§ (1) Where—
- (a) an Association which has as its object the encouragement, development and governance of any sport or other form of recreational activity (or which has as its object the representation of such Associations) is approved for the purposes of this section by the Charity Commissioners for England and Wales, and
- (b) the memorandum of association or other similar instrument regulating the functions of the Association precludes the direct or indirect payment or transfer to any of its members of any of its income or property by way of dividend, gift, divisions, bonus or otherwise howsoever by way of profit, there shall, on a claim in that behalf to the Board, be allowed in the case of the Association—
- (i) exemption from tax in respect of income, and
- (iii) exemption from tax in respect of chargeable gains.
§ (2) In Sections 338 and 339 of the Income and Corporation Taxes Act 1988, "qualifying donation" shall include a payment under a disposition or covenant made by a company in favour of an Association approved for the purposes of this Section under sub-section (1) above.
§ (3) The conditions specified in paragraph (b) as sub-section (i) above shall not be deemed not to be complied with in the case of any Association by reason only that the memorandum or other similar instrument regulating its functions does not prevent the payment to its members of reasonable remuneration for goods or facilities supplied, or for services rendered, of reasonable interest for money lent, or of reasonable rent for any premises.
§ (4) In this section "recreational activity" means any activities in the fields of physical recreation conducive to the health or welfare to those participating in them.'.—[Sir Eldon Griffiths.]
§ Brought up, and read the First time.
§ Sir Eldon Griffiths (Bury St. Edmunds)
I beg to move, That the clause be read a Second time.
Let me start with a few figures. First, the British people each year spend £4.5 billion on sport and sport-related activities, which is rather more than they spend on gas, electricity or bread. Secondly, the Government are fortunate to be able to take out of that sporting expenditure a revenue of £2.2 billion—£770 million in VAT and excise charges, £540 million in betting duty, £950 million in income tax and £100 million in corporation tax. Thirdly, of the total tax take, we return to sport approximately one fifth, £425 million, in rate support to local authorities for their sporting activities and £60 million—a pretty miserable £60 million—for the activities of the Sports Council.
I have two other figures which I am sure that my right hon. Friend the Financial Secretary is panting to hear. The first is that in this country sport employs directly, as salaried people, 367,000 of our fellow citizens, and another 690,000 working one way or another as voluntary helpers, as coaches, referees and administrators. They do that work for nothing: for the love of the game and to help young people.
Those facts demonstrate that the Treasury—God bless it—gets far more out of sport than is given back to sport. I make no complaint about that any more than I do about the fact that road and petrol taxes are not fully paid back in terms of road expenditure. There is a responsibility on all of us to contribute to the general revenue.
Tonight, I am trying to change the proportions just a little. Consequently, my new clause is designed to even up the balance. Its purpose is to leave to voluntary sports organisations more of the money that they collect—many of them in tin cups, in 10p and 20p pieces—to allow them to save more of the subscriptions from their members and to use that money for what, in effect, are close to charitable causes.
The language of the new clause has been framed carefully to exclude from the tax relief that I am seeking any organisation that is in sport to make a profit. I am in favour of profit, but I do not seek to give tax benefits to those who make a profit. I seek to exclude from that benefit all forms of professional sport, including, incidentally, the Football League, for which in present circumstances I would not lift a little finger.
To qualify for relief under the new clause, a voluntary sport body would need to meet two conditions. First, its object must be 456the encouragement, development and governance of sport or…recreational activity".Lest my hon. Friend imagines that in any way I am seeking to help those who regard virtually any form of indoor amusement as something to be tax-relieved, I emphasise that the definition of recreational activity in my new clause means that it must be physical and conducive to the health and welfare of those who take part in it.
The second test that would have to be met—[Interruption.]
§ Madam Deputy Speaker (Miss Betty Boothroyd)
Order. I am sure that it would be advantageous to the hon. Gentleman who is moving his new clause if those who are carrying on conversations would do so quietly.
§ Sir Eldon Griffiths
I am obliged to you, Madam Deputy Speaker. I assure you that you were missing a very good speech.
The second test that would have to be met before the tax relief would be due is that such sporting bodies would need to have articles of association that precludethe direct or indirect payment or transfer to any of its members of any of its income or property by way of dividend, gift, divisions, bonus or otherwise howsoever by way of profit".That makes it clear to those hon. Members who can hear, or to those who want to hear, that only voluntary bodies could possibly benefit.
I turn briefly to the machinery by which eligibility for this tax relief would be determined. At first sporting bodies suggested to me that it should be determined by the Minister. I have been a Minister responsible for sport and I know that it has one of the smallest and perhaps least fortunate trade unions in the world. Therefore, I immediately concluded that on no account should the Minister for sport have anything to do with determining tax relief. Instead, I went for the well-tried route of the Charity Commissioners. I believe that they are perfectly capable of determining whether a sporting body is in every sense entitled to such tax relief because it meets the criteria set out in the new clause.
In conclusion, who are the people that would benefit? I have in my hand a list of hundreds of voluntary bodies throughout the country who give their time and effort for the benefit of sport and to help young people. The anglers, the badminton players, the indoor bowls players, the canoeists, the equestrians and all the rest add up to a very large number of our citizens who, in my judgment, are entitled not to be taxed on the subscriptions that they collect or the donations that are made to help them.
How would they use the tax relief, which I estimate would run to not more than £2 million or £3 million per year at the very best, although I hope that it would increase as donations from the corporate sector increase? They would use it to provide better facilities and better coaches, so that people would be able to enjoy sport and have more to do instead of hanging around on street corners. Their health would improve at the same time. The object is good, the machinery is sound and I believe that my right hon. Friend should look upon the new clause sympathetically.
§ Sir Hector Monro (Dumfries)
I rise, briefly, warmly to support my hon. Friend the Member for Bury St. 457 Edmunds (Sir E Griffiths). He put the case extremely clearly and highlighted how important it is to help sport, because it generates within itself the new facilities and new opportunities that we are all so keen to encourage.
The effort to help sport has been going on for many years. In the 1960s, under a Labour Government, I started trying to produce legislation that would provide mandatory derating of sports grounds for amateur clubs. Ultimately, perhaps 20 years later, that has now come into being. It shows that, with persistence and enthusiasm, sport will win through.
I hope that my right hon. Friend realises that within the House there is tremendous support for sport, for amateur sports clubs and for all the volunteer work within it. I hope that he will look favourably upon the new clause.
§ Mr. Menzies Campbell (Fife, North-East)
New clause 15 stands in the name of two former Ministers for sport. It has just been supported by yet another, and I understand that it will be supported from the Opposition Front Bench in due course.
Undoubtedly the new clause attracts all-party support. You, Madam Deputy Speaker, had the privilege, if I may so put it, of presiding over a wide-ranging debate on sport last night. You will recall that the right hon. Gentleman the Financial Secretary to the Treasury, who is to reply to the debate, made a fleeting appearance in the debate and, when the issue of tax concessions for sport was raised, felt it necessary for reasons which were never explained to us, to depart and go elsewhere. But that does not detract from the fact that the contribution which is made to sport in our country by voluntary sporting bodies is so substantial that, without it, sport in a form that we know and enjoy simply could not exist.
It seems to me quite unnecessary that voluntary sporting bodies, including, for example, the British Olympic Association, should be compelled to pay corporation tax. If such bodies were exempt, all the sporting bodies in the United Kingdom would put £3.5 million back into sport in Britain—a small amount for the Treasury but an amount that would have a disproportionately large effect on the activities of those bodies which are presently compelled to pay it.
The new clause has all-party support and I hope that the House will be able to support it because in Olympic year it would, above all, provide some justification for the remarks made last night by the Minister responsible for sport. I notice that he is not with us. He said that the Government value sport highly, put a proper premium upon it and are determined to do everything in their power to advance sport and the cause of sportsmen. If the new clause becomes law, it would be more than earnest of those intentions, it would be a reality. It would give a clear and unequivocal signal that sportsmen and women in the United Kingdom could look to the Government for support and assistance.
For those reasons, the House should be happy, indeed eager, to accept the new clause.
§ Mr. Richard Tracey (Surbiton)
I do not wish to delay the House for more than a few moments because hon. Members wish to talk about short speeches. Perhaps I can set an example.
I wish to put on record the fact that I support my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) because of the case that has been put strongly for a number 458 of years by the British Olympic Association. I agree entirely with what was said by the hon. and learned Member for Fife, North-East (Mr. Campbell). He said that the British Olympic Association should receive all the support it can from the Government and from our country as a whole when our young athletes go to do their best in the various Olympic sports.
As we have been building up to the Olympics the athletes have been preparing themselves. Alongside them, with just as much effort, the members of the British Olympic Association have been raising much-needed funds to allow our athletes to go to the Olympic games. If my right hon. Friend the Financial Secretary will give us an assurance that the Government will look seriously at what is in the new clause, it will add our flame to the efforts of our athletes in Seoul.
§ Mr. Henderson
Those of us who have sat through the debates on the Finance (No. 2) Bill for the past two months have become accustomed to contributions from Conservative Members which start vehemently, but become more diluted as the debate moves on; by the time the debate reaches its conclusion, there is not very much left with which to proceed. I am disappointed to detect signs of that in this debate.
I support the new clause, and my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) will also give support. However, I do not give my support without reservation and I shall enter a caveat. There is a need for better help for sport in our country. Some professional sport is doing reasonably well; some is not. We should all agree on that. Another point on which we should also agree is that some of our amateur sporting organisations, particularly in sport that attracts support from the poorer sections of our community, have had a difficult time in recent years. I am not making a party political point. We have failed properly to redevelop many of our inner-city areas and our peripheral housing areas. We all know the areas to which I am referring. They can be found in cities up and down Britain.
People who live in those communities and are keen on sport have had a difficult time in recent years because local authorities have had neither the capital nor revenue resources to develop and sustain the development of any assistance to sport, whether it be the involvement of a community worker in a sporting activity at local revenue level or a major capital investment in a new stadium. Because of the difficulties faced by local authorities—as a result of the policies imposed by central Government—those areas and the sports that develop in them have problems.
Furthermore, because of higher unemployment in those areas, people have less money in their pockets to devote to their sport or to its promotion. My own athletics club, Elswick Harriers, is in the west side of Newcastle—an area of high unemployment and inner-city deprivation in need of assistance from local government, which cannot help it at the moment. Youngsters who depend on the promotion and encouragement of sport are not getting proper opportunities. If part of the £3 million that would be given back to sport if the Government accepted the new clause found its way into areas such as mine, some good would accrue.
459 I must say that I do not think that I could do very much if I had £3 million to spend on sport. Much larger sums are needed to revitalise our sporting world. In many senses, it would be better to give sporting organisations direct funding rather than tax relief but realistically I know that that is not going to happen, and if we cannot have direct funding, I am prepared to settle for tax relief as a second best.
Let me enter my caveat, although I think that the new clause probably accommodates my wishes in this regard. It is not sufficient to say that an organisation will benefit from what is effectively charitable status under the new clause provided that it is a non-profit-making body. That is not a sufficient test. The House of Commons football team could set itself up as an unincorporated organisation whose objects were to give encouragement to football and its promotion and governance in the Palace of Westminster. If the interest from any of its investments appeared in its accounts it might then be entitled to tax relief. The House of Commons football team would be a creditable non-profit-making organisation, but essentially it would be a self-help organisation.
To qualify for the tax relief, an organisation ought to be more than a self-help, non-profit-making organisation. It ought genuinely to act to promote and govern sport in the widest sense and especially to help those who do not have the opportunity to take part in sport at the moment. That would be doing a service—whether to sport in its narrow definition or to recreation generally.
I hope that the Government will recognise the extent of support for the new clause. I urge those who tabled the new clause to proceed with it; I hope that they will listen to what we are saying in that regard. If they do that, the Government will perhaps agree to give about £3 million back to sporting organisations.
§ Mr. Denis Howell (Birmingham, Small Heath)
It is nice to speak from the Opposition Front Bench and to record complete unanimity among all those who have spoken. Unlike my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) I hope that we shall not proceed to a Division. In reality, what we need is for Ministers to promise us an effective review of the principles that we have raised. We know that we could not carry the new clause, but it is important that we should sustain the unanimity that we have achieved.
There is every reason for trying to encourage sport and recreation. Wherever we look—in our schools and our cities, in town and country—we see growing social problems. In that context the endeavour of thousands of people in voluntary sport is beyond price and should be encouraged. That is a great social justification for new clause 15. I appreciate the hon. Member for Bury St. Edmunds (Sir E. Griffiths) tabling it and I support it.
Although I understand what my hon. Friend the Member for Newcastle upon Tyne, North was saying about the need to give grants where appropriate, that is not always the best way. I ask him to reflect on the situation facing the British Olympic Association in 1980. Without going into all the reasons for the difficulties, had we been given grants during the Moscow Olympics, the association would have been in great difficulties because the Government decided to withdraw support. It is better 460 to give permanent assistance, as the new clause suggests, because in a sense that removes the party political problems of the moment.
We should remember Edinburgh's difficulties with the great cost of staging the Commonwealth games, which Sheffield now faces in staging the world student games. It is important to give practical help and every encouragement to such cities which are willing to do that on behalf of the country. Birmingham and Manchester are others.
The hon. Member for Bury St. Edmunds has drawn the new clause tightly, for reasons that he explained. I hope that that will encourage the Minister to appreciate that all of us who are determined to encourage voluntary and amateur sport do so responsibly. With this all-party agreement on the record, that should produce a constructive response from the Government.
I remind the House that last time anything like this clause came before the House it was thanks to my hon. Friend the Member for Linlithgow (Mr. Dalyell) who has persistently and consistently raised these matters. He urged the Government to give help in this direction and the Chancellor of the Exchequer, then the Financial Secretary—I wish his successor on the Front Bench the same success—replied:I accept that there is a problem. Indeed, this was accepted right at the beginning of the introduction of corporation tax. The Select Committee on Corporation Tax recognised that there was a problem and that some way of alleviating it should be sought. But there is a serious difficulty of definition.That was during debates on the Finance (No. 2) Bill in 1980. The Government have had eight years to look at the definition and it is time that they came up with something, however limited, which all of us would support, to encourage amateur sport.
The then Financial Secretary continued:It is not for the Treasury to define a charity. Still less is it for the Treasury to decide whether a debate should be held on the Goodman report."—[Official Report, 3 June 1980; Vol. 985, c. 1286–87.]The House will remember that that report paid attention to charities. I have always believed that the Government were one and indivisible. It is for the Government, if not the Treasury, to produce an acceptable definition. I am sure that that is the wish of the House, and, on behalf of the Opposition, I offer our support to the new clause.
§ Mr. Norman Lamont
Having wandered by mistake into last night's debate on sport, and therefore having heard several speeches tonight that were made last night, I recognise the degree of interest in and feeling about this subject.
I have noted the comments of my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths). There are difficulties with the new clause, but I am prepared to review the issues raised in it and to meet hon. Members to discuss it.
All the problems associated with the new clause relate to drawing lines and definitions. Such things are always tedious to people who want their good causes to be advanced, but they are important to those of us who have to put our names to the Bill and the policies in it.
The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) illustrated the difficulty. He interpreted the new clause as applying to sports clubs. I do not think my hon. Friend the Member for Bury St. Edmunds intended that, but I fear that the clause would apply to clubs. That would have far-reaching consequences. It would be difficult to distinguish a club, as an 461 unincorporated association, from other sorts of unincorporated associations that perform worthwhile activities, such as housing associations that are not run specifically for charitable purposes, certain types of clubs, local enterprise agencies and parent-teacher associations. It would be difficult to exempt one of those without exempting the others. So I cannot go as far as the hon. Member for Newcastle upon Tyne, North wanted.
I want to say a word about how sporting bodies are taxed. Generally, clubs and associations are liable to corporation tax on income from investments—money in the bank—or from commercial activities such as business sponsorship schemes. That is right. There is a tax deduction for the company, so the money should be taxed in the hand of the recipient organisation. But I am informed that funds raised from members through subscriptions or donations are not generally taxable. That may interest hon. Members.
In general, it has been shown again and again—there have been a number of court cases—that the promotion of sport is not a charitable purpose. Special exemption for charities is not easily available. My hon. Friend's new clause addresses that point. It requires that the qualifying association should be approved by the Charity Commissioners. No doubt that was intended as a way of limiting the problems, but the task would be beyond the powers and experience of the Charity Commission, which is responsible for deciding whether a particular body was established for charitable purposes. The commissioners' decisions are based on charity law and on the principles that have evolved over numerous court cases. Although 462 my hon. Friend has specified the criteria he thinks should be used to determine whether a sporting body is a charity, the provisions of the new clause would not, by themselves, be sufficient for the Charity Commissioners. They would need further guidance. That is a major problem: charity law, which is based on case law, is extremely complicated.
I have just outlined a number of difficulties, but I recognise that there is keen interest in this subject. I shall review it, and I shall be happy to talk to hon. Members about it at their convenience.
§ Sir Eldon Griffiths
I am obliged to my right hon. Friend. I agree that there are problems in this matter that have baffled previous Governments. However, the time has now come—this has been demonstrated by the virtual unanimity in the House—for us to do better by our voluntary sporting organisations. It is very much in our interest to do so. I accept immediately my right hon. Friend's invitation to have a discussion about this matter, possibly with right hon. and hon. Members on both sides of the House who have had the quaint distinction of having been Ministers for sport. I hope that he will allow us to associate with such a discussion those representatives of the voluntary organisations who feel deeply about this matter.
I am grateful to my right hon. Friend, other of my hon. Friends and the right hon. Member for Birmingham, Small Heath (Mr. Howell) for their support.
I beg to ask leave to withdraw the new clause.
§ Motion and clause, by leave, withdrawn.