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I am grateful to my noble friend Lord Layard for raising these issues. I hope he is reassured that the clause will not allow employers to avoid providing actual learning to young people. We are equally committed to ensuring the quality of the learning experience for young people. We will be monitoring and reviewing the situation, as I am sure he will be, and I do not rule out further dialogue. In the light of those assurances I hope that he will withdraw the amendment.

Lord Layard: My Lords, I am grateful to my noble friend for his reply and for his offer of further dialogue, which would be fruitful as there are still a number of points that have not been fully clarified. On that basis

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I am willing to withdraw the amendment, though we will want to raise it again on Third Reading if we are not satisfied with the dialogue process. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 9 and 10 not moved.]

Lord Davies of Oldham: My Lords, I beg to move that further consideration on Report be now adjourned and, in moving the Motion, I suggest that Report begin again not before 3 pm.

Moved accordingly, and, on Question, Motion agreed to.

Sport: Funding

2.01 pm

Lord Glentoranasked Her Majesty’s Government what is their assessment of arrangements for the funding of British sport.

The noble Lord said: My Lords, the funding of sport currently falls into three distinct areas: elite sport, funded by UK Sport; mass participation in communities, funded by Sport England; and schools funding, which is helped by the Youth Sport Trust, which gets no outside funding, and the DCSF.

In 1994 the National Lottery was started by John Major and the last Conservative Government. Four funding bodies were set up: the Millennium Commission, and bodies for sport, for charities and for arts. Let us look at what Her Majesty’s Government have done with this legacy and how it has affected the funding of sport over their 10 years in office.

Looking first at the recent Olympic successes, I point out that grass-roots and elite cycling has received £49.8 million in lottery funds and £18.6 million from the Exchequer since 1997; that is 73 per cent lottery. Since 1997, swimming has received £332.8 million in lottery funds and £14.2 million from the Exchequer; that is 96 per cent lottery. For the Paralympics, lottery funding of disabled sports, NGBs and competitors has been more than six times the Exchequer funding since 1997—£72.7 million versus £11.6 million.

Interestingly, the average age of a GB medal winner in Beijing was 28 and the average age of gold medal winners was 26. All their schooling and early training would have been under the previous Conservative Administration.

Funding of sport is down since 1997. Raids on the lottery for government pet projects have seen total spending on sport decline by £135 million—that is 25 per cent since 1997. More than 80 per cent of grass-roots and elite sports grants have come from the National Lottery. Poor budgeting is costing us our sporting legacy. The Government’s budget miscalculations and further lottery raids will cost sports distributors £70 million. Fifty-eight per cent of UK Sport grants and 83 per cent of Sport England grants come from lottery funds.

Some 800,000 children still do not get two hours of sport per week and 2.1 million children do no competitive sport. The Government were going to appoint 450 competition managers, one for every school sport partnership. Mr Burnham reannounced that they would be appointing 225.

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Elite sport is funded in the UK through UK Sport. This is currently a mix of National Lottery—58 per cent—and Exchequer funding, with the vast majority of the latter coming on stream following the announcement of additional funding for 2012 in 2006.

UK Sport currently invests about £100 million per year in Olympic and Paralympic success. Around 85 per cent of this money goes direct to the world-class programmes of national governing bodies to fund and support their athlete programmes, including coaching, sport science and medicine, clothing and equipment, international travel, et cetera, as well as the athlete personal award, which contributes to each athlete’s living and sporting costs.

The funding submission, which the Government went for in 2005-06, required an additional £300 million of funding from 2006 through to 2012, taking the overall budget to £600 million. The Chancellor’s announcement was for a further £300 million but stated that £100 million of that would be raised by private investment. I wonder where that is.

UK Sport now needs to give certainty to sports for their funding for the London Olympiad between 2009 and 2013 so that they can plan and build on the back of Beijing by recruiting and retaining the best coaches, medics, et cetera for the next four years. UK Sport will make all its funding decisions at its board meeting in early December. At that time it will therefore require certainty over the amount of money available to be invested, as the board will only invest what it knows to be available. At the moment, it is able to confirm only £20 million. That has been embedded into lottery forecasts for the period, although this has not been confirmed yet by Camelot. Therefore it is looking at a shortfall of funding of £80 million. Obviously that would impact on its ability to fund sports and to support them with appropriate services over the period.

The DCMS has responsibility for raising the £100 million. It has taken on Fast Track and is developing a scheme called Medal Hopes to raise money against the World Class Events Programme, and, in particular, the athletes funded on it. Since 2006 the Government have stated that they should plan on the basis of a £600 million mission and that is what they have done. Nothing at the moment is confirmed, however, and there continues to be close work with the DCMS on this to ensure that by December we have certainty of necessary resources to make funding decisions, but we are only five weeks away.

On drugs and the national anti-doping organisation, in December last year UK Sport made a recommendation for a new stand-alone agency, which the Government welcomed. Since then, it has been building up the business case and working with the DCMS to understand both the transition and running costs involved. The challenge remains in securing the funding for this and ensuring that the new organisation is able to be world-leading and world-class, with full case-management and investigatory powers, well in time for 2012. I wonder where the money is. The Conservative Party has always fully supported the creation of a fully independent anti-doping agency. Her Majesty’s

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Government must ensure that it is fully funded so that the UK becomes a world leader in the fight against drugs.

Lottery funding has been crucial to the success of Team GB in Beijing. Since the Athens Olympics in 1996, 58 per cent of grants to elite sport have come from the National Lottery. With regard to Sport England’s strategy, changing directions in the past has been detrimental. Various funding strategies and lack of long-term funding and vision has caused a stop-start approach to plans to boost mass participation. Conservatives have always favoured an NGB-centred strategy to drive up mass participation. Sport England should act as the bank and the auditor of sports funding and leave the NGBs to distribute funding accordingly.

Eighty-three per cent of grants going into grass-roots sport have come from the lottery this year. The total going into grass-roots sport now is £135 million less than it was in 1997. As a direct result of Gordon Brown’s raid on lottery cash, lottery funding going into grass-roots sport has fallen by nearly 50 per cent, from £397 million in 1997 to £209 million in 2006. Due to the Olympic raids, sport now gets only 13.5 per cent of lottery funding. About £70 million has been diverted from grass-roots sport to pay for the Olympic overspend.

The Youth Sport Trust is responsible for young people’s participation in and enjoyment of sport. It receives no government funding. The Youth Sport Trust plays a central role in supporting the Department for Children, Schools and Families and the Department for Culture, Media and Sport in the delivery of the PE and sport strategy for young people. The overall aim of the PE and sport strategy is to enhance the take-up of sporting opportunities by five to 16-year-olds; we believe this to be vital.

The emphasis should be placed on primary schools. Those enthused in sport between the ages of seven and 11 are much more likely to continue playing it in later life. The Government must invest in physical education training during initial teacher training. Currently, 60 per cent of primary school PE teachers have less than six hours’ training in a year. This does not provide teachers with the confidence and capability to teach quality PE.

On 13 July 2007, Gordon Brown announced a new target for children’s participation in sport. This stated a goal to give every child the chance of five hours of sport every week; yet this was originally included in Labour’s 2005 manifesto, on page 95:

“Investment in school sports will ensure that by 2010 all children will receive two hours high-quality PE or sport per week. Building on that, we pledge that by 2010 every child who wants it will have access to a further two to three hours sport per week”.

We know that we have not got that.

The Conservative policy is to return the lottery to its four original pillars and release an extra £400 million into elite and grass-roots sport in the decade following 2012. We would use this extra money to drive increases in participation through the national governing bodies. We would give funding directly to the NGBs to increase mass participation within their sports. The Conservatives

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would use SNGBs to drive improvements in sport and release more money back into sport by driving down administration costs of the lottery distributors. Those involved in governing bodies distributing funds will know very well what opportunities there are. On the CASC scheme, we will increase funding to sports clubs by introducing gift aid relief on junior subscriptions. If the lottery had been left in the configuration intended by John Major and the Conservative Party, the previous decade could have been a fantastic one for sports funding.

2.11 pm

Lord Pendry: My Lords, I hope that I will be forgiven for leaving the Chamber before the end of the debate. I have discussed this with the noble Lords, Lord Glentoran and Lord Davies of Oldham. I have to be in Manchester for a sporting event, which I promised I would attend. I had thought that the previous debate would be shorter.

I thank the noble Lord, Lord Glentoran, for initiating the debate. Having spent a great deal of time with him when I was a Minister in Northern Ireland, I might say that I consider him to be a friend. However, after that speech, perhaps I will revise my Christmas-card list. Seriously, as we share a common attachment to sport, we often take part in debates in this House.

We are once again addressing the vital issue of funding sport in this country. In 1997, the Government promised a high level of commitment to sport. They promised international sporting events and initiatives that would enable and inspire young athletes. To a large extent, they have delivered on that promise and can be proud of the events that this country has hosted: events such as the rugby world cup, the Champions League final, the cricket world cup and the 2002 Commonwealth Games. I am sure that these would never have taken place without the active assistance of the Government.

Looking to the future, we will be hosting the 2012 Olympics and, if our bid is successful, the football world cup, which the Prime Minister is actively pursuing alongside the bid for the 2014 Commonwealth Games in Glasgow. So the Government have demonstrated their commitment to the nation as regards sport. The phenomenal success in Beijing was the biggest medal haul since 1912; a total of 47 medals, 19 of which were gold. The Paralympic Games boasted incredible success, too, with more than 100 medals. Those successes are the icing on the cake but, in my view, every cake needs a cherry and that cherry will be London 2012.

The task now is to match or improve on that total at the London Olympic and Paralympic Games. Praise is due to the noble Lord, Lord Coe, and his team’s great efforts in winning the 2012 bid. In part, it is testimony to Britain’s superb facilities and history as a host of world-class events. I am sure that all noble Lords will want to congratulate him on becoming a sports personality award winner and a Knight of the British Empire.

However, we all realise that the credit crunch and the downturn in the economy will impinge on the ability to give as much cash as the Government and

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the Olympic bodies would wish. The Department for Culture, Media and Sport has announced a new national sponsorship scheme called Medal Hopes. It is intended to offer UK business national, regional and local authorities the opportunity to support British athletes as they prepare for 2012.

The noble Lord, Lord Moynihan, the chairman of the British Olympic Association, has said that we need a full four-year programme so that we can attract the best coaches and performance directors at the high market price which most of them rightly demand. If we do not, many other countries will poach them from us. The noble Lord, Lord Glentoran, was right in saying that the main reason for our recent success lies in the investment put in place by the National Lottery. However, if he were to read the debates—I led for the Labour Party in the other place on the lottery—he would see that most of the thrust for changes for sport came from the opposition Benches. Of course, there is the Exchequer cash for both the Olympic and Paralympic Games.

There is more to be done before 2012, as a number of sports did not figure in the medal tables. UK Sport, the body responsible for helping to maximise the performance of all sports, recognises that it will not be easy to achieve. Its ambitions and ours will require a certainty of funding, but also leadership and consistency of approach. To this end, UK Sport has developed Mission 2012, a means of monitoring each element of performance and assessing potential danger areas. It will encourage sports bodies to stay actively aware of how their system is performing and to be creative in problem-solving.

Winning the bid for London means that the international spotlight will be on London and our home-grown elite athletes, but it also comes with a duty to inspire those at all sporting levels to get involved. We will host the Games in world-class venues such as Wembley, Wimbledon, Lord’s and the Dome. However, we must also ensure that we make local venues and facilities accessible nationwide.

There are measures that must be taken at the grassroots level. The CCPR acts to promote sport and recreation as part of a healthy society. As such, it is campaigning for gift aid to be made available on subscription to community amateur sports clubs. I hope that noble Lords will join in this campaign, as I pledge so to do. Gift aid would mean that it would gain 28p in every pound. This applies to subscriptions to the National Trust and the Youth Hostelling Association and would be of enormous support to local sports clubs. With £538.4 million diverted from community sport to pay for the London 2012 Olympics, it needs all the help it can get.

Sport England has announced its strategy for the next five years, and pledged £800 million in community sport, a major contributor to the Government’s commitment to five hours of sport per week for five to 19 year-olds. Sport England has set itself quantifiable targets to reduce the number of youngsters who leave sport post-16. This will help to lay the foundations of the Olympic legacy. It should be noted that any negligence to cater for the vast majority of people who are disengaged from competitive sport will prove costly in

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the long run. Elite success is predicated on mass participation and it is crucial that we, as a country, continue to promote mass participation in physical activity in its broadest sense. If Sport England is to focus entirely on sport, other government departments, specifically the Department of Health, need to promote the wider participation agenda.

Those of us who are lovers of sport recognise a great opportunity to boost national pride in our sporting heritage. After all, we gave the world many of the sports that took place in Beijing. It is now our duty to ensure that the enormous hopes and talents we brought home from Beijing are not jeopardised in future.

2.20 pm

Lord Sheikh: My Lords, I thank my noble friend Lord Glentoran for securing this debate and congratulate him on his excellent presentation. The enjoyment of sport is a near universal activity that transcends differences between human beings. It is hard to come across anybody who has not been touched by sport at some point in his or her life. Sport brings people together and occupies a key part in the lives of many people across all countries and sectors. A love of sport is shared globally, and pride in the successful performance of particular teams can be a strong unifying factor in any community.

At a time when the economic outlook appears grim, people will instinctively turn towards sport as a means to exercise some of their frustrations and to raise their spirits. Governments have rightly been encouraging more people to engage in sporting activity as part of a healthy lifestyle. We cannot, however, avoid the fundamental truth that there is a considerable reduction in participation in sport between the ages of 16 and 18 and when moving into adulthood. That is why promoting and facilitating grassroots sport is so important. Although a number of initiatives have been developed, I want to pay particular tribute to the work of the Rugby Football Union in taking action to promote its sport through the Go Play Rugby initiative. The success of that effort has been rehearsed in other forums, but I want to repeat that it is a good example of how best to re-engage people who may have lost touch with regular sporting activity. We need to learn from its experience and apply the lessons more widely.

Another key example can be found in the England and Wales Cricket Board, whose investment has significantly increased the number of children and adults playing cricket at grassroots level, and that has had an impact on performance at elite levels. County cricket clubs are better able to choose high-quality players when the pool of people playing the game is increased.

It is very difficult to debate a subject such as the Olympics without also reflecting on funding. The unfolding chaos in the Government's approach to the 2012 Olympic Games is a clear demonstration of that point. I share the concerns stated by the shadow Secretary of State for Culture, Media and Sport that the Government's use of lottery funds to pay for the 2012 Olympics, largely as a result of their dithering on how best to leverage private sector investment, will have regrettable consequences for sport at the grassroots.

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I would be grateful if in his reply to this debate the Minister would assure the House that sports such as rugby union, cricket and netball will not lose out as a consequence of the Olympic Games. There is very real concern on this point, and it would be most helpful if the Minister could clarify the Government's position.

I wish to focus my contribution this afternoon on the funding of grassroots sport and specifically on what could be done to the taxation regime to facilitate investment in grassroots sport. Whatever delight and success may be achieved as a consequence of the Olympic Games in London in under four years' time, if the price to be paid is reductions in resources available to local and community sports clubs we should ask whether that is really a course that we should want to progress.

The interests of specific sports are, by and large, protected and promoted by national governing bodies, such as the England and Wales Cricket Board, the Rugby Football Union and so on. The taxation regime that they face is identical to that of companies, with this exception: national governing bodies do not obtain tax relief for expenditure on grassroots sport development, which is comparable to a company's research and development expenditure. As a consequence, sport governing bodies are taxed on their investment in grassroots sport activity and have to bear the burden of the administrative costs incurred in achieving tax compliance, which is a rather complicated regime.

On that basis, I wonder whether the Minister would consider granting statutory tax relief for grassroots sport expenditure by national governing bodies. If, as seems reasonable, economic circumstances are going to make investment complicated, we should be examining options to facilitate the actions of national governing bodies in delivering grassroots sport activities in local communities. Another potential solution would be a corporation tax exemption for national governing bodies. A recent study has calculated that the cost of a tax exemption would be between £5 million and £10 million a year and would significantly reduce the amount of time spent by governing bodies on tax planning, compliance and payment. A recent study conducted by Deloitte found that, of the 26 European Union states that responded, all except the United Kingdom provided either a tax exemption or special relief to national governing bodies. Effectively, sport bodies in other countries across Europe do not pay corporation tax.

One argument advanced is that sport governing bodies should establish charities in order to benefit from the tax advantages afforded to them. The economic benefits of this route are, however, dubious. The time and costs associated with running a charity are considerable, possibly as much as £5 million a year for national governing bodies. Not all grassroots expenditure would meet the strict definition of charitable expenditure, and charities are unable to reclaim value-added tax, which may result in a substantial VAT bill. I understand that a number of national governing bodies have been in regular communication with the Government to press this point, with limited response.

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Given that we are entering difficult times, sports bodies have genuine concern about their revenue streams. We have to acknowledge that the Olympic Games could prove more expensive than originally anticipated, particularly given the failure of the Government effectively to engage with the private sector. The stories that abound of sports professionals awash with money are not reflected in the experience of those involved at grassroots level. The National Lottery is increasingly being used to pay for projects that the Government deem worthy, and the original intentions are being undermined. In those circumstances, I urge the Minister to revisit what could be done with the tax system to assist sport governing bodies, and I very much look forward to his response to this debate.

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