Baroness Twycross (Lab)

I thank the noble Lord, Lord Parkinson of Whitley Bay, and the noble Baroness, Lady Brady, for tabling these amendments, and the noble Lord, Lord Markham, for speaking to this group. On Amendments 60 and 61 in the name of the noble Lord, Lord Parkinson, the five-year timeframe is critical to the effective functioning of the backstop. A set timeframe gives the industry certainty that the regulator can intervene to end the deadlock between the leagues if they cannot agree for an extended period. In addition to this, due to the imbalance in bargaining power between the parties in this case, we do not want to allow a situation in which a league could be coerced into a much longer agreement that essentially renders the backstop unusable. On Amendment 69 in the name of the noble Baroness, Lady Brady, Clause 61(5) is intended to function as a protection for the interests of relegated clubs, ensuring that final proposals take into account the disproportionate impact that removing or reducing parachute payments will have on them. The amendment would broaden the provision out so that final proposals consider the financial sustainability of all effective clubs, not only relegated clubs, but that change is unnecessary. Final proposals must already address the financial soundness of clubs and the financial resilience of English football as a whole. To be chosen, a proposal must advance the regulator’s objective. Of course, parachute payments may affect the overall balance of leagues, but relegated clubs are the most directly affected. That is why they need the specific protection that the current clause offers. On Amendment 71, as the House will know from our debates over the past months, the sustainability of English football is at the heart of the Bill. I understand the noble Baroness’s intent, but the sustainability of English football and advancing the regulator’s objective are already explicitly at the heart of the backstop. Clause 7 already requires that, as far as reasonably practicable, the regulator must exercise all its statutory functions in a way that is compatible with the purpose of the Bill. Of course that includes the backstop, and it would not be appropriate to require leagues to set out how their clubs would spend the disputed funds, nor to implicitly require the regulator to approve exactly how clubs spend funds. That would be overly prescriptive and disproportionate. As I have set out before, concerns surrounding potentially reckless spending by clubs are already addressed in the financial regulation provisions in the Bill. These measures will ensure that clubs have appropriate resources and controls in place to manage their financial risk. For example, clubs will be required to provide up-to-date financial plans, backed by appropriate financial resources, which will be stress tested. This is the most appropriate way to address how clubs spend their money. The noble Baroness’s Amendment 73 would require the funder’s proposal to be chosen by default, as long as it met a minimum level of consistency with the principles in Clause 62. However, the fundamental aim of the backstop process is to bring balance to a negotiation between two parties where one has significantly more bargaining power than the other. That means impartiality is key and no party can, or should, be favoured. On Amendment 74, we understand the concerns regarding property rights, and I take this opportunity to reassure the House. The provisions relating to distributions allow for interference with property rights, but that interference is lawful; it is proportionate and in accordance with the law. Most importantly, any interference would also be in the public interest. The backstop can be used only in limited circumstances where a clear issue has been identified. For a proposal to be chosen, it has to be in line with the regulator’s objectives; there is, therefore, no situation where the proposal chosen is not in the public interest. This is set out in more detail in the ECHR memorandum that accompanies the Bill. We are confident that the current drafting of the Bill, as well as the requirements of the Human Rights Act, ensure that property rights must be respected. I move on to the government amendments in this group, Amendments 68 and 89. We have listened to the concerns raised by the noble Baroness, Lady Brady, and fellow Peers that it is imperative that financial sustainability of relegated clubs is protected under the backstop. We argued in Committee that this protection was already implicit in the Bill, but these amendments put it beyond doubt. If the backstop is used to resolve questions relating to parachute payments, the leagues must address the sustainability of relegated clubs’ finances in their final proposals. We hope that that clarity will ease the concerns of clubs that face relegation. With regard to Amendment 62, we want to ensure that our policy intention is clear. The backstop is intended to be a last-resort power, only to be used if another regulatory intervention would not achieve the same result. We have therefore tabled an amendment adding a requirement to the list outlined in Clause 59(2) covering the considerations that the regulator must take into account before triggering the backstop process. This new requirement ensures that the regulator must consider whether any of its other functions would achieve a similar result before approving an application to trigger the backstop process. This change demonstrates clearly that the backstop will be used only if other regulatory interventions would not solve the problem. Amendment 63 requires the regulator to outline any findings in its most recent “state of the game” report that it considers relevant to the question or questions for resolution. The regulator must outline this in its notice to trigger the backstop process. We have always been clear that we expect that the “state of the game” report will play a crucial role in the decision-making process for the backstop. However, by tabling this amendment we have made this commitment explicit in legislation. This will give clarity to the leagues as to how the findings of the report could shape the backstop process. It will also provide reassurance in the Bill that the “state of the game” report will be published before the backstop process can be triggered. The findings of the “state of the game” report will be crucial evidence to inform the regulator’s decisions, including those made as part of the backstop process. Finally, on Amendment 66, we acknowledge the concerns raised by Peers, most notably the noble Lords, Lord Birt and Lord Burns, both in your Lordships’ House and in meetings since Committee, that the current drafting of the Bill has a hard deadline that puts an automatic end to the mediation phase. While it is important that the backstop process comes to a timely conclusion, we understand the concern that parties may be timed out due to the statutory deadline for the mediation phase being triggered. To be clear, we do not want the mediation phase to come to an arbitrary conclusion if further useful discussion could take place. The Government would strongly prefer an industry-led solution, and we hope the mediation phase will facilitate this, so we have tabled an amendment to allow the mediator to request a single extension of the mediation process, up to 28 more days. This will allow for productive discussion without extending the process unreasonably. For these reasons, I urge the noble Lord to withdraw his amendment, and I ask for your Lordships’ House’s support on the government amendments in this group.