The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)

I join the noble Lord, Lord Parkinson of Whitley Bay, in his congratulations to Newcastle United, and I offer commiserations to Liverpool and its supporters. Good football is always a joy to watch, but only one side can win; I feel for those who put in all their effort and did not go away smiley-faced. I want to address one of the points raised by the noble Lord, Lord Jackson of Peterborough, in relation to reports in the media this morning. The noble Lord should be mindful of the old adage that you should not believe everything you read in the newspapers. Your Lordships’ House has heard at length during the Bill’s passage that too many football fans have been left with nowhere to turn when faced with reckless owners, financial mismanagement and threats to their club’s very existence. That is why the Government remain absolutely committed to introducing an independent football regulator to put fans back at the heart of the game. We had extensive discussion on the topic of equality, diversity and inclusion in Committee, when a number of noble Lords opposite aired their considerable concern over what is a very standard addition to almost all corporate governance codes. I am sure that the noble Lord, Lord Jackson of Peterborough, and the noble Baroness, Lady Fox of Buckley, will not be surprised to know that I do not agree with them. The Government have not changed our view that equality, diversity and inclusion is a key part of good corporate governance. Research has shown that diversity on boards and in organisations promotes better governance, decision-making and transparency, all of which in turn contribute to improved financial sustainability. We heard in Committee about the vital work that the industry is already undertaking in this area. The regulator will look to work co-operatively with other stakeholders, to draw on the expertise of the sector and to add to industry initiatives through the code. As with fan engagement, this will be a statutory baseline. The noble Lord, Lord Jackson, referred to the Green and Hand report, which was forwarded to me —I am very grateful to the noble Lord, Lord Moynihan of Chelsea, for that. I appreciate that the noble Lord, Lord Jackson of Peterborough, noted the findings of Green and Hand regarding McKinsey studies into the relationship between EDI and corporate performance. I recognise that the assessment refutes the link between ethnic diversity and financial performance. However, it remains my view that the relationship between diversity and improved corporate performance is well established and accepted beyond the studies of McKinsey alone. For example, both the Financial Reporting Council and the Association of Chartered Certified Accountants acknowledge this relationship. Clubs that already champion equality, diversity and inclusion will not have an additional burden placed on them, other than having to periodically report on these things. My noble friend Lord Bassam of Brighton outlined a number of issues that remain within the game. Under the corporate governance code, clubs will simply be required to explain how they are applying the code and what action they are taking on equality, diversity and inclusion—nothing more. As suggested by the noble Lord, Lord Addington, that does not feel onerous, but it is a helpful and transparent measure, in the Government’s view, and I refer noble Lords to the points made by the noble Lord, Lord Pannick. As I have said previously, the regulator is not going to prescriptively micromanage each club’s board, or set targets and quotas on EDI. That is not the role of the regulator, and would be a significant burden on both the regulator and clubs. Turning to Amendment 34, in the name of the noble Lord, Lord Markham, I thank the noble Lord for this amendment and for his engagement on this, along with a number of other noble Lords. I particularly thank my noble friend Lord Knight, who has been a strong advocate on this issue and has met me to discuss it. I wrote to him about it, as the noble Lord, Lord Parkinson of Whitley Bay, mentioned, and I would be happy to lay a copy of this letter in the Library of the House. As I outlined in the letter, we are fully in agreement with the principle of independent non-exec directors. We recognise that they can greatly improve decision-making, provide independent scrutiny and drive up corporate governance standards. This supports the regulator’s objective of better financial soundness, stability and decision-making for football clubs. However, while we agree with the principle, we do not feel it is right to include this detail in the Bill. We do not believe that the Government should be writing the corporate governance code, or making detailed recommendations on how a club’s board should operate. Indeed, no corporate governance code is written in primary legislation; this helps ensure flexibility and future-proofing. We are setting up an independent, specialist football regulator, which will have in-depth knowledge of the unique challenges of football club governance. It will be for the regulator to then develop, consult on and ultimately publish this code. This approach enables consultation with industry, including clubs, which is essential to ensure that it is appropriate for the football industry and that it can be adapted in the future to reflect best practice. However, I again assure noble Lords that we fully expect the regulator’s code to include detail and guidance on independent directors. This is the norm for all corporate governance codes, and we do not expect the regulator’s code to be any different. I think there is broad agreement on the importance of independent non-exec directors, and I thank noble Lords across the House for the interest shown in this issue. I hope that the reassurance I have provided will satisfy any concerns that INEDs will not be included in the corporate governance code. I therefore hope that noble Lords will not press their amendments for the reasons I have given.