31: Schedule 5, page 99, line 11, leave out paragraph (ii)
Member’s explanatory statement
This amendment, along with the other amendment in the name of Lord Jackson of Peterborough to Schedule 5, is intended to remove the equality, diversity and inclusion provisions of the Bill.
My Lords, I rise to move Amendment 31 and to support Amendment 33 in my name and that of the noble Baroness, Lady Fox of Buckley. The amendment seeks to remove the explicit reference to EDI—equality, diversity and inclusion—in the Bill by way of a compulsory obligation in the independent football regulator’s corporate governance statement.
I do not wish to rehearse the arguments made in Committee, when the Minister, I gently suggest, did not fully engage on this issue. I am nevertheless grateful that her letter of 15 January to my noble friend Lord Moynihan of Chelsea—who, incidentally, has done excellent work on this issue—was more helpful and at least tried to put forward a partial rationale for this part of the Bill. As your Lordships will know, this is an additional duty and encumbrance from the Bill put forward in the last Parliament. To that extent, it does not have the support of His Majesty’s loyal Opposition.
I want to say at the outset that it is important to treat everyone in football with fairness and equity; I believe that is good business as well as morally the correct thing to do. That is why we have a strong existing regulatory and legislative regime in this country, to ensure compliance with the basic tenets of decency, fairness and equality. But I oppose the compulsory and draconian imposition of an EDI obligation on football clubs for a number of reasons. It is heavy-handed and diverts resources from excellent existing community engagement initiatives that have developed organically over the last few years in grass-roots football. It is costly, bureaucratic and divisive, and I believe it under- mines community cohesion. It will impose unnecessary costs on a majority of smaller clubs whose financial health is precarious, and on which the onerous provisions will weigh heavily.
It will encourage diverse and divisive litigation and the intervention of third-party groups such as Stonewall, and will result in cases such as that of the football fan Linzi Smith, banished from Newcastle United Football Club for expressing her own lawful and reasonable gender- critical views online and questioned, in my opinion, in a disgraceful Orwellian fashion by Northumbria Police, for which it was forced to issue a belated and grudging apology. These proposals will chill free speech, cause the proliferation of ideological training schemes and undermine women’s sex-based rights in their workplace.
My Lords, the noble Lord, Lord Jackson, puts his case very high. He says that this is draconian and heavy-handed, will lead to ideological training schemes and is even Orwellian. His case is simply not made out. The EFL in its briefing to noble Lords says on corporate governance:
“The EFL supports the inclusion of equality, diversity and inclusion provisions within the corporate governance code of the Bill. The EFL’s equality code of practice is already mandatory for member clubs and this approach is a logical extension of existing arrangements that will ensure high standards are maintained”.
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It therefore appears that EFL clubs do not have the same concerns that the noble Lord, Lord Jackson, has expressed to us. I simply point out that the corporate governance statement requires no more than that the club explains what action it is taking to improve equality, diversity and inclusion. As I understand it—and the Minister will say if I am wrong—it imposes no substantive requirements of any sort. It is a provision purely intended to provide information as to what a club is doing, if anything. I, for one, would be very interested to know—and I am sure many other people would be, particularly the supporters of particular clubs —what they are doing. This amendment is inappropriate, unnecessary and has no basis whatever.
My Lords, I support the noble Lord, Lord Jackson, in his amendment and speak to my own in this sphere. These amendments aim to remove the requirement for clubs to submit EDI statements to the independent football regulator detailing their plans to improve, as we have heard, equality, diversity and inclusion policies. This requirement was added to the original Bill by the Government and, in my view, is unnecessary and burdensome and could act as a Trojan horse for politicising clubs in ways that would be divisive.
As the noble Lord, Lord Pannick, has just explained, it is a duplication of work that is already done by many clubs. The Premier League and the EFL already require their clubs to do work in this space to comply with the EDI standards of those leagues. Can the Minister therefore explain whether the expectation is that they need to more or to do EDI differently and what does “improve” comprise? Perhaps the Minister can elaborate on what she envisages will trigger sanctions for non-compliance. What would non-compliance look like?
This especially matters for all those clubs that this Bill will regulate beyond the Premier League and the EFL—all those National League clubs that operate on the tightest of margins with very small staff and volunteer teams. Think of the sanctions: clubs could face the IFR publication of a censure statement and/or the requirement to appoint an external EDI professional, and they do not come cheap. Clubs could face financial penalties or, ultimately, suspension or revocation of their operating licence, so there is a cost to pay and a lot of pressure to comply that could well generate substantial financial and time burdens on clubs.
All the evidence shows, across a multiple of institutions, that EDI regulatory regimes often divert scarce time, attention and resources away from the core mission and priorities of organisations. They also tend to expand their remit because one of the most obvious ways that regulated organisations prove their EDI credentials is through ever-more elaborate, flashy guidance documents, mandated training programmes, unconscious bias workshops and so on. It is a perfect example of a well-meaning policy that grows and proliferates, an exemplar of self-fulfilling mission creep. It was recently revealed, for instance, that Oxford University now employs 59 staff in EDI roles—a 20% increase since 2022—at a cost of £2.5 million a year before pensions and benefits. This seems baffling, given the dire state of university finances.
My Lords, this is rather an odd one. Apparently, we are in favour of equality but not in favour of doing much about it. A reporting strategy on what we are doing to improve equality and diversity does not strike me as terribly onerous. Indeed, if we are doing something that comes under the “expletive silly” category, we will know if it is reported. I suggest that we are trying to build a little monster here—build it up so as to have something to knock down. There are real battles to fight; let us wait for those.
I shall speak to Amendment 34 in my name and that of my noble friend Lord Parkinson. This was the subject of much debate in Committee, where there was a united feeling that we want clubs that are well run, with good governance, and that are sustainable. Wherever possible, we want a regulator to be light touch.
My amendment would encourage the use of independent non-executive directors to help in that regard and put it in the code of practice. I freely admit that having independent non-executive directors is not a guarantee of good governance, but most of us would agree that having impartial experts as part of a board is generally a good and sensible thing to do in any organisation. Members on all sides of the House supported this in Committee. I know that the Government are generally supportive of this proposal, and I look forward to hearing the Minister’s views on how we can best help to make it happen. I believe that this would be a sensible move towards good governance.
My Lords, I should like to counter some of the nonsense that we have heard from the noble Baroness, Lady Fox, and from the noble Lord, Lord Jackson of Peterborough, who moved the amendment against equality, diversity and inclusion.
The EFL, which represents 72 of the clubs affected by the Football Governance Bill simply says this:
“Our equality code of practice is already mandatory for member clubs, and this approach is a logical extension of existing arrangements that will ensure high standards are maintained”.
That says a lot. If you go to any football ground on most weekends, as I try to do, you will find messages of persuasion and inclusion to ensure that football plays its part in guaranteeing that the game becomes more inclusive and that its workforce is diverse.
During the early debates in Committee, I suggested that the business of football, outside the players on the pitch, could do with looking at this issue some more, because the workforce more broadly is not as diverse as it should be, certainly at senior management levels and director level. We need to encourage that better, and in some ways the amendment proposed by the noble Lord, Lord Markham, about independent football directors, may play a role in that as well, because that provides some flexibility within the senior echelons of management.
Only 4% of managers in the professional game are from non-white backgrounds. Given that some 45% of the workforce—the players on the pitch—are black or from a minority group, something is clearly not working in how the business is developing, and we should do all that we can to address that. I agree with the noble Lord, Lord Pannick: this is a non-sensible amendment that we should rigorously oppose.
My Lords, although I am mindful of the rules of debate on Report, I am sure that noble Lords will understand if I preface my remarks with a short, two-hour encomium to Newcastle United, congratulating them on their victory in the Carabao Cup, their first domestic trophy in 70 years—that is longer than the living memory of any of my relatives. That is an area on which I know the Minister and I are in full agreement. I am mindful that other noble Lords were present at Wembley yesterday and hoping for a different result, so I shall not go on about it, other than to say that I hope that anyone who had the pleasure of being on the London Underground yesterday was as delighted as I was to see all the lads and lasses there with smiling faces and will join me in sending hearty congratulations to the Newcastle fans, who have waited so very long for this moment.
The Government’s new corporate governance provisions have, I think it is safe to say, received considerable attention during our debates on this Bill. My noble friend Lord Jackson of Peterborough has just set out the concerns of many on these Benches very powerfully, and the noble Baroness, Lady Fox of Buckley, has echoed them and added her own concerns.
I have been very clear throughout the passage of the Bill that we on the Opposition Benches are not persuaded by the changes the Government have made to the Bill, compared to the version we put forward in the last Parliament. As I said in Committee, we do not believe that the additions the Government have made in this area are necessary either. The Bill already has strong corporate governance requirements, mandating a corporate governance statement as part of the licensing process, and that is in addition to the rules already enforced by the Football Association and competition organisers.
Regardless of whether one believes that prescribed EDI policies would improve the operation of clubs and football in this country—and as we can see from the short debate we have had again today, that is by no means a settled view—clubs already have to comply with similar rules and, in many cases, voluntarily go further. The noble Lord, Lord Bassam, alluded to some of the work they do, and my noble friend Lady Brady mentioned it in more detail in our debate in Committee. Mandating further policies and action to promote equality, diversity and inclusion is, therefore, a clear example—we think—of unduly onerous regulation which has little to do with financial stability. The Minister has been clear throughout our scrutiny that this is intended to be a sustainability regulator.
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.
My Lords, I thank all noble Lords for their contributions to this short debate, particularly the thoughtful remarks from the noble Baroness, Lady Fox of Buckley. I will briefly correct the assertion made by the noble Lord, Lord Bassam. I have not tabled an amendment that is against EDI; it is against a compulsory and costly duty enshrined by the corporate governance document in the Bill. That is a separate thing. I am disappointed that no noble Lords, except the Minister, actually engaged with the evidence that both the noble Baroness, Lady Fox of Buckley, and I have put forward.
There is one point that I would challenge the Minister on. Once again, despite being challenged in the letter from my noble friend Lord Moynihan of Chelsea, and by me today, she has yet to come forward with any alternative to the McKinsey study showing evidence that EDI improves the bottom line in business, let alone the football world. That is a very important issue.
The Minister was right when she said we have had a good and lengthy debate on this issue over many weeks, both before Christmas and this year. Notwithstanding that, I do not think she has answered the specific questions we have raised. On that basis, I would like to test the opinion of the House.
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The Minister prays in aid a study by McKinsey into EDI and improved corporate decision-making but, as she knows, McKinsey’s 2018 study Delivering Through Diversity has been comprehensively critiqued and discredited by Green and Hand’s March 2024 paper published in Econ Journal Watch, which demolished its empirical evidence base and methodological assumptions, specifically on reverse causality, narrow focus, opaque data, quartile bias and global versus US scope of the research. Other academics, such as Alex Edmans of the London Business School, have similarly echoed Green and Hand’s robust and rigorous refutation of McKinsey’s studies. It is noteworthy that the Minister does not in her letter, or previously in this House, reference any other generic EDI research in respect of its efficacy, nor any on football specifically or wider sport. Perhaps she will address this issue in her later remarks.
There is a reason. Green and Hand’s headline finding was that EDI policies did not harm profitability, but there was no evidence that it helps it either—a rather important issue, given that the Wall Street Journal estimates that, globally, businesses will spend $15.4 billion on EDI next year. Where is the evidence that an EDI duty will, as the Minister has stated, “make clubs more sustainable” and ensure “good corporate decision-making”? Really?
The penny is finally dropping. Last week, the Financial Conduct Authority and the Prudential Regulation Authority ditched their plans to impose costly and bureaucratic diversity and inclusion regulations on the financial services sector, which the FCA’s own impact assessment estimated would cost £561 million to set up and £317 million in recurring annual expenditure. The fans and wider public agree. In May last year, Policy Exchange found that, by 50% to 14%, people agree that businesses have become too concerned with taking political positions on contested issues, while 75% of people believe that companies should prioritise hiring on merit, regardless of race or gender, rather than hiring to create a diverse team. Of course, they are right: 40% of Premier League footballers are non-white—on merit.
I assume that both the Prime Minister and his adviser, Morgan McSweeney, read those polls and media coverage too. I am heartened by reports today that the most senior leaders in government are considering prioritising growth and economic prosperity rather than overregulation and virtue signalling, and are giving serious thought to ditching the IFR. Perhaps the Minister will offer her views on that issue.
Does anyone really believe that fans clamoured for the mandatory reporting of data on race, gender and sexuality when Bury FC went bust in 2019? The proposition is ridiculous. We need to trust our football clubs to do the right thing within our current laws. Regulation for regulation’s sake will only hasten the demise of our world-beating football success story. For those reasons, I beg to move.
However, such concerns about EDI’s bureaucratic and financial burdens are not confined to a few of us here. As we have heard, last week, two regulators made similar points. The Financial Conduct Authority and Prudential Regulation Authority announced their decision to abandon plans to impose diversity and inclusion rules on financial firms. Surely this must give the Minister pause for thought. It is surely not too late to consider deferring this section of the Bill to consider such adverse outcomes, and to consult on specifically this issue with stakeholders, fans and so on.
If we listen to the debate within the financial services sector, it is instructive. Wendy Saunders, a partner and head of financial services at Lewis Silkin, said that it was a huge relief that the FCA was no longer proceeding with its diversity and inclusion proposals, which she said
“would have imposed unwarranted costs on firms without delivering clear benefits”.
Instead, the regulators in financial services will limit their role to voluntary industry initiatives—I am not opposed to that. Surely such a voluntary approach is appropriate for football too. Requiring the new football regulator to impose what other regulators admit is too burdensome is not proportionate.
My key question to the Minister is still: what problem is this measure as a solution to? We heard in Committee and since that there is a concern about the lack of diversity at clubs’ senior management level. There is little evidence, however, that EDI—whatever its good intentions as a theory—will resolve this problem in practice. I would be reassured if the Government elaborated on how they envisage that EDI policies will operate in relation to HR and employment in individual clubs, because EDI has a very poor track record of improving workplace culture—the opposite is often true.
Last week, Trevor Phillips wrote an insightful comment piece in the Times entitled:
“There’s a better way than DEI to fix prejudice”.
In it, he warns of the way that EDI policies can stir up resentment and competitive victimhood that will do little but cause conflict in workplaces. He says that DEI programmes
“increasingly appear not to be aimed at making the workplace a better, more productive environment but a modern-day inquisition dedicated to damning white men merely for their existence”.
Meanwhile, at King’s College, members of staff were told that they could not get promoted unless they signed up to the whole of the university’s EDI initiatives, including taking part in activities run by Stonewall, an organisation now considered so controversial that it has been largely ejected from activities in Parliament and Whitehall. EDI training at Imperial College includes:
“How to be a White ally”.
Staff have been asked to agree that they have white privilege. I just want to know whether the Minister envisages that as a productive thing if it happened in clubs. Is that what she thinks EDI in clubs will look like? It certainly looks like that in many organisations. Does the Minister see the dangers of this introducing a contentious and politicised agenda into clubs’ culture? Although EDI is often framed as fostering better decision-making, in reality it often reinforces groupthink in workplaces.
I am just worried that this seemingly small part of the Bill will unintentionally drag football clubs into murky political territory. I note that there is a judicial minefield here. For example, if clubs chose to set quotas to fulfil their EDI requirements based on people’s protected characteristics, would that not open up the gate to biological males who identify as women being able to play in women’s sports? This is such a political and ethical topic, and noble Lords see all the controversies that the FA is involved in here—the noble Lord, Lord Triesman, spoke so passionately about this in Committee.
I am not suggesting that noble Lords have to agree with my sex-realist gender-critical views on this, but I urge the Government at least to wait for the judgment by the Supreme Court in For Women Scotland v The Scottish Ministers, which relates to the definition of a woman and how a trans woman fits in under the Equality Act. Is there a danger that EDI provisions could unintentionally open clubs up to being challenged in the courts and make them subject to spurious litigation in this area?
In fact, over the weekend, we found out that one of the biggest girls’ football leagues in the country, West Riding Girls Football League, is being threatened by the Football Association with being shut down for refusing to allow boys to play in its matches. Last week, an emergency meeting was held by organisers of the league, which has at least 6,000 under-18 girls playing across more than 300 teams by the way—fantastic progress with girls in football.
At that meeting, managers voiced their concerns that allowing boys to play would open the floodgates and was a massive threat to the girls’ game. Parents are looking to take their daughters out of the league, with girls themselves saying that they will give up if boys join, and the FA’s response is that “this is part of our inclusion and diversity strategy”.
Your Lordships do not have to agree with me. The Minister may dismiss these concerns as all a bit culture wars-y, even a bit Trump-ite. Nothing could be further from the truth. So to reassure the Minister, I would like to call on one of her Cabinet colleagues as an ally. Wes Streeting told a Macmillan Cancer Support event: “There are sometimes some really daft things being done in the name of EDI, which undermine the case. For example, there was one member of NHS staff who was merrily tweeting a job ad online, saying that part of her practise was anti-whiteness”. As Wes Streeting said, “What the hell does that say to the bloke up in Wigan who is more likely to die earlier than his more affluent white counterpart in London?” He concluded that the real issue of inequality that affects working-class people is not addressed here, and called for the ideological hobby horse of EDI to go. I agree. I think we should drop it from the Bill, which does not mean that we should not fight tooth and nail for equality and fairness in all walks of life.
Our concern is that placing new EDI duties in the Bill and, therefore, tasking the regulator with concocting rules to that end would increase the risk of mission creep, which we have all been very concerned about. We are clear that this will end up meaning more, not less, regulation. At a time when the Prime Minister is promising to clear out the regulatory weeds, and the Chancellor is writing letters to regulators asking them to promote economic growth, we should be aiming for fewer regulatory burdens, not more.
I shall say a few words about Amendment 34, which my noble friend Lord Markham outlined the case for, which relates to independent non-executive directors. We had a strong cross-party exchange on this topic in Committee, when amendments to the same effect were tabled by the noble Lords, Lord Knight of Weymouth and Lord Blunkett. They were evidently satisfied with the Minister’s response, so they have not brought them back, but I am glad that my noble friend Lord Markham has tabled his. I am very grateful to the Minister for taking the time to discuss this issue with both of us, as I believe she also did with a number of other noble Lords who raised it in Committee. She kindly copied us in to the letter she sent to the noble Lord, Lord Knight of Weymouth, about it, but I look forward to any further reassurances she is able to give on Amendment 34.
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.