Memorandum by Central Council of Physical
Recreation (CCPR) (LGB 31)
1. KEY RECOMMENDATION
1.1 It is important to the future of voluntary
sport clubs that the Local Government Bill includes a clause on
mandatory rate relief at 80% for the new Inland Revenue registered
Community Amateur Sports Clubs. This will have a net cost of approximately
£20 million but will provide immense benefits both to sport
and to the government's policies for health, education, social
inclusion and crime reduction.
2.1 On behalf of the 265 member national
governing bodies of sport and recreation, the CCPR is pleased
to summit evidence to the inquiry into the draft Local Government
Bill. This paper builds upon three recent pieces of research undertaken
into business rates and voluntary sports clubs.
2.2 Voluntary sports clubs are concerned
that the Draft Bill could leave them worse off, thereby undermining
the Government's commitment to support them.
3. THE IMPORTANCE
3.1 There are over 110,000 voluntary sports
clubs in Britain. These clubs are run by volunteers and provide
sporting opportunities for some six million people.
3.2 Voluntary sports clubs are subject to
Uniform Business Rates. CCPR research has identified that business
rates are the single biggest tax faced by voluntary sports clubs,
accounting for some 10% of turnover.
4. THE IMPORTANCE
4.1 ". . .as many people now recognise,
[sport] is one of the best anti-crime policies that we could have.
It is also as good a health and education policy as virtually
any other. It deserves to be supported and we will support it."
The Prime Minister (Hansard: 20 March 2002)
5.1 The Committee will be aware that in
the last Budget, the Chancellor introduced a special tax status
for Community Amateur Sports Clubs (CASCs). These exemptions were
designed to support those clubs that are unable to become charities.
5.2 This decision was welcomed by sport,
as it was felt that the proposals for charitable status would
exclude too many clubs. The twin track approach was called for
by the overwhelming majority of the 2,400 clubs that responded
to the Treasury's 2001 consultation on the best way to support
voluntary sports clubs.
5.3 The Treasury is unable to include business
rates within its exemptions, as this is the remit of what is now
the Office of the Deputy Prime Minister. Many national governing
bodies, including rugby and cricket, are of the opinion that the
Government's proposals for promoting CASCs will be of limited
value to their member clubs unless the Inland Revenue tax exemptions
include mandatory rate relief at 80 per cent.
5.5 It is understood that the former Minister
for Sport, Kate Hoey MP, had received written assurances from
the then Local Government Minister, Hillary Armstrong MP, that
any Inland Revenue tax exemptions for CASCs would be supported
by 80 per cent mandatory rate relief.
5.6 A number of clubs have recently reported
that their local authority has reduced discretionary rate relief
and is encouraging them to become charities. This would reduce
local authority expenditure. As the Committee will be aware, mandatory
rate relief for charities can be claimed back from central government
whereas the authority must fund 25 per cent of any discretionary
6. RESEARCH INTO
6.1 In September 2001, the CCPR published
"Hit and Miss - Future Ratings of Voluntary Sports Clubs".
The research examined in depth the Local Government Green Paper
proposals to give voluntary sports clubs the same mandatory rate
relief as small businesses.
6.2 The CCPR undertook the research due
to the lack of any detailed statistical evidence to support the
proposals for voluntary sports clubs within the Local Government
6.3 The report found that many clubs believed
that the proposals for limited mandatory rate relief would reduce
their discretionary rate relief and leave them worse off. The
proposals would also complicate the ratings system for sports
6.4 The draft Bill will penalise larger
voluntary sports clubs at the same time as the Government's Plan
for Sport looks to encourage larger multi-sports clubs.
7. BOOM OR
BUST? - VOLUNTARY
7.1 On 26 March 2002, the CCPR published
"Boom or Bust?" an analysis of the financial
state of the voluntary sports club sector in Britain. The research
presented a picture of a sector limping along on the edge of a
financial precipice, over-burdened by red tape. There are some
40,000 clubs in financial difficulty.
7.2 The key findings were that the number
of voluntary sports clubs is decreasing at an alarming rate. Things
will get worse without tax exemptions from Government. Only 22
per cent of clubs have an income greater than their expenditure
and 34 per cent described their financial position as precarious.
8. COST BENEFIT
8.1 The CCPR has calculated that the gross
cost of giving mandatory rate relief at 80 per cent to all CASCs
would be in the region of £35 million. However, as some local
authorities already give limited discretionary rate relief the
net cost would be closer to £20 million. This should be seen
against the benefits to social inclusion, health, education and
crime reduction provided by voluntary sports clubs.
9.1 "A Sporting Chance"
a statistical analysis of Rate Relief Policies of Local Authorities
in 1999 found that sports clubs in the poorest areas were least
likely to receive rate relief. This is particularly unfortunate
as sport can be a key component in neighbourhood renewal and social
inclusion programmes. The final version of the Bill should address
this anomaly by including mandatory rate relief at 80 per cent
for all Inland Revenue registered CASCs.
25 June 2002