Select Committee on Transport, Local Government and the Regions Memoranda


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.  INTRODUCTION

  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 OF THE LOCAL GOVERNMENT BILL TO SPORT

  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 OF SPORT TO THE GOVERNMENT'S AGENDA

  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.  COMMUNITY AMATEUR SPORTS CLUBS

  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 relief.

6.  RESEARCH INTO THE IMPACT OF THE LOCAL GOVERNMENT GREEN PAPER

  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 Green Paper.

  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 clubs.

  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 SPORT IN PERIL

  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.  CONCLUSION

  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



 
previous page contents

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 8 July 2002