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The Economic Secretary to the Treasury (John Healey): I welcome the cross-party support expressed by the hon. Members for Arundel and South Downs (Mr. Flight) and for Kingston and Surbiton (Mr. Davey) for the general increase in support for community and amateur sports clubs.

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The provisions that the Government, together with the Charity Commission, have put in place offer the scope for local sports clubs to become charities if they choose and if they are eligible, and they offer significant support for clubs that are not able or not willing to become a charity. What the hon. Member for Arundel and South Downs proposes does not tidy up the provisions that the Government propose; it does not reduce the complexity; and it does not reduce the inequity that the hon. Gentleman thinks he sees in what we are proposing. I shall explain why in a moment.

10.30 pm

The hon. Member for Ryedale (Mr. Greenway) said that he had wanted to speak about these matters for a long time. Indeed, he has a long-standing interest in local sports and is heavily involved in his local area. I know of his activities and I know the area well, and the hon. Gentleman spoke knowledgeably on the subject.

On business rate relief, that was not part of the tax package that was the subject of the consultation that led to the provisions in the Bill. Discretionary rate relief, as the hon. Gentleman rightly points out, is a matter for local authorities. The Office of the Deputy Prime Minister has issued a consultation paper on revising the guidance on rate relief for charities and other non-profit-making bodies. The aim is to provide a more consistent basis for and approach to decision making in local authorities on these matters. The issue that the hon. Gentleman raises is a matter for the Office of the Deputy Prime Minister, not for a Finance Bill. The measures contained in the Bill and in the tax package are generous by any measure and they are widely welcomed.

New clause 7, as the hon. Member for Arundel and South Downs briefly explained, seeks to extend all the exemptions that charities enjoy on their income to clubs which have as their object the promotion within the community of amateur sport, physical education or the provision of sports facilities. The Opposition claim that the new clause would give sports clubs parity with charity, which clubs have sought, as least as regards the exemptions on their income.

Clubs can already achieve parity by becoming charities, following the Charity Commission's decision to relax its approach, announced alongside the pre-Budget report in November last year. If a sports club wants to be treated as a charity, it can now be treated as a charity, and it should become a charity.

Mr. Flight: I thank the Minister for allowing me to intervene. My understanding, as I mentioned, is that the Charity Commission has made it clear that not all amateur sports clubs can become charities. They must be able to meet the Charity Commissioners' designation of health and fitness. I read out an illustrative list showing that there are various kinds of amateur sports clubs that would qualify for the measures in the Bill, but cannot become charities.

John Healey: The hon. Gentleman is perfectly right. The broadening of the definition of charitable purposes that the Charity Commission confirmed in November last year included two activities that it will now recognise as charitable: first,

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and secondly,

That leaves certain sports which Sport England would recognise as a sport, such as angling, pool, billiards and snooker, outside the definition. Hence, we are bringing in tax provisions in the Bill so that clubs that cannot qualify as a charity may nevertheless benefit to a significant extent from the support that we want to put in place to back their activities.

Amendment No. 5 would give sports clubs access to all the reliefs that charities enjoy on various sources of income, including the right to reclaim tax on payments made under gift aid. Amendment No. 6 would remove the restriction of reliefs where a sports club spends its funds on non-qualifying purposes—that is, not in providing facilities for or promoting participation in an eligible sport.

Amendment No. 7 would give donors to sports clubs access to all the incentives that donors to charities enjoy. It would also allow members of sports clubs to use gift aid for their membership fees. That is not charity parity, but charity plus, and it is not justified.

It would be misconceived to allow any organisation not prepared to meet the requirements or the responsibilities of becoming a charity to enjoy the full range of exemptions available to charities. It is not our intention to put community and amateur sports clubs in a better position than charities or other businesses.

Furthermore, including membership subscriptions in the gift aid scheme would not be appropriate. Gift aid is intended to increase the value of gifts to charity by allowing taxpayers to add to their donation the basic rate of tax that they have paid. It is not meant to subsidise the payments that people make to purchase their use of leisure and sporting facilities.

The principal purpose of the provision in the Bill is to support local sports clubs, which pay an important role in all our communities. Every Member could cite a number of local clubs in their constituency that could benefit from this support. They play such an important role that we want to support them. In my own area, next door to where we live in Rawmarsh, is the Upper Haugh cricket club and the St. Joseph's junior football club. Those clubs allow people to participate in sport, and are run by people who give up their time willingly and voluntarily, and have often done so for many years. This is the first time that the Government are putting in place through the tax system support and recognition for their contribution to their communities.

Our proposals, as set out in clause 57 and schedule 18, provide alternative support for clubs that cannot or do not want to become registered charities. We received more than 2,500 responses to the consultation. The sector told us that it wanted a scheme with less regulatory requirements than the Charity Commission that was administered by the Inland Revenue. That is what they have got. If clubs meet the criteria in schedule 18, they will be able to enjoy most of the reliefs and exemptions usually associated with charitable status, including many reliefs for donors. The package is targeted in particular at helping the smallest sports clubs without triggering the level of regulation required of charities.

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I shall show the strength of support for this provision. After the proposals were first set out in the pre-Budget report in November last year, Elsa Davies, director of the National Playing Fields Association, said in December:

In response to the Budget on 17 April, the chairman of the Central Council of Physical Recreation said:

The new clause would introduce a more complicated regime, not a tidier one. It would require the Secretary of State to decide what activities should qualify for this relief, and to set up additional procedures for approving individual clubs. It would require clubs to apply to the Inland Revenue for exemptions.

Our proposals would define qualifying sports by reference to the list of recognised activities maintained by the Sports Council, to which I have already referred. It seems to us to be best placed to make such decisions. That would allow clubs to register with the Inland Revenue, which would be responsible for administering the exemptions.

These provisions have been the subject of wide consultation and the object of equally wide welcome. I hope that I have explained to the House why the Government's proposals, not those in the new clause or the amendments, should be the basis for the Bill's support for community sports clubs. On that basis, I encourage the hon. Member for Arundel and South Downs to withdraw the new clause. If he will not, I urge my right hon. and hon. Friends to vote it down.

Mr. Flight: Half a pint is better than no pint, but our new clause and amendments are clear. They simply ask why on earth we should have slightly different rules under this mechanism. Instead, we should have a system under which amateur sports clubs get the same tax breaks either under the Bill or as charities. There will be confusion as a result of the difference, and I am afraid that there is some disappointment.

Our lawyers advise us that there is nothing more in what we propose, although I have specifically raised the issue of membership. Our proposals seem to us by far the better solution. The Treasury is proving that it can do it as it wishes, as it is already doing, but that is simply to avoid what is called the golf club problem. We think that what we propose is right, and we are not satisfied with the Government's measures—welcome though they are as half a pint. Sports clubs could easily have been treated the same as charities.

Question put, That the clause be read a Second time:—

The House divided: Ayes 179, Noes 296.

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