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Standing Committee F
Tuesday 11 June 2002
[Mr. Joe Benton in the Chair]
(Except clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134 and schedules 1, 5 and 38)
Relief for community amateur sports clubs
Mr. Howard Flight (Arundel and South Downs): I beg to move amendment No. 69, in page 238, line 37, at end insert
'and may include a club which is incorporated'.
The Chairman: With this it will be convenient to take amendment No. 70, in page 239, line 22, at end insert
'(4) A club does not cease to be open to the whole community under (1) above if it has rules allowing it to expel members for inappropriate or disruptive behaviour.'.
Mr. Flight: Good morning, Mr. Benton. I welcome you back to chairing our deliberations. I must apologise to the Committee because I must go and speak in the financial services debate at 11 o'clock. I hope that we shall have completed schedule 18 by that time, but if not my hon. Friends will take over.
I hope that there is a chance of a stand part debate, because I recollect that when we were debating clause 57 before the holiday we had discussed its principle but had not wound up the subject. Amendments Nos. 69 and 70 are specific and seek to extend eligibility for the new relief to additional types of club. We want to stress the major point that the new relief is unnecessarily complex and restrictive. It would have been better to give qualifying sports clubs the same tax relief measures as those enjoyed by charities. The Law Society says that the relief is welcome, but that it will add to, rather than replace, existing tax reliefs. The relief will therefore add to the complexity of existing reliefs, and that could have been avoided by bringing all sports clubs under a single regime, which is something that we sought to redress with new clause 3.
I shall divert to apologise for having initially omitted to welcome the hon. Member for Wentworth (John Healey) to his new post of Economic Secretary to the Treasury, and I congratulate him on that. We share views about the importance of skills training and have spoken together about that.
The Law Society also comments that it should be made clear that ''clubs'' extends to corporate bodies, provided they have complied with amateur requirements. Although the principles in paragraph 2 are laudable, the question is whether they will impose unforeseen constraints on the clubs concerned. It should be clear, for example, that a club does not cease
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to be open to the whole community because it has rules allowing its members to be expelled for inappropriate or disruptive behaviour, so an addition to paragraph 2 should be made.
The reliefs for donors in paragraph 9(3) should extend to include relief for a club from stamp duty on any assets that it acquires. The provisions allowing gifts of assets to charities should also extend to sports clubs. Paragraph 14 contains the definition of an eligible sport, which will be designated by statutory instrument. It might have been easier to include a list of sports in the legislation. Given the adverse tax consequences that follow from a club ceasing either to be registered or to hold property for qualifying purposes, surely a list of eligible sports clubs could be laid out in statute to create certainty on the core list of activities that can be undertaken to give rise to the relevant tax reliefs. The two amendments are designed to address those issues.
One point has come to my attention since our previous discussions. The Treasury proposals last November contained a specific pledge to permit 80 per cent. rates relief to qualifying sports clubs. That seems to have disappeared and the promised relief is less generous than that suggested by the Government during the election campaign. I have received many complaints from sports clubs that the package is not what they had been led to believe. We believe that parity with charity is the correct approach. The costs would not be hugely material but the administration would be much easier.
Dr. John Pugh (Southport): During the recess, I occupied myself usefully with this amendment by consulting the local sports council in Sefton, which is, as you know, Mr. Benton, a reputable and sound body. I gave it the good news about the tax incentives and benefits, but its response was a little muted because the world of large donations and trading incomes of £15,000 plus seems a little foreign to it. Its main interest each year is to get by without being in debt and its main financial preoccupation is meeting the rates bill. The registration scheme poses a dilemma: if it follows the route of charities, mandatory rates relief will be 80 per cent., but if it goes for registration, there will be no such benefit and discretionary rates relief from the local authority could be adversely affected. There was not enormous delight because the benefits were thought to be rather modest.
One matter of concern, which is the thrust of the amendment, is that the Treasury has reserved to itself the right to define what is an eligible sport. There is an uncontentious mechanism to get around that and to get the Treasury off the hook. For all its expertise, the Treasury is not good at defining sports because it is not an area in which it has a substantial body of knowledge. I should have thought that eligible sports could be as well defined by Sport England as by anyone else and certainly better than the Treasury, unless the object of the Treasury in defining eligible sports is to control the rate of tax relief.
Will the Treasury evaluate whether the adjustment is successful in encouraging sports clubs? If there is no evaluation, there is a danger that what the measure
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achieves might be cosmetic. I do not think that that is the Treasury's intention and it should explain how it will evaluate the success of the measure.
The Economic Secretary to the Treasury (John Healey): It is a privilege and a pleasure to join this Committee, albeit in slightly unusual circumstances, and my hon. Friends on the Front Bench. It is a particular pleasure to join the Committee under your chairmanship, Mr. Benton, and that of your co-Chairman, Mr. Gale. It is clear from the Official Report that your firm and fair chairmanship has helped the Committee to make good progress.
I could not help noticing in the Official Report that the first sitting was peppered with sporting metaphors from jousting to ''Just a Minute'' and from saloon car racing to stunt wrestling. My right hon. Friend the Chief Secretary to the Treasury, whose brief I have inherited but, confusingly for some, not his title--he is still a member of the Committee--was almost prescient in his reference to the World Wrestling Federation because I feel like a tag wrestler being introduced into the contest in the middle of a round. However, I shall do my best to pick up the excellent work that he has done and to play my part on the Treasury's excellent Front-Bench team.
Although we are discussing the narrow amendments Nos. 69 and 70, the hon. Members for Arundel and South Downs (Mr. Flight) and for Southport (Dr. Pugh) introduced points that range much wider. With your indulgence, Mr. Benton, I shall deal with them as well as the amendments.
I was disappointed to hear the hon. Member for Southport dismiss the clause as modest. In many ways, that talks down the value of the measures, which are widely welcomed by sporting federations and, more important, the local community sports clubs that they are designed to benefit. If the hon. Gentleman's experience in his constituency was reflected in his comments, I must tell him that it is not the universal reaction that many of my hon. Friends and I have had from sports clubs in our patch.
Both hon. Gentlemen raised the question of business rate relief. I am aware that sports clubs and some of their organisations are making a case for that, but I point out to Opposition Members that decisions on business rates are not for the Treasury but for the Department in charge of local government policy and finance. The matter cannot be dealt with in the Finance Bill. However, the measures in the Bill represent a generous package of support for local community sports clubs.
Both hon. Gentlemen also posed a question about the Treasury definition of sports.
Mr. Flight: I am aware that the business rates issue must be dealt with under separate legislation, but Sport England's and my understanding is that it will entail relief of only 50 per cent., not 80 per cent., which everyone was led to expect.
John Healey: Business rates relief for sports clubs that are not charities is a matter of local discretion. A basic principle of local government introduces a
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distinction between charities and non-charitable sports clubs. If I may, I shall deal first with a further point that the hon. Gentleman raised in his brief introductory remarks and then revert to the question of who defines eligible sports and sports clubs.
The hon. Gentleman's point that the measure does not offer full ''parity with charity'' is true. However, the Bill includes a generous package in parallel to what is available for charities. The Charity Commission's decision last November to recognise as charitable those sports clubs that are engaged in the promotion
''of community participation in healthy recreation''
allows many sports clubs to achieve charitable status if they choose. The crucial point is that it is for the clubs to decide whether such a status suits their purposes and membership.
If clubs decide, for whatever reason, that they do not wish to be charities, there is no reason why they should enjoy exactly the same benefits as charities, as they would not have to fulfil exactly the same requirements and responsibilities as charities, which are regulated by the Charity Commission. We are trying to strike a balance between supporting the clubs and respecting and taking into account the interests of registered charities.
Let me turn to the question of the Treasury defining sport. The hon. Member for Southport said that he doubted that the Treasury had the expertise to make such judgments. My hon. Friend the Member for Bradford, South (Mr. Sutcliffe) might disagree with him, but the hon. Member for Southport is right. The Treasury will not take decisions about what should be classified as a sport. Sport England already has a list of recognised activities, and we have decided that it would be most appropriateinitially, at leastto link the definition of eligible sport for the purposes of clause 57 to that list, rather than have Treasury Ministers of whatever description proposing what should constitute an eligible sport. The matter can be dealt with by statutory instrument, which can be readily amended should circumstances require it.