Clause 57 - Relief for community amateur sports clubs
Finance Bill
11:00 am
Mr John Pugh (Southport, Liberal Democrat)
I shall put all my remarks into one contribution to save the Committee time and to allow me to probe the Financial Secretary's philosophy on the subject.
As has been mentioned, we have two distinct but parallel initiatives: the Treasury proposals for sports clubs, and the proposals from the Charity Commission and the Department for Culture, Media and Sport. Clubs are in the enviable position of being able to choose from an a la carte menu. We applaud the Government for doing something to help sports clubs. It is entirely a good thing and, from the Treasury's point of view, very prudent. Given the huge amount of money required for the national health service, we can conclude that a healthier, sportier nation will result in appreciable savings to future health Bills and to law and order as people will be happily exercised in recreational activity.
However, the choice between registration under the Treasury regime and charitable status under a different regime is taxing sports clubs a little. I have a briefing from the Rugby Football Union, which is unsure as to how to advise its members. The briefing states that the Treasury proposal has only limited tax exemption for investment, does not include the mandatory rate relief, and that company donations to sports clubs will not qualify for tax relief. On the other hand, it also suggests that the Treasury is much the preferred option, as the regime suggested by the Charity
Commission imposes some fairly onerous duties and responsibilities. It makes it clear that the registration of a club as a charity involves a change in ethos, and that certain clubs will not be able to register as charities. Sports clubs are faced with a dilemma and I invite the Financial Secretary to comment on that.
I understand the line that the Charity Commissioners have taken; they place an emphasis predominantly on healthy recreation. They specifically exclude activities that they do not regard as healthy recreation. For example, snooker is excluded because, although it has a benefit for people's mental health and amusement, incidental by-products, such as drinking and smoking, are not good for individual health. [Hon. Members: ''What about Rugby?''] I was coming to that. Such sports can create a net disadvantage to the health service. Similarly, the commissioners exempt extreme sports, which are good for cardiovascular fitness but lead to many unnecessary injuries.
The Charity Commission's proposals could almost have been designed by the Treasury because, at the end of the day, the bill to the taxpayer is likely to be significantly reduced if the proposals are implemented across the board. However, the Treasury's thinking is not clear. The Bill leaves the registration of sports to the Treasury's discretion. Paragraph 14 of Schedule 18 states that
'''eligible sport' means a sport that is designated for those purposes by Treasury order.''
In other words, it is precisely what the Financial Secretary designates as such.
In a way, I have great sympathy for the Financial Secretary. I can understand that he does not want to subsidise activities that would happen anyway. In a sense he wants more bang for the Treasury buck. There are no arguments against keeping the process under tight Treasury control. However, to return to the basic principle, if his philosophy is to have a healthy nation, which is why the tax exemptions are being made, and to ease what we all desire—an expansion of sports facilities, so that they progress and develop—the proposals by themselves do not go far enough. They do not seem to be sufficiently imaginative.
If the object of the Treasury is to secure large-scale expansion and real development of sports facilities—I like to think that that is the Treasury's objective, or at least the Financial Secretary's, who I would not expect to be interested in simply cosmetic improvements—the legislation needs to be framed in such a way that it does not fall prey to an obvious accusation. One could take the view that the charity route could be fairly expensive to public finances. One could also take the view that registration might be cheaper. Registration could be seen as a Pied Piper leading people away from the charity route. I do not think that that is necessarily the case, but I should be interested to know what the Financial Secretary feels about it.
I shall conclude by offering two further areas for consideration. Many new clubs face horrendous financial hurdles when they are set up, and particularly ambitious ones consider an element of cross-subsidy. I am familiar with a club in my constituency that has
used go-karting—a straightforward commercial activity—to fund a range of good and desirable facilities. I am not sure whether it would benefit from any of the exemptions offered by the Charity Commission or the Treasury. I wonder whether the Financial Secretary is considering what might be done in future.
A second area of concern is the status of professional clubs that we do not regard as charities. What would happen if they provided open access community provision? Let us take the hypothetical case of a professional football club. Such clubs are very cash-rich, and not candidates for charity—[Interruption.]—well, one or two of them are, but the major league club that I know best, which is closest to me, is Liverpool football club. As we all know, it contributed massively to the psychological well-being of that community. It does not have quite the same effect in Manchester, but it makes a massive contribution to the mental health of Liverpool. If one looks at the area around the ground to see what healthy living patterns exist, one will see deprivation and an absence of sporting facilities.
Is there a strong case for future tax exemptions for projects that are linked to professional clubs—there are many such schemes on the continent—and community facilities provided not for the benefit of the club, but the community in which it exists? Is there not further scope to make the fiscal system make a real difference? Is the Financial Secretary tentatively going down a route of responding to a lobby, or is he beginning a genuine and important fiscal journey that could result in the tax system's being used to benefit the health of the nation?