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Lord Bassam of Brighton: It is worth spelling out what the impact of the amendments would be. I am grateful for the declaration of interest. No doubt when the previous Government scrapped rates and introduced the poll tax, there was much grief in the estate agency world. They were denied the prospect of further work until council tax was introduced. As the noble Earl, Lord Caithness, said, it makes work for the estate agency world.
The formula for the calculation of small business relief is to be found in Clause 63(3). It is clearly set out with the letters "D" and "E", which are defined in Clause 63(5). "D" is the rating multiplier to be applied to a property receiving small property rate relief and "E" is the amount by which the resulting bill will reduce by the, and through the, application of relief.
Amendment No. 136, by striking out subsection (5), would leave "D" and "E" undefined. On its own, it would wreck the clause and destroy the small business relief scheme. Research published by the old Department of the Environment in 1995 showed rates to be a specially heavy burden for small businesses, accounting for a significantly higher proportion of operating profits than in the case of larger businesses.
In this clause, we are trying to implement the relief scheme set up in England, as set out in the White Paper published in December 2001. The mandatory rate relief will be available for properties with rateable values of less than £8,000. The percentage of relief will be on a sliding scale. There will be 50 per cent relief for properties with rateable values up to £3,000. The percentage of relief will then taper off gradually so that, for example, properties with rateable values of £6,000 will have their bills cut by 20 per cent. To qualify for relief, a business will need to apply to the local authority, declaring that it occupies only the one property for which it is claiming relief.
In England, the relief scheme will be funded by a small addition of no more than 2 per cent to the bills of other ratepayers, so there is a recalibration, a rebalancing. The means by which this can be done are contained in one of the provisions in Clause 64.
Obviously, this is about striking the right balance between different classes of ratepayer. It is also about affordability. We believe that the scheme we have devised for England strikes a fair and not unreasonable balance between the interests of small businesses which will be receiving the relief and other ratepayers who will be funding it, while also being straightforward to operate. The noble Earl said it was a straightforward scheme, and it certainly is. That was the beauty of the old domestic rating scheme too.
The purpose of Amendment No. 137 is to set in concrete, effectively, the amounts of relief to be provided by writing these into the primary legislation. The level of relief in the amendment is more generous than that proposed in the White Paper. Properties with rateable values of up to £10,000 would benefit as opposed to the White Paper proposal that the relief should end at £8,000. This amendment would remove any flexibility. At the last revaluation in 2000, rateable values rose on average by about 20 per cent. We therefore raised most relief thresholds accordingly. The amendment would prevent us from doing so in the future in the case of small business rate relief. Perhaps that is not the intention of the movers of the amendment, but that is the effect, and it needs to be understood.
The amendment might, on the face of it, look more generous to businesses, but in practice, because of my point about flexibility in threshold raising, it may not be. It would require a further Act of Parliament to increase the threshold following any future revaluation. As I am sure the noble Earl will accept, that is a cumbersome mechanism with which to make those sort of adjustments.
I hope that that explains the points raised. On the general issue of why this is revenue-neutral, we are looking at a particular class of taxation. I think the noble Earl may be suggesting that the taxpayer at large should fund a scheme of bigger benefit to small businesses. We are ensuring that there is a rebalancing
within one system of taxation which is applied locally and collected for national benefit. I hope that deals with the points raised by the noble Earl.
The Earl of Caithness: I am grateful for that reply, but I thought that the Minister dealt rather in generalities—he spoke of large businesses and small businesses, saying that the Government thought they had a happy medium. But there was no explanation of why the Government had decided on £8,000 as the rateable value threshold. Why is it different from the £10,000 rateable value in Scotland? Why will the Government penalise anybody just above the £8,000 limit? Why is it revenue-neutral? Why is there not some help from the taxpayer? Why are the Government not fulfilling their obligations or their statement of help to small businesses? Perhaps they do not want to help small businesses after all.
The effect of the amendment is, as the Minister said, to leave the introduction of small business rate relief in place but allow for the taxpayer to pay for it. I hope that the noble Lord will have a little more to say. Will he comment any further?
Lord Bassam of Brighton: The only comment I can really make with regard to the noble Earl's point about the Scottish situation is that that is a devolved matter. It is for the Scottish Parliament to determine. If that is what it wishes to do within its own arrangements, that is fine. But we have to act for England in this case, and we have designed this scheme as fit for the purpose that we see as appropriate.
The noble Earl and I can disagree about relative generosity, but the Government think that the clause begins to address some of the problems on which we agree. Perhaps in the past there has been more of a burden on the smaller business ratepayer than the larger business ratepayer. This is the scheme we have come up with—we can disagree about it. We certainly disagree about where the burden should be placed. We think it should be placed within that class of taxation rather than on the taxpayer at large. But this is the scheme we are proposing, and we have taken soundings on it in the past. That is why it is in the Bill.
The Earl of Caithness: I am grateful for that. I warn the Minister that I will come back to this in more detail on Amendments Nos. 139 and 140. That gives the fifth cavalry the chance to come to his aid.
I will want to know the reason for deciding on £8,000. I will also want to know what the Minister estimates as the cost in terms of benefit for small businesses as a result of the existing list. But we can deal with all that when we come to Amendment No. 139. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 137 not moved.]
6.15 p.m.
Lord Phillips of Sudbury moved Amendment No. 138:
- After Clause 63, insert the following new clause—
Lord Phillips of Sudbury: That is a good start.
Lord Bassam of Brighton: The fans have arrived.
Lord Phillips of Sudbury: I think that the happy mumbling is a fair reflection of the fact that this amendment has no enemies. It is no accident that there are supporters from the four corners of the House—the noble Lord, Lord Weatherill, from the Cross Benches, the noble Lord, Lord MacLaurin of Knebworth, former chairman of the England and Wales Cricket Board, from the Conservative Benches, and the noble Lord, Lord Sheppard of Liverpool, from the Labour Benches. All three are extremely sorry that, for various reasons, they cannot be here.
The whole sports world is extremely grateful for the Government's introduction of tax exemptions for community amateur sports clubs in 2002. It was a huge step forward. To be honest, there have not been enough thanks from the sports community as a whole to the Government. One of the reasons, perhaps, is that rates remain the most present and universal expense for clubs, and many councils do not provide relief. As sports clubs are not charities, it is entirely up to councils to decide whether they should exercise their discretion to relieve rates for community amateur sports clubs. It should not be forgotten that, if councils provide such relief, they must pay a quarter of the
The issue was introduced during a debate in the House in 1999, initiated by the late lamented Lord Cowdrey, to which there was a unanimous response. He was concerned about the state of sport in this country, not merely at professional and international level, but throughout society. During that debate, the noble Lord, Lord Sheppard, made an extremely telling remark. He has asked me to quote him as saying,
Why, the Committee may ask, has the sporting world not leapt at the community amateur sports clubs (CASC) exemption? Given that there are around 140,000 sports clubs, why have tens of thousands of applications to register not flooded in? I was going to say that it is a mystery, but it is no longer so. The reason that, at the last count, fewer than 400 clubs had registered as CASCs, is a combination of circumstances peculiar to these wonderful beasts. First, amateur sports clubs have no professional help; secondly, they have a phobia about bureaucracy and think that becoming a CASC, let alone a charity, will lead them into deep bureaucratic ways; and, finally, they are afraid of moving into the unknown and adopting a status from which they cannot withdraw. The survival of many CASCs is extremely tenuous, which I shall discuss in a moment. Rates are the most important factor of all to such clubs, which is why there is a such a low take-up of the CASC exemption.
I am perfectly willing to accept that the Government may not believe us because we said that thousands of clubs would take up the CASC exemption. When the issue was debated in the Commons in January, the Minister, Mr Leslie, said, first, that the Government felt that they needed to wait and see how things worked out vis-à-vis the CASC exemption, and, secondly, that to give rating exemptions to CASCs would be anomalous. We have had long enough—over a year—to see how CASCs develop. Fewer than 400 have registered. Fewer than 40 clubs have registered as charities, which is a possibility that has been available only in the past year or two.
Members whose names are attached to the amendment—and, one could almost say, everyone else—feel that community amateur sports clubs are the lifeblood of England's communities. They reach people that genuinely no other voluntary organisations reach, particularly young tearaways; that is to say, young men and women with a lot of energy but few outlets for it. CASCs provide self-discipline, teamwork skills, self-esteem, community involvement and participation in a way that many will not experience in any other pursuit.
Another feature of CASCs—this goes directly to the point of the amendment and the need to make this further concession to CASCs—is that they are the very
There are more than 5 million members of such clubs in the country, many of whom are young people. Because of those benefits, although we come here as supplicants to seek a further concession, there is a genuine sense that the Government would do their own bidding very effectively by allowing CASCs to have the same rating exemption as charities. The costs—a hugely important consideration—are modest by government spending reckoning.
On 19th December, there was a Written Answer asking how many CASCs were on the rating lists. The answer was:
The calculations carried out by the Central Council for Physical Recreation (CCPR) provide a statistic that I should have given to the Government Front Bench before speaking, but I shall happily provide a copy immediately. It reckons that the cost of 80 per cent mandatory relief for CASCs would be around £10 million a year beyond what the Government currently pay. That assumes a much, much higher take-up for registration of CASCs than the present rather pathetic number.
There is a feeling on this side of the Committee that this concession should have no enemies. Some councils are now starting to say, given the proposed new small business relief, that if a club will not register as a CASC or charity, they will not exercise discretion to give it the relief that it has hitherto provided. For example, Copeland Borough Council has told Whitehaven rugby club just that. It says that if the club does not register as a charity, it will not give it any concession. Given that the discretionary relief is particularly onerous for councils to carry out and is expensive to administer, I have no doubt that many other councils will follow the same line. It should not be forgotten that the many clubs with a rateable value of over £8,000 will find that their rate bills are increased. As I understand it, the new small business relief is supposed to be self-financing, which will place a higher burden on the others.
Many may say that sport is doing fine and ask why we need more concessions. It is not doing fine. When the debate was held in 1999, the general consensus was that sport in this country has many wonderful achievements to its name but that grassroots sport is not doing fine. I have some up-to-date statistics.
In tennis, at elite level, we have two men in the top 100 world rankings, but there are no women in that position. In rugby, on which there was a very big survey recently, 46 per cent of clubs reported a decline in membership. The only element of clubs that is increasing is mini-rugby. That is good, but clubs need all the help that they can get to keep that impetus going into the senior clubs. In cricket, there is a slow but steady decline in affiliated and unaffiliated clubs. In soccer, there has been a dramatic decline of almost 4 per cent in the number of clubs in the past two years, meaning that almost 1,500 clubs have gone out of business. In addition, in a recent CCPR survey, a third of clubs said that their finances were precarious; 38 per cent reported a decline in membership; 68 per cent reported an increase in red tape, and so on. The picture, despite many bright spots, is not good.
There is no point in waiting any longer to see where things are, as we know already. CASCs are not an anomaly; they have already been given special tax status in the 2002 budget. I hope very much that the Government will accede to this request, which has the full backing of the CCPR, Sport England, the Rugby Football Union, the Football Association and many other organisations. I beg to move.
"RELIEF FOR CHARITIES AND COMMUNITY AMATEUR SPORTS CLUBS
(1) In section 43 of the 1988 Act (occupied hereditaments: liability) for subsection (6) there is substituted—
"(6) This subsection applies where on the day concerned the ratepayer is—
(a) a charity or trustees for a charity and the hereditament is wholly or mainly used for charitable purposes (whether of that charity or of that and other charities); or
(b) a community amateur sports club within the meaning of Schedule 18 to the Finance Act 2002 (c. 23) (relief for community amateur sports clubs) and the hereditament is wholly or mainly used for the purposes of that club or of that and any other such community amateur sports club or clubs."
(2) In section 45 of that Act (unoccupied hereditaments: liability) for subsection (6) there is substituted—
"(6) This subsection applies where on the day concerned the ratepayer is—
(a) a charity or trustees for a charity and it appears that when next in use the hereditament will be wholly or mainly used for charitable purposes (whether of that charity or of that and other charities); or
(b) a community amateur sports club within the meaning of Schedule 18 to the Finance Act 2002 and it appears that when next in use the hereditament will be wholly or mainly used for the purposes of that club or of that and any other such community amateur sports club or clubs.""
"there needs to be an unbroken chain leading towards sporting achievement of the highest standard. A key link in the chain is provided by the Community Amateur Sporting Clubs. If that is missing, much of their promise and skills is wasted".
That is why the noble Lord says:
"I believe it is in the public interest to give relief to such clubs".
"The rating lists for England include about 16,000 sports properties, including those used by community amateur sports clubs, as well as professional and commercial sports bodies".
It continues:
"Of the 16,000 sports bodies, 7,500 have rateable values of under £3,000 and a further 4,000 have rateable values above £3,000 and below £8,000".—[Official Report, Commons, 19/12/02; col. 949W.]
Those are the new small business exemption limits. A modest number of around 7,000 have a rateable value of over £8,000.
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