review report was published in November 2021. When the Government responded last year they said they would back all 10 strategic recommendations. They delayed—too consumed by chaos in the Tory party and the Government—and the promise to legislate was watered down to the publication of a White Paper. The White Paper was promised for months, and although we were finally told that we could expect it weeks ago before recess, instead it was leaked to The Sun newspaper. In the meantime, more clubs have struggled and come near the brink of collapse. I am pleased that we are finally making progress, although today’s announcement should not really have been about a White Paper; it should have been about a Bill. It is not clear how much more we will learn from a consultation on a White Paper that was not already explored by the fan-led review, which had wide-ranging fan and stakeholder input, supported by an expert advisory panel.
Given where we are, Labour wants to use the opportunity to help the Government make the future Bill as strong as possible. In welcoming the broad proposals, I ask the following questions of the Minister. First, financial sustainability is at the centre of the fan-led review. We need a regulator with sufficient teeth to ensure that our game as a whole is sustainable, as well as individual clubs being sustainable. We look forward to seeing the full detail of powers that the regulator will have to step in on issues such as redistribution if the football bodies do not resolve them. What can the Minister say about the review’s recommendations on other important financial issues such as the transfer levy, parachute payments, or sustainable player contracts?
The fan-led review proposed what was called a golden share, which is simply a requirement that there should be democratic fan consent for actions around heritage items such as club colours, names, badges, or relocation outside the local area. How will that supporter consent be guaranteed? When the White Paper was leaked, The Sun reported that the then Secretary of State wanted legislation in place for the 2024-25 season. Will the Minister lay out the consultative and legislative timetable that would allow that to happen? Is it the intention to legislate in this parliamentary Session, and how soon does he think we can get a Bill passed and an independent regulator up and running? Those are important and fundamental questions, because our national game needs action and change. Football fans have waited long enough.
The hon. Gentleman is right to talk about the finance side of things, and of course the regulator will have the teeth it needs to ensure support for the whole of the game. On fan voice, although we have not gone down the golden share route, the voice of fans is front and centre in this White Paper. It will basically achieve exactly the same thing, and it will be a condition of a licence for clubs to compete in English football. I am extremely grateful for the offer of support on the Bill, and I look forward to working with the hon. Gentleman as we try to progress it through the House.
I thank the Minister for the White Paper. It has, I know, been a painstaking experience for him, but we are here due to his perseverance, and that of his officials. The White Paper honours and reflects the vast majority of recommendations in the fan-led review, which I and the panel, and the thousands of fans who contributed, appreciate. I genuinely believe that the White Paper does nothing to threaten the competitiveness, wealth or attractiveness of the premier league, but it will protect English football from vulnerabilities that in the past have had devastating consequences. I appreciate that we will now go away and look at the detail of the White Paper. I also appreciate, Mr Deputy Speaker, that I have to ask a question in response to the statement, so is the Minister able to set out his vision for the timeframe for the next steps of the White Paper?
One of the most important things is that the enormous wealth of football is distributed more fairly through the whole pyramid. The Minister says the regulator’s powers will be a fallback, but I think they will be necessary. Paragraph 9.12 of the White Paper talks about the regulator deciding on the
“issues that any financing would need to address.”
Is it not more than that? The regulator needs a steer from the Government and from this House on what those issues should be. Does the Minister accept that the issues are twofold? We should have a fair distribution that, first, ensures the sustainability of all clubs throughout the pyramid and, secondly, prevents the cliff edge of parachute payments, which create unfair competition at various points in the pyramid.
The House knows that the Premier League is one of this country’s most successful businesses, exports and brands. The key issue for fans is how much can be squeezed from this golden goose without damaging it, so that we can give proper, long-term and sustainable support to clubs lower down the professional pyramid and, indeed, to the vital grassroots of football. Whatever happens, and however quick the consultation, the regulator will not be in operation for another 18 months or two years. How long does the Minister propose to give the game to sort out the key issue of the distribution of money?
Well done, His Majesty’s Government. I think Kieran Maguire, the host of “The Price of Football,” will be very pleased with what has been said today. I am the only Scot remaining in the Chamber, but I believe football is for everyone, on whichever side of the border they live. Scotland has gone some way down this road. I appeal for everything humanly possible to be done to co-ordinate with Scotland and Wales to make sure there is a universality of approach, because we can learn from each other to get it right.
I especially welcome the proposal for an independent regulator for English football, but will the Minister please confirm that the financial powers of the regulator, which are essential to rebalancing the game, are not just powers of last resort? If they are, it will surely be a potential lost opportunity.
“Both the Premier League and EFL are in agreement that a greater quantum of cash needs to flow through the pyramid”
That is absolutely not true. The position of the Premier League is that it should continue with the parachute payments, which is the impasse to our getting a fairer distribution of resources. Ministers can stand at the Dispatch Box and say they have pleaded with the two parties to come together to reach an agreement, but it will simply not happen because of the intransigence of the Premier League. We cannot wait for the independent regulator to go through all the processes set out in chapter 9 before coming to a decision about what side to come down on in that argument. We need urgent action, otherwise other clubs could disappear. What will the Government do to urgently address that issue?
“provide all clubs with the fairest opportunity to compete through sporting endeavour whilst operating sustainably, with the inclusion of supporters and influence on their communities.”
I wish to press the Minister on the supporters’ voice element, given the absence of the golden share mechanism. Can he assure me that there will be formal recognition of the supporters in any shadow regulator or regulator, to ensure that licence conditions that affect fans so much can be considered in a formal sense?
Amateur leagues in Northern Ireland— I know that that is not the Minister’s responsibility, but I use it as an example—are thriving. People of all ages and abilities are encouraged to train, play and attain physical fitness. How can we ensure that all levels of football can be enhanced through the application of this report’s findings? What will his Department do to help smaller and amateur leagues because it is important that they are part of this process?
Bill Presented
Holocaust Memorial Bill
Presentation and First Reading (Standing Order No. 57)
Secretary Michael Gove, supported by the Prime Minister, the Chancellor of the Exchequer, Secretary James Cleverly, Secretary Suella Braverman, Secretary Kemi Badenoch, Secretary Gillian Keegan and Secretary Lucy Frazer, presented a Bill to make provision for expenditure by the Secretary of State and the removal of restrictions in respect of certain land for or in connection with the construction of a Holocaust Memorial and Learning Centre.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 254) with explanatory notes (Bill 254-EN).
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