Coalition Watch - edition 3

29.09.10

 

Welcome to the third edition of the Public Law & Regulation team's Coalition Watch alert series.

As we move into autumn, and the Coalition gears up for the hard business of government, everyone with an interest in the future of the public sector might well want to brace themselves for an interesting ride. "It's time," said the Prime Minister as he returned from his summer holiday, "for the rubber to hit the road".

If there was any doubt about what is shortly going to happen, or any sense that the Coalition's rhetoric might be getting too far ahead of the reality, it is dispelled by two recent news items. The first - the report that the UK's net public borrowing in August was, at £15.9 billion, the worst on record - reminds us that the problems of a rapidly accumulating structural deficit are not going to go away. They will continue to drive the Coalition's agenda, as perhaps they must. The second - the leak of an internal document showing the sheer scale of the government's plans for the abolition and restructuring of quangos - demonstrates that the Coalition is entirely serious about making deep and long-lasting cuts in the machinery of the State.

The credit crunch and its aftermath have desensitised us all to the real value of huge numbers preceded by a pound sign; perhaps one reason why the more domestic-level abuses of the MPs expenses system served as such a useful proxy for public anger about government waste and incompetence. So, it is the probably the second of these stories that most especially catches the eye. Whether the leak was a genuine breach of protocol or an officially sanctioned attempt to warm us up to what will follow, it still had some shock value. Of the 742 arm's length bodies which are subject to review, it is now clear that at least one third, and probably as many as 40%, are shortly to disappear from the public sector.

This is a huge shake-up by any estimation, and will have massive implications for the future. Add it to the projected 25% cuts in departmental spending that will be revealed in the Spending Review on 20 October, the radical legislative programme that will shortly follow it, and the wave of civil service redundancies for which the Superannuation Bill is currently paving the way, and we have a cocktail of changes for which it is difficult to find any precedent in recent political history.

So, as we enter the brief hiatus of the party conference season, after an even briefer parliamentary session largely confined to making progress on some of the Coalition's constitutional reforms and taking the Superannuation Bill through committee stage, please read on for the news of the most recent developments.

Helping you to stay on top of all the changes that matter, we provide expert commentary on:

  • Constitutional change - looking at the progress made in the Coalition's proposals concerning devolution and sovereignty, voting reform, parliamentary reform, as well as human rights and civil liberties.
  • Managing the Machinery - covering changes to the functions performed by central, regional and local government and arm's length bodies.
  • Regulation - assessing the Coalition's proposals to prevent an expansion of the overall regulatory burden on society, together with the reorganisation of regulatory frameworks.
  • Money and everything else - considering the impact of reduced government spending, the details of potential public body privatisations, and the building blocks of the 'Big Society'.
  • Outstanding/Omission - the Public Law & Regulation team discusses an important policy that finds itself on the backburner.

1 Constitutional Change

Devolution and Sovereignty

There are no new updates to report this week. Watch out for the next edition of Coalition Watch.

Voting Reform

  • Alternative vote referendum
    The Parliamentary Voting System and Constituencies Bill - which provides for a referendum on changing the voting system - has had its second reading in the Commons. Despite criticism from the Coalition benches, the bill was passed with a majority of 59. It will now move to be considered in detail by a committee of the whole house.

    The passage of the Bill to committee stage means that the Coalition remains on track for a referendum on AV on 5 May 2011.
  • Fixed-term Parliaments
    The Fixed-Term Parliaments Bill has had its second reading in the Commons. The Bill was passed by a majority of 288. The majority of Labour MPs did not vote against the bill, but reserved the right to revisit their position at a later stage.

Our comment:

At first glance, the recent votes that have taken place suggest that the Parliamentary Voting System and Constituencies Bill is highly contentious, while the Fixed-term Parliaments Bill will be easier for the Coalition to enact into law. This is not necessarily the case. Not only has the Opposition reserved its position on the Fixed-term Parliaments Bill, but the Bill has attracted notable criticism.

The Political and Constitutional Reform Committee, established by the Coalition in June 2010, has published a second report on the Bill. The Committee criticised the Bill for having an unnecessarily rushed timetable, as well as stating that most of the opinion it has received favours a four- year term, rather than the five-year term adopted in the Bill. The Report also adopts the concerns made by the Clerk of the House of Commons regarding the effect that the Bill could have on parliamentary privilege and the risk that the Bill could become a potential Trojan horse for an election process being subject to legal challenge.

The Fixed-term Parliaments Bill is of great constitutional import. However, the Coalition's haste in pushing the reform may well be determination and a desire to avoid procrastination. Similar criticisms of rushed reforms were made at the time of what is now the House of Lords Act 1999 - the Act which removed the majority of hereditary peers from the second chamber. As to the potential for legal challenges to the election process, such an occurrence is surely a necessary consequence of further codifying the United Kingdom constitution. It is for the courts to interpret and apply laws such as this and the higher courts have long been adept at hearing cases of a constitutional nature.

Parliamentary Reform

  • Redistribution of Commons seats
    The Parliamentary Voting System and Constituencies Bill, which (as noted above) passed its second reading in the Commons and now moves to committee stage, sets out new rules for the distribution of Commons seats, reducing the number of constituencies to 600 and re-drawing boundaries to ensure a roughly equal number of voters in each.

Our comment:

The fact that Parliament has been in session at all in the period before the party conference season, and so able to undertake the second reading of the Parliamentary Voting System and Constituencies Bill, is a result of the Coalition's shortening of the summer recess, as reported in the second edition of Coalition Watch. The House of Commons was in session for just two weeks, breaking up for a further recess on 16 September.

As well as indicating a desire to get on with it, the short session of Parliament served a political purpose. The legislative progress made on the Coalition's political reforms helped to draw a line in the sand in respect of the potentially divisive compromises the Coalition entered into on constitutional matters, demonstrating a settled intent before the Prime Minister and Deputy Prime Minister headed off to their respective party conferences.

Human Rights & Civil Liberties

  1. Human trafficking
    The Coalition has confirmed that the UK will not opt-in to draft European laws on human trafficking, even though the UK already complies with much of the draft directive.
  2. Extradition
    As promised in the Coalition Agreement, the Home Office has announced an independent review of the UK's extradition laws.

    The review will cover:

    • the Home Secretary's powers to stop extradition
    • the operation of the European Arrest Warrant, which deals with extradition requests between European countries
    • where a crime is mainly committed in the UK, whether the person should be tried here
    • whether the US-UK Extradition Treaty is unbalanced
    • whether requesting countries should be required to provide sufficient evidence to prove an allegation

    The review will be expected to report back by late summer 2011.

Our comment:

Given that human trafficking is one of the generally accepted evils of the modern world, the Coalition's decision not to opt-in to the EU directive on the subject may seem surprising.

We do not comment on the Home Office's statement that the UK already complies with much of the EU draft directive. Tellingly, however, the Home Office notes that "opting in would ... require us to make mandatory the provisions which are currently discretionary in UK law."

It seems likely that this will be the first of many "opt-outs". With the Coalition committed to ensuring that no further powers are transferred to Europe, we expect that it will make full use of the United Kingdom's opt-outs - where appropriate synchronising UK law with that of the EU on a voluntary basis rather than formally buying in to European initiatives.

The changes made to the UK's extradition laws by the last government have been widely criticised - in particular the concessions made to the United States which attracted no reciprocal benefits in favour of this country. This has led to some high profile, and somewhat embarrassing, extraditions in cases which were quite capable of being dealt with in the UK courts. The announcement to review the UK's extradition laws comes after calls from Liberty and other human rights groups for the Coalition to honour its promises, and is obviously welcome. While the announcement is another display of the Coalition's civil liberties agenda, this appears to be an internal review only. It would be presumptuous to assume that it will quickly result in significant changes without a considerable diplomatic effort.

The above analysis was written by Rachel Martin and Chris Warburton in Wragge & Co's Public Law & Regulation team.

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2 Managing the Machinery

'Quangos'

  1. The Leaked List
    The major news arises not from an official Coalition announcement, but from the leak to the BBC of a letter sent by the Minister of the Cabinet Office to the Deputy Prime Minister. There is no question as to the authenticity of the letter, which outlines the Coalition's programme of substantial cuts to the number of arm's length bodies. Specifically it envisages:

    • 180 bodies to be abolished (some of the abolitions have already been announced as settled policy and reported in earlier editions of Coalition Watch)
    • 124 bodies to be merged
    • 56 bodies to be retained but subject to substantial reform
    • 282 bodies to be retained in their current form

    This leaves 100 bodies which are still under review.

    The leaked document lists each body and its current status in the Coalition's planning, allowing anyone with an interest in a particular arm's length body to see whether it is at risk. But two words of caution have to be attached. First, the document leaked to the BBC is a month old, and the Daily Telegraph obtained a slightly different list. Clearly, nothing is final until the Coalition has completed its review and official announcements are made. Second, a number of the proposed 'abolitions' will terminate a certain quango's status as a public body, but not necessarily terminate the body itself - a number of bodies may be able to have some continuing life as part of the third sector.
  2. Recent official announcements include:
    1. Review into Ofwat
      The Government has announced a review into the objectives, responsibilities and effectiveness of another regulator. This time it is Ofwat - the economic regulator of the water and sewerage industry.

      The review emanates from the Coalition's commitment to reform the water industry to ensure more efficient use of water and the protection of poorer households and will feed into the Water White Paper which is scheduled to be issued next summer.
    2. New non-emergency number
      A new service for access to non-emergency NHS healthcare is to be piloted in four areas before its national roll out. The pilot service, which involves the use of new 111 number, was launched in County Durham and Darlington and will be provided in Nottingham, Lincolnshire, and Luton later in the year.

Our comment:

The leaked list of quangos to be abolished, merged and reformed needs to be treated with caution, since it is clearly only a working document and by no means final.

However, it is very revealing as to the scale and reach of the Coalition's ambition to reduce and restructure arm's length bodies. The government's own figures put the total number of quangos at 742. Of these, at least one quarter are to be abolished, while a quarter of the those remaining will be merged. These percentages are likely to rise as the Coalition completes its reviews of the remaining 100 quangos whose futures are currently undecided.

In earlier editions of Coalition Watch we noted that the changes proposed by the Coalition seemed likely to have a permanent impact on the way in which the UK is governed. Nothing can better signify this than the scale of the Coalition's intentions for quangos as revealed by the leak. Many governments have talked about reducing the size of the 'quangocracy'; none has yet made any serious inroads into it. But, if the Coalition follows through these plans it will have reduced the overall number of arm's length bodies at least onethird, and probably something closer to two-fifths, when compared to the number it inherited. It is hard to see those changes being undone for decades, if ever.

By contrast to the shock and awe generated by the leak, the official Coalition announcements this week seem limited in scope, but each is important in its own terms.

In light of the review into Ofgem (the energy regulator) it is perhaps not surprising that Ofwat should also be subject to the same level of scrutiny. However, there are significant differences, particularly in the context of competition and customer choice, between the two sectors. It will therefore be interesting to compare the outcome of the two reviews to understand whether, and if so how, the regulatory governance approach needs to differ going forward.

As to the new non-emergency health service number, there appears to be some confusion about the future status of the new service. Conflicting statements from the Minister in charge make it difficult to assess whether the new service will, once it is operational nationwide, replace the existing NHS Direct or whether the change is merely a cosmetic one involving a change of telephone number which is free to call at point of use. Although the most recent statement indicates that the latter position is the correct one, the Department of Health's website does not reflect this. It quite clearly states that the "NHS 111 telephone number will eventually replace NHS Direct when it is rolled out nationally". The confusion is a little compounded by the fact that the pilot in County Durham and Darlington is being trialled by the North East Ambulance Service Trust - a NHS Trust which is quite separate and distinct from the NHS Direct Trust.

Regional and Local Government

  1. Cleaner streets
    The Coalition wants councils to remove what it terms as 'street clutter', e.g. unnecessary signs, railings, bollards, etc. It believes there is too much unnecessary street furniture and that a clear out will enable neighbourhoods to reclaim their character, councils to save money, and the public to navigate the streets more easily.
  2. Fair deal for travellers
    The Coalition proposes to give the travelling community the same rights and responsibilities as other mobile home residents, with the caveat that it must 'play by the rules'. The intention is that this levelling of the playing field, along with the implementation of other housing measures - including, for example, incentives on councils to build new homes and revision of planning enforcement powers which are to be included in the Localism Bill - will help reduce the tension between travellers and local communities which can be created by the current rules and to provide a fairer system for all.
  3. Funding for Local Government Improvement Organisations
    The Coalition is proposing to transfer responsibility from central to local government, for determining how funding designated for council service improvement and training is utilised. The funding, known as the Revenue Support Grant, is presently deducted from the local government pot and is given direct by central government to nine local improvement bodies that provide services to local authorities. It is proposed that in future there will be no ring-fencing of this money, but instead it will be allocated to a local government body which will determine how it can best be used to improve council services and allocate it to local authorities accordingly.

Our comment:

Many local authorities take advantage of their street 'space' by using it for advertising purposes in order to generate additional income. The new Coalition missive on street cutter may therefore be unwelcome to these authorities, particularly in an age where they are facing further financial pressures and constraints including reductions in central government funding. This will not be the only example of what are sure to be a series of tensions between the Coalition's aspirations for local communities and the practical realities faced by councils which will need to raise revenue from every possible source in order to balance the books and preserve essential services.

The proposal relating to local Government Improvement Organisations is a clear example of the localism initiative in action. The Local Government Association, which initially called for the change, has indicated that payment of the funding to a single body would deliver efficiency savings. Also, that as a result of such efficiencies, the total amount of funding (currently around £45 million) could be reduced by 30% (although of course the total amount may in any event be reduced in the forthcoming Spending Review).

The above analysis was written by Ravi Randhawa in Wragge & Co's Public Law & Regulation team.

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3 Regulation

Reducing Regulation

  1. Byelaw powers
    English councils are to be given the power to review, revoke and make local byelaws without requiring a stamp of approval from Whitehall. Councils will need to consult local residents on the need for taking such action. Legislative changes are expected early in 2011.

Our comment:

This is an obvious and easy way to fulfil two strands of the Coalition's overarching policy direction - it seeks to reduce unnecessary regulation and devolve greater power to localities. It also allowed the Government to achieve some nice headlines by pointing out the number of inane and redundant local laws which are still on the books - prohibitions against placing towels on the Promenade in Blackpool (no doubt one of the least of that town's problems) and fish frying in Gloucester (ditto).

In practice, precisely because these rules are arcane and unenforced, the new freedoms for local authorities are very unlikely to make any real difference to the regulatory burden, or lives, of their residents. But the Coalition is well aware of the importance of symbolism, and this proposal certainly has a symbolic appeal, adopting a new approach to which it would be hard to object.

The real story here is in fact not that some now outdated local laws remain on the books, but that councils currently need to get permission from Whitehall to repeal them. That provision has long since had its day.

Reorganisation of Regulation

  1. Advertising Regulation
    Under a new industry agreement, the Advertising Standards Authority, a public authority which is independent of government, is to gain greater powers in March 2011 to regulate all types of online advertising in the same way as other non-broadcast advertising media (i.e. excluding television and radio). Currently the ASA can only regulate paid-for space and sales promotions on the internet, and cannot intervene in respect of advertising on social utilities such as Facebook, or on the advertiser's own website. The change will mean that many more advertisers will become subject to regulation.

Our comment:

Given the important function of the ASA to protect consumers from misleading advertising, and to ensure social responsibility and the protection of children through advertising, it seemed only a matter of time until the internet was fully harmonised with the regime affecting other non-broadcast media marketing.

This is not an initiative commenced under, or driven by, the Coalition Government. But we include it here because it exemplifies the type of voluntary regulation scheme that the Coalition has said that it will actively encourage. The last administration, was suspicious of self-regulation and sought to dismantle regulatory arrangements which were not directly within the sphere of government, particularly in the area of professional regulation. In contrast, the Coalition is encouraging all sectors to promote schemes which avoid centrally imposed rules.

The ASA has long been a standard bearer for this type of approach, and the recent development shows that this type of regulation can be at least as adaptable as any other to changes in the environment in which it operates. But, this is a model that has been copied with a surprising lack of frequently in other sectors.

The above analysis was written by Robyn Farmer in Wragge & Co's Public Law & Regulation team.

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4 Money and everything else

Spending

  1. The Spending Review
    The outcome of the Spending Review is not due to be announced until 20 October. However, a Treasury spokesman has confirmed that five government departments have already agreed their budget cuts (assumed to be in the region of 25%). The first five to do so are the Foreign Office, the Cabinet Office, HM Treasury itself, the Department for Communities and Local Government, and the Department for Environment, Food and Rural Affairs.

    Having been at the vanguard of departments agreeing their budgets, the Secretaries of State for the latter two departments have been given seats on the Coalition's so-called 'Star Chamber', which will adjudicate disputes between other departments and the Treasury in relation to budget cuts.
  2. Superannuation Bill
    The Superannuation Bill will cap the compulsory severance pay for civil servants at 12 months' salary - a significant restriction of the current rights. During the short session of Parliament that followed the summer recess and preceded the break for party conferences, it passed its second reading and completed public committee stage in the House of Commons. It has now been sent for report stage in the Commons which is due to take place on 13 October.
  3. The Spending Challenge
    HM Treasury has announced that at least three of the suggestions made by members of the public on the Coalition's Spending Challenge website have been adopted (with others said to remain under consideration). The winning three are:
    • Reducing the number of criminal records checks for junior doctors.
    • Distributing national insurance numbers by letter rather than plastic card.
    • Increasing the sale of surplus government equipment by means of an online auction site.
  4. Office for Budget Responsibility
    The Treasury Select Committee has approved the appointment of Robert Chote as the Chair of the Office for Budget Responsibility as a replacement for its first head, Sir Alan Budd, whose period of office was distinctly brief.
  5. Scientific Research Funding
    The Secretary of State for Business Innovation and Skills has suggested that there are likely to be material cuts in the government budget for science and research, which is currently £4.3 billion per annum. He suggested a greater focus on the output value of research and said that "there is no justification for taxpayers' money being used to support research which is neither commercially useful nor theoretically outstanding".

Our comment:

We remain in a 'phoney war' so far as the Spending Review is concerned. None of the departments which have already settled their budget are traditional 'big spending' departments. Many internal debates in government are surfacing in the public domain from time to time, like the ripples from an undersea earthquake, as both HM Treasury and the affected departments seek to gain some leverage. The replacement for the nuclear deterrent and additional cuts to the welfare budget (above the £11 billion already announced in the June emergency budget) are clearly major areas of contention. Given the scale of the cuts about to be imposed, it is perhaps surprising that fewer stories have yet to be played out in the media.

Paving the way for the major departmental cuts ahead is the Superannuation Bill. There will be no legislation in this Parliament, which makes such a major change in so few words. In its mere two clauses, it creates a limit on the value of civil service redundancy payments which will make wide-scale redundancies of civil servants affordable in the current fiscal climate. Since such redundancies are an inevitable consequence of the major cuts proposed as part of the Spending Review, it is no exaggeration to say that the Review could hardly be given effect without the Bill. The Coalition expects to pass the Bill during the autumn, almost certainly unleashing a wave of redundancies in the early part of 2011 as the cuts are implemented.

Given the continuing scale of the budget deficit (reported in the introduction to this edition of Coalition Watch) and the uncertainties over the effect of public sector cuts on the wider economy, the independent forecasting role of the Office for Budget Responsibility could hardly be more important. Fortunately, its new Chair, Robert Chote, has strong credentials. Previously director of the highly-regarded and unimpeachably independent Institute for Fiscal Studies, he has a solid track record in producing impartial analyses of government financial data. It has to be hoped, however, that he survives in post for longer than his predecessor.

Privatisations

  1. Royal Mail
    The Secretary of State for Business, Innovation and Skills has announced that the Coalition is committed to the privatisation of Royal Mail.

    The announcement follows an updated report from Richard Hooper identifying three areas key to preserving the universal postal service: an injection of private sector capital; resolution of problems relating to the pension deficit and a new regulatory approach entailing the merger of Postcomm and Ofcom.

    Hooper's recommendations include the government taking over Royal Mail's £8 billion pension deficit, the Post Office network remaining in public ownership, and employees taking a stake in the company upon sale or privatisation. The Coalition has committed itself to introduce legislation in the autumn to implement these proposals.

    As part of its proposals, the Coalition has subsequently announced that at least 10% of the shares in Royal Mail will be made available to its employees as part of the privatisation - potentially (subject to take-up) one of the largest employee share schemes ever.

Our comment:

We reported in the last edition of Coalition Watch that Richard Hooper had been asked by the Coalition to revisit and update his report of 2008 into Royal Mail. He has wasted little time in doing so; a sign in part of the degree of urgency and importance that he clearly attaches to the situation at the company.

Certainly the future of Royal Mail presented an intractable problem for the previous government, which knew that something had to be done but found it hard to muster the political will to take radical action in the teeth of strong objections from many of its own MPs. It made abortive attempts on at least two occasions to privatise or part-privatise the company. There will be many within the senior levels of the Opposition who, whatever their public stance, will not be unhappy to see the Coalition having to wrestle with the issue.

Nonetheless, the Coalition is going much further and faster than might have been anticipated. The Coalition Agreement committed it only to seek an injection of private capital into Royal Mail, but it is clear that we are now going to witness a full-scale privatisation of everything except the pension deficit (which no buyer would wish to touch) and the Post Office network (which any commercial buyer would largely wish to close). This may not be hugely popular, but obvious alternatives are in short supply.

The 'Big Society'

  1. Private Universities
    The Minister for Universities and Science has signalled a potential change in legislation to allow more private universities into England's higher education system.

    Following Lord Browne's higher education funding review, due to be published in October, the Coalition is likely to address this issue and whether or not to raise the cap on tuition fees in an Higher Education Bill to be laid before Parliament in autumn 2011.
  2. National Survey of Charities and Social Enterprises
    The Coalition has launched a second wave of the National Survey of Charities and Social Enterprises, with the aim of understanding better the environment within which local third sector organisations operate. All organisations which fall into this category are encouraged to respond to the survey, which can be done using an online form, by 11 October. As reported in previous editions of Coalition Watch, a review of the regulatory framework within which these organisations operate is the basis for an important element of the Coalition's policy of trying to promote greater social involvement.
  3. Free schools
    The Secretary of State for Education has announced that 16 proposals to establish free schools are ready to progress to the next stage, which will require their sponsors to produce a full business case. Those which have their business cases approved could become the first free schools operation in time for the academic year beginning in September 2011.
  4. Academies
    The National Audit Office has produced a report on the Academies' programme, broadly positive as to the improvement in the rates of academic attainment being achieved by Academy schools when compared with their predecessors, but raising questions about value for money in certain cases. The report suggests that the risks to value for money may be increased with the challenges posed by the greater number of Academies now being promoted under the Coalition programme. The Coalition responded by reaffirming its commitment to the promotion of Academies.

Our comments:

Education issues dominate the Big Society agenda in this edition of Coalition Watch, and that is hardly a surprise. The Coalition has made little secret of its desire to give local schools greater independence of government, while continuing to provide them with public funding. But, in the area of universities it is considering going one step further and actively promoting private universities.

In a sense, all English universities are of course private, since none are owned or governed by the State. But all - excepting the private University of Buckingham - also accept public funding and the constraints that come with it. The Coalition is effectively considering whether there it is desirable to encourage more institutions like Buckingham which operate on a purely private basis. The real story here is perhaps not so much whether new institutions will be created on that model, but whether some of our existing major universities - competing in the international market for students with institutions such as Harvard and Yale - will change their current direction and adopt a purely private model. Would the Coalition really welcome that kind of radical shift in education?

The above analysis was written by John Cooper in Wragge & Co's Public Law & Regulation team.

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5 Outstanding/Omissions:

In each edition of Coalition Watch we draw attention to an area in which the Coalition, for all its activism elsewhere, appears to suffer from an uncharacteristic attack of reticence.

This edition's subject is...the beautiful game.

Len Shackleton, a great Newcastle and Sunderland forward in the years immediately following the Second World War, famously wrote in his autobiography a chapter entitled 'The Average Director's Knowledge of Football'. It consisted of a single, blank, page.

What is the average Coalition Minister's knowledge of football?

The Coalition Agreement contained the promise "We will encourage the reform of football governance rules to support the co-operative ownership of football clubs by supporters". But what exactly did this mean? What is it for a government to 'encourage' something to happen when it has the power to impose a solution?

Some context is required. The English Premier League has, by any standards, been one of the great business success stories of the last two decades - converting a moribund national league, struggling to compete after the post-Heysel exclusion of its leading clubs from European tournaments, into a major global success story. It has also - a point not remarked upon nearly often enough, and much to its credit - spread the wealth of its lucrative international television deals across its members and into the lower-tier Football League. This is a much superior model to national leagues such as the Spanish Primera Liga in which clubs are entitled to sell television rights individually, permanently enriching and entrenching the positions of the very biggest.

But, in spite of these outstanding successes, someone has clearly taken their eye off the ball when it comes to the governance of the clubs themselves. The recent financial collapse of Portsmouth, the deeply-unpopular leveraged buy-out of Manchester Utd, and the ongoing ownership/debt shipwreck at England's most successful club, Liverpool, are both an embarrassment and a potential threat to the game. Examples of similar failures in the Football League could be multiplied. And the Premier League's success has served to drain power and influence away from the Football Association, notionally the game's governing body, but now a neutered (and leaderless) shell capable of building the world's most expensive football stadium but not of effectively regulating its own sport.

Somehow, these issues need urgently to be addressed, while not compromising the success of English football as a global product. The more successful and important the national game becomes, the more it is necessary to ensure that it can be regulated in the national interest. And, football clubs are more than businesses; they are a cohesive focal point at the heart of local communities - an active example of a functioning Big Society long before the people who coined that term were born. For the communities in which they are based, they are just as much 'too important to be allowed to fail' as the banks expensively rescued from the effects of the credit crunch.

In addition, it is not obvious that football, however well-meaning its leaders may be, is in a position to sort out its governance without some external intervention. The byzantine power relationships that bind the clubs, the FA, the Premier League, the Football League, and their various sponsors and owners, are not obviously a fertile ground for the kind of compromises necessary for creating an effective governance system in which any one might be required to cede authority to another.

On first taking office, the Minister for Sport talked tough about the meaning of the Coalition Agreement. He told The Times newspaper on 18 May "We'll give football the chance to sort itself out first by seeing how they plan to reform over the summer, and if it doesn't work then the Government will step in. We need to take a serious look at reforming the governance and structure of football in this country."

However, as the summer is all too obviously over, it has become clear that there is little prospect of the Coalition delivering on this talk. Indeed the Minister seemed to be backing down from it in no time at all when he told the House of Commons on 21 June: "The Government will encourage the Football Association, Premier League, and Football League to work closely together to improve the governance and regulation of the game. This includes exploring better ways to involve supporters in their local clubs."

Notably there was something here about encouragement, but nothing at all about 'stepping in'. A month is perhaps quite long enough for civil servants, in the finest tradition, to remind a Minister that it really is all very difficult.

Frustrated by the absence of action, a group of MPs led by the Member for Liverpool Walton organised a Westminster Hall debate during the recent short session of Parliament. It proved to be one of the most passionate and certainly the most well-attended of recent debates (attracting even more MPs than were present to excoriate the much disliked Independent Parliamentary Standards Authority). And it produced a broad consensus about the need to take steps to reform the governance of football. However, in his response, the Minister for Sport stepped a long way back from promising direct action. He said:

"The twin aims of greater supporter involvement in running football clubs and the reform of football governance are shared across the political spectrum and are, as the [Member for Liverpool Walton] correctly said, part of the Coalition Agreement. However, I have to tell him that, although the issue is widely agreed in this place, it is not entirely shared in the wider football family. There is a battle to be fought to convince the football family of the merits of this case."

In an ideal world, football would indeed get its own house in order. But this seems, to put it mildly, far from imminent.

The Coalition has not elsewhere confined itself to the role convincing everyone of the need to change their own ways. It seems, however, that when it comes to football, 'encouraging' others means literally just that.

The above analysis was written by John Cooper in Wragge & Co's Public Law & Regulation team.

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If there is anything you would like us to cover in future editions of Coalition Watch or wish to comment on from this edition, please feel free to email the team at publiclawandregulation@wragge.com - we welcome your comments.

 

Key Contact

John Cooper, partner, +44 (0)870 730 2878, john_cooper@wragge.com

This analysis may contain information of general interest about current legal issues, but does not give legal advice.