Mr Clive Betts
MP for Sheffield South East · Labour · United Kingdom
“I wholeheartedly welcome the Foreign Secretary’s statement, both its content and its tone. I would like to ask about his discussions with our colleagues and allies in other countries who are looking to implement similar sanctions.”
“I offer two congratulations: first, to my right hon. Friend and constituency neighbour, the First Secretary, on her well-deserved promotion—I am sure she will do an excellent job. Secondly, I congratulate her and the Prime Minister for their real commitment to devolution, which I have wanted to see for an awfully long time.”
“I apologise for the fact that—as I have explained to you, Madam Deputy Speaker—I will have to leave straight after my question to chair Westminster Hall. I thank my right hon. Friend for doing this very challenging piece of work. I think that the theme of fairness, for the people who need benefits and for taxpayers, is right.”
“On the other hand, so many constituents with really serious conditions get turned down for PIP, and can get it only if they struggle through the appeal system, sometimes without any help at all. So the system is not fair to anyone at present.”
“When the previous Government let the contract, we were in a situation in which procurement could not properly take account of the past record of companies, and I understand that the Government have now changed that.”
“I will dive very deeply into the question, Madam Deputy Speaker. The Chair of the Committee sends his apologies for his absence; he is presently in a Committee meeting.”
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“Could I ask for a bit of advice, Ms Nokes? I have a selection list that says that new clause 4, which I also tabled, should be debated with amendment 27, but another selection list says that it should be debated under clause 56. There seems to be some discrepancy. It would be helpful if you could provide an explanation.”
“Thank you for that clarification—I am sorry for mixing myself up. Let us get down to the issue of parachute payments, which almost everyone spoke about on Second Reading, and which the Minister seems to believe should be treated as a given in their current form, with no change. I think he has the support of the Premier League—or some clubs in the Premier League, because it is by no means certain that the Premier League speaks with one voice on these issues. But it clearly is a very important issue. I am calling for the removal of clause 55(2)(b), which stops the regulator, as the backstop, being able to consider removing or changing parachute payments in their current form. Under the regulator’s remit, they have to be treated as a given.”
“I am talking about parachute payments that currently exist, which is what the Bill refers to—I do not think it refers to parachute payments that might exist in the future in some other arrangement.”
“The position under the Bill as drafted is that that cannot happen, because it is fixed as it is and cannot be changed by the regulator. The Minister will probably say that the leagues themselves could come to an agreement and change it. What happens if they do not do that? There has not been much evidence of the leagues being able to reach an agreement for a long period of time now—that is why we are here debating this Bill. In the end, it is down to the backstop. That backstop, the regulator, needs to have the flexibility to address these very important measures.”
“It is not reasonable to say to the regulator, “The only thing that matters is parachute payments to protect clubs that get relegated and you should have no regard to the impact on the clubs already in that league.” I hope that the Minister will consider this seriously. It is obviously a concern across the House, as was reflected on Second Reading. I know that my hon. Friend the Member for Barnsley East on the Front Bench has a slightly different way of addressing the issue, but the wording in her amendment 31 relates to what I have just said. Yes, parachute payments and the impact on the clubs that receive them must be taken into account, but the impact on other clubs that must compete with them must also be taken into account.”
“It has been said over and over again that Championship clubs are getting completely overstretched, because the holy grail of promotion to the Premier League means that clubs try to extend their budgets beyond what is reasonable. Owners put in large sums of their own money, often beyond what is reasonable and sustainable, in order to compete with clubs with parachute payments, and the difference is enormous. Parachute payment clubs will come down with budgets three times the size of those of many other clubs in that league, so in order to compete clubs often do fairly stupid things to try to ensure that promotion becomes a possibility. My amendment says that the regulator ought to take account of those issues.”
“I do not think that anyone I have met who has talked about this issue has said, “You cannot have parachute payments.” They say that it must be looked at in terms of the totality of the game and the distribution of money. I would understand, very quickly, that a club going up into the Premier League faces an enormous difference between the wage bill it had before being promoted and the wage bill it will need once promoted, and it must have some reassurance on what happens if it gets relegated. That is an understandable situation, but we must also take into account the impact on the finances of clubs in the same division as the relegated clubs and their ability to compete.”
“When the Premier League talks about its generosity to the game, it is talking about generosity to a handful of clubs that have just been in the Premier League. That is not a real position. When we look at the distribution of the media money overall, we find that 92% goes to 25 clubs—namely, the Premier League clubs and five others that have been in and out of the Premier League in the recent past. That is not sustainable, and if a reasonable and fair distribution of money should be agreed in the future, the regulator must have the power to take that into account. I have also said to the Minister that we ought to look at not just the importance of parachute payments to the clubs that receive them.”
“That just does not chime as an appropriate situation for the Government to get themselves into compared with everything else that they have said about the Bill. The regulator needs to be independent and have discretion, but on this issue it is not allowed to have the freedom to look at the situation, particularly with regard to the state of the game report. If the regulator believes that it is necessary to revisit the issue of parachute payments in order for income in football to be distributed properly and appropriately, and for it to be sustainable not just for individual clubs but for the whole of the football pyramid, this proposal is a significant mistake. We must recognise that 80% of what the Premier League gives to the EFL is in parachute payments to a handful of clubs.”
“The point I was going to go on to make was that I am not suggesting that parachute payments should never be allowed under any income redistribution. That is not the case. My amendment does not say, “No parachute payments”. It says that parachute payments can be considered as part of the overall distribution of finances within the game. The Bill as drafted states that parachute payments are exempt from consideration at the backstop stage—full stop, end of story. Everything else, including media income, can be considered, but not parachute payments. That seems strange, given that the Minister has repeatedly said that the independence of the regulator needs to be preserved and recognised, and yet on this key issue its hands are being specifically and absolutely tied.”
“That really is not a sustainable position for the clubs receiving those, for the clubs that are trying to compete with them, for the competitiveness of the game, or for the sustainability of the pyramid as a whole. I hope that the Minister will reconsider this because it is an issue that really needs addressing.”
“Absolutely. I just made the point about the enormous difference in budgets that Championship clubs now experience because of that. Of course, when we look at this season of the Championship, three out of the top four clubs have received parachute payments. Yes, other clubs, such as Ipswich, have done remarkably well without them, but clubs are always trying to compete with those clubs receiving the payments. Last year, two of the three clubs that came up had parachute payments, and it is now almost becoming a cycle of clubs getting parachute payments, going back up, then sometimes being relegated, and then getting another lot of parachute payments.”
“Is it not one of the great strengths of the English pyramid that there is, or should be, the ability for clubs to move around? If there are massive differences in the financial capabilities of the clubs that come down from the Premier League with a view to going back up again very quickly and the other Championship clubs, that effectively removes the element of competition and removes the prospect of promotion from so many clubs that it changes the fundamental nature of the pyramid. Surely that goes against one of the objectives that the Bill is trying to achieve.”
“Is the hon. Gentleman saying that the Premier League’s objective in having parachute payments protected in this way is to ensure they that continue, while the issue of the pyramid and more competition lower down is met by even more money from the Premier League to the EFL, irrespective of parachute payments? It seems to me that that is not its position; it actually wants to hang on to as much money as it can for Premier League clubs and to protect parachute payments too. I accept what the hon. Gentleman says about the multitude of issues surrounding competition between clubs in different leagues, but the fact that we cannot solve everything with this amendment does not mean that we should not address one of the problems.”
“It would help if the Minister was clear on what he was suggesting the regulator should do to deal with the massive gap between the clubs with parachute payments and those in the Championship without. Is he suggesting that the regulator should come in and tell clubs with parachute payments, “You have got them, but you cannot actually spend them, or not all of them, because that is distorting competition”? It seems a very odd way to try to deal with the problem.”
“Could the Minister explain what he has just said? I still do not understand how it is going to work. On the regulator’s powers to deal with the problem created by parachute payments, which he accepts could be created, what exactly are those powers? How does he expect the regulator to use them?”
“(2A) The IFR can only make such rules if it can be satisfied that their inclusion furthers its objectives under section 6 by protecting and promoting— (a) the financial soundness of regulated clubs, and (b) the financial resilience of English football. (2B) The IFR should also have regard when making any rules under section 7 to act in such a way that avoids any— (a) effects on sporting competitiveness of any regulated club against another regulated club, (b) adverse effects on the competitiveness of regulated clubs against other clubs, and (c) adverse effects on financial investment in English football.”— (Stephanie Peacock.) Question put, That the amendment be made.”
“I am not convinced by the Minister’s arguments, I must say. I think that we will be giving further consideration to this, as I hope the Minister will, and that we will come back to this issue on another occasion. I just hope that, by the time we come back, the Minister might be able to better explain the powers of the regulator to smooth out the issues where there are problems for Championship clubs trying to compete with those clubs with parachute payments. I was not convinced about that point from his arguments, but we will consider that further at another stage. I beg to ask leave to withdraw the amendment. Amendment , by leave, withdrawn. Amendment proposed : 31, in clause 55, page 45, line 3, at end insert— “unless the IFR specifies otherwise in rules.”
“If the regulator will not be there to protect the pyramid, what will it be there for?”
“What there might then be is good and/or best practice guidelines, reflecting what is going on in other industries and in this industry. It would say, “Here are some examples of good or best practice that the good or the best institutions are doing,” and try to encourage change through that.”
“Q To follow up on that, are you trying to achieve not a very detailed description in the Bill of what the regulator can and cannot do, but an acceptance that the regulator has an oversight of what football is doing to address the equality, diversity and discrimination issues, and the ability to comment—and step in if necessary—if football fails to address the problem? Sanjay Bhandari: Our view is that the regulator should have the ability to have oversight in the way that any other regulator does, as a matter of governance, and that what should go in the governance code is what reflects contemporary best practice. In our experience, to drive change it is probably a couple of different things. There is the base standard and mandatory stuff, and we think the key to that is transparency reporting. Again, transparency is disinfectant.”
“This is a really important clause. There have been so many problems in so many clubs where actions have happened but there is some mystique about who is responsible. The mystique is often deliberate, to hide the real owners and what they are doing. Although this will be the rule from now on, one issue that I can see arising is about what happens when a league wants to look at who was responsible for the actions of a club in past months and years. Will there be a trail to discover who the owner was in past months and years, so that that sort of action can be taken by the leagues?”
“Can I just raise two issues? The first is about appointments to the board. Does the Minister feel that the issue of conflict of interest is important? Does he feel that he ought to be setting down somewhere what conflicts of interest may amount to, and what may disqualify someone from being a member of the regulator’s board? Secondly—this issue arises in Select Committees from time to time—will the regulator’s chair be subject to a pre-confirmation hearing by the Select Committee?”
“I am interested in what the Minister says about the sustainability of the football pyramid. If a particular measure on the distribution of funding affects other clubs and those in the pyramid that receive that money, that could be construed as posing a risk to the pyramid and might fall within the remit of clause 6(b).”
“I am interested in the Minister’s definition of heritage. So far he has talked about the heritage of English football clubs, not the wider game, and that is quite interesting. Does he accept, for example, that the FA cup is very much part of the heritage of football in this country, and therefore the regulator ought to be able to give some thought to that competition and its future?”
“They want us to recognise that and to give some assurance that such decisions will not be taken with their interests cast to one side, as though they simply do not matter.”
“The Minister’s answer with regard to the FA cup will disappoint many football fans. Football fans look to us to address things that matter to them, and the Minister is right that many fans were outraged at the decision taken with no consultation—not even proper consultation with the EFL and other leagues—to simply abandon FA cup replays. We could all wax lyrical about the FA cup replay matches we have been to. Those are the ones I remember, and I refer again back to the 1970s, when Sheffield Wednesday, a third-tier club, had four FA cup replays with Arsenal, which was then in the top tier. I remember every one of those games—I went to four of them at least—because they were a unique experience, and that is what many fans feel.”
“Let me put a scenario to the Minister that involves not just FA cup replays, because I suppose that decision could be reversed; it would not be too difficult to manage if we got to the point where we wanted that to happen. Let us say there is a scenario—it nearly happened a few years ago—in which the Premier League decides to create a Premier League Two, then pulls the drawbridge up and stops relegation from that league. What would happen then? Would the Minister say, “That is terrible. I am getting a lot of letters and emails and people stopping me in the street; I cannot do anything about it and the regulator has no power”? Indeed, would the regulator have a power to intervene at that point, because that would be a major disruption to the whole structure and pyramid of English football?”
“We should always be cautious when we look at regulation. Without drawing you into the debate, Sir Christopher, I am sure that you would echo that point. Nevertheless, the fact is that there is a bit of conflict in the Government’s argument. Why are we here today with the Bill in terms of regulation? One of the reasons why is that a handful of clubs decided that they wanted to break away into a European super league, so the Bill specifically mentions clubs not being able to simply up roots and go into a different league without permission. The Bill legislates for and gives the regulator powers over new competitions and which clubs may enter into them, but no powers over existing competitions and how they may be changed.”
“I was thinking of moving my amendment from the Chair and then I could have directed the Minister to agree with it. [ Laughter. ] This proposal would feel very strange, as Ben Wright from the PFA said this morning, without the two groups of people who are absolutely key to football. We can manage without owners and directors, but we cannot manage without fans and players, and they are not mentioned in this part of the Bill. Will the Minister give us some comfort at least about how that particular point will be addressed?”
“The Minister is saying that this is a job for the leagues and the clubs. One problem with the legislation—it relates to the point made a few minutes ago by my hon. Friend the Member for Liverpool, West Derby—is that clubs consult their own supporters. The real argument in the Premier League a few years ago was about the price of tickets for away supporters. How do clubs consult on that? Why should not the regulator, in looking at the sustainability of the game, consider the impact on the future of the game of pricing out away supporters?”
“I am chair of the all-party parliamentary group on football. I do not think it necessary to declare, but at least it is there on the record in case anyone wants to know that.”
“Parachute payments are a clumsy solution to the bigger problem, which is the significant difference between the revenues of not just the Premier League and the Championship, but also between the Championship and League One.”
“Q Do you think parachute payments, as they currently exist, cause problems or provide solutions? Kieran Maguire: I think they do both. The intention of parachute payments when they were introduced, which was around 2006, was to address the possibility of clubs going into administration, because of the significant step-downs between the Premier League and the Championship. At the same time, it does mean that you have created a new benchmark in levels of spending that clubs in receipt of parachute payments can achieve, and therefore those clubs in the Championship that want to be competitive are incentivised to overspend, so I think we have a problem.”
“Q Using your own words then, do you think it is right that that clumsy solution should be written into the Bill as a no-go area, which cannot be looked at by the regulator as part of the financial backstop? Kieran Maguire: If we are going to look for a 92-club solution or, if we are including the National League, an 116-club solution, then the regulator should be able to deal with parachute payments, otherwise you are not dealing with the whole issue. If you have a redistribution model that does not involve parachutes, the Premier League’s position would be advantageous, and I do not think that would be in the best interests. Dr Philippou: You need to have access over the whole of revenue, and that forms part of the revenues of Championship clubs. It would not make sense, in that sense.”
“Q We are told that the regulator will still have some powers over parachute payments. Do you understand what they are and how they might work? Kieran Maguire: One would imagine that you would look at parachute payments from two angles. First, the quantum—the actual sums involved. Secondly, the length of parachute payments. They have been reduced from four years to three years, in recent years. I think there is a third issue, in respect of those clubs that are in receipt of parachute payments and are then promoted back to the Premier League. The parachutes that are not received are kept by the Premier League and distributed between the 20 clubs. That does seem very harsh, given that clubs are losing more money in the Championship to begin with.”
“When it comes to the regulator using last resort powers, it is effectively the same as the Bank of England. The Bank of England is the lender of last resort, but there are alternatives. Surely the same should be true in football. It is testament to the intransigence of the Premier League, in particular, which is unwilling to look at the broader football issues in the country.”
“Q On the regulator’s powers, is it unusual to have a regulator that cannot decide to intervene until you have gone through a process, and will step in and do anything only after the parties have failed to reach agreement? Kieran Maguire: You would hope that the parties would be able to sort something out between themselves. If we did not have a regulator, we would be in a very similar position to the one we have at present. The Premier League has no incentive to be more beneficial, in terms of the distribution of money. It would have to be dragged to the table by the regulator, so that is why the backstop powers are important. The EFL is a fantastic league in its own right. The chances are that anybody who has supported a club in the Premier League have also supported it in the EFL.”
“Q So it is not the case that the regulator should be able to come in earlier? Dr Philippou: I think a lot of the parts of the Bill that look to fix issues relating to the financial sustainability of clubs and corporate governance should in the long term negate the need for intervention, because stuff will be run in a much better way. The issue at present is that if there is no money forthcoming into the EFL, that creates a huge potential financial problem. That is why the backstop powers are there. It is one for the lawyers to debate, really.”
“Q I want particularly to look at clause 55(2)(b), which you are probably all very familiar with. Could I ask for your view on that provision—the removal from the regulator’s backstop powers of the ability to look at parachute payments? Did you lobby Ministers to include it? Richard Masters: We do not think that parachutes should be part of the backstop power.”
“If you want the Premier League to be competitive and to be the economic powerhouse that it is, and to continue to redistribute its success, then we have to have parachute payments and I do not believe they should form part of this regulatory regime.”
“This is the part that we think should be adjudicated on if there is to be a backstop power, not parachutes. Why not parachutes? Because they are a competitive balance tool. They obviously have an impact on sustainability as well, as all financial regulations do. Without parachute payments, the Premier League would not be competitive at the bottom end. You will hear from clubs this afternoon that will be able to talk about parachutes from their own perspectives. One is Brighton, which came up without a parachute. If a club wants to be competitive within the Premier League, which is a brutal meritocracy and that is why people love it, then you have to be financially supported. That is the principal purpose of it.”
“Solidarity, parachute payments, is part of the football pyramid and has been for over 30 years. This is not just between the Premier League and the EFL, but intra-EFL and from the EFL into the national league as well, where there is a generous parachute system for clubs coming in and out of the national league and into league two of the EFL. Solidarity is relatively new. It came around in 2007 when Lord Mawhinney, once of this parish, agreed a small deal with Richard Scudamore, the then chief executive to the Premier League. Over the past many years we have agreed a number of different arrangements. The current arrangement—which is still in existence; there is no cliff-edge—was agreed in 2019. At the moment, the amount of solidarity that comes out of the Premier League to the EFL is around about £130 million a year.”
“So you lobbied to have that included. Richard Masters: Well, when asked for our opinion, did we express it? Yes, we did, and I am very happy to repeat it here, Clive. The backstop power is a very novel power, and it should remain so. It should incentivise football-led solutions, which I believe it intends to do. It drives mediation and negotiation. At the very end, if the people at this table cannot come to an agreement, it is able to impose a solution in one specific area, which is solidarity—the funding of the rest of the pyramid, normally from the Premier League down. Any party has the ability to trigger that mechanism once every five years. All of that has been discussed with all of the people at this top table along the way, and it is right that it was, and right that everybody had their opportunity to express their views.”
“So what we are saying is that we can apply the backstop and all its might to the £79 million, but we cannot touch the £233 million. That seems to be the ultimate definition of fiddling while Rome burns. Why you can view one without the other, I do not even begin to understand. In terms of the effect of parachutes, just in case people are not across it, if we go back to 2010-11—which is not that long ago—they totalled £30 million. They represented 7% of the aggregate turnover of all championship clubs. By 2020-21, they had risen to £233 million and 39% of the aggregate turnover of the championship clubs. They have become the cuckoo in the championship nest. They are enormous. So if you exclude them from the backstop, you might as well not bother with a backstop, frankly.”
“Q I expect the EFL has a different view? Rick Parry: Yes. First of all, we think that the way the clause is drafted is intellectually incoherent because it says that parachutes cannot be included in the definition of revenue—they are not revenue, they are distribution. To take Richard’s point that they should be used separately from solidarity, it is interesting that solidarity payments to championship clubs are literally pegged to parachute payments. They are defined as being 11% of a parachute payment, so they are intertwined. In terms of the practical effect of what the clause says, if we look at the 2021 figures, five parachute clubs received £233 million between them and 19 championship clubs received £79 million in solidarity.”
“Q We had a very detailed submission from the EFL, explaining your understanding of the current distribution of media money within the EFL and the Premier League and what the challenges were. I do not think we have had anything similar from the Premier League, have we? You have not given us your understanding of the current position and what you would like to see it changed to, if you want to see any change? Richard Masters: Sorry, Clive—”
“The EFL have given us their understanding of the current distribution of funding within the Premier League and the EFL, particularly around media funding, and what sort of changes they would like to see. I do not think we have had a submission from the Premier League identifying what your understanding of the position is and what changes, if any, you would like to see. Richard Masters: We have our current agreement and it was agreed in 2019.”
“Q So that is it? So you do not want to see any changes? Richard Masters: It is a perfectly legitimate debate to be had—is the funding of football correct? That should be reviewed on a periodic basis. We have an agreement that stretches out way into the future and either party can terminate it after three years. The current agreement is about to become five years old, so once the state of the game report is done, the regulator will turn its mind to other issues. We are very happy to express our views on the distributions within football; we are not shy of doing that.”
“If you want to see our accounts—they might be four weeks out of date, but that is as much as you are going to get—our cash flow forecasts, forecast profits and losses, which are done every month, or our business plan, that is not a problem. I would not buy the argument that this is all cumbersome and difficult, because it just is not. That sort of monitoring would have helped to prevent problems like Bolton, Derby, Bury and a whole lot of other clubs experienced..”