§ 'Notwithstanding the provisions of section 505 of the Income and Corporation Taxes Act 1988, a non-profit making body, club or institution which has as its principal purpose the promotion, encouragement or provision of facilities for amateur sport shall be eligible for relief under that section, and consequent classification as a recognised body for the purposes of Part I of that Act.'.—[Mr. Menzies Campbell.]
§ Brought up, and read the First time.
§ Mr. Menzies Campbell (Fife, North-East)
I beg to move, That the clause be read a Second time.
The new clause is yet another attempt by hon. Members who have an interest in amateur sport to bring about a 775 recognition of amateur sport that would have the effect of admitting it to the kind of tax position that charitable activities now enjoy.
Two years ago, when an earlier Finance Bill was on Report, we had a most constructive and interesting debate in which a number of former Ministers for Sport took part. Considerable sympathy was evinced by Treasury Ministers towards the proposition then before the House. If my recollection is correct, an undertaking was given that it would be further considered. The First Scottish Standing Committee recently considered the matter, and I observe from the report of the Committee stage of the Finance Bill that it was ventilated there as well. However, in spite of those opportunities and promises of consideration and the sympathy given to the idea, so far it does not appear to have recommended itself to the Government. Certainly they have made no move to make it law.
I should declare an interest: I am a governor of the Scottish Sports Aid Foundation and a trustee of the Scottish Sports Aid Trust. If what the new clause proposes were to pass into law, I would derive no financial benefit, but my fellow trustees and I would be in a position to give additional assistance beyond that which we now can give to promising sportsmen and sportswomen in Scotland.
I move the clause with a sense of responsibility and, to some extent, privilege. If I, with others, were successful in persuading the Government to accept the clause, I would regard it as some recompense for the great contribution that sport has made to my life. It has been of great importance to me throughout my life: it has given me great pleasure and continues to do so, although these days it is the somewhat more passive pleasure of observing Mr. David Sole and his 14 Scottish companions winning the grand slam with a display of character and robustness that many people in Scotland felt was a proper reflection of the Scottish character. Mr. Sole and his friends were invited to a number of receptions, such as those at No. 10 Downing street and Edinburgh castle, and they were feted for their great achievement. However, I suspect that they would regard the passing into law of my proposal as a far greater recognition of their efforts than all the receptions and parties to which they were invited.
Many sports clubs, institutions and associations make a truly valuable contribution to the well-being of the community. They provide opportunities for the young, the middle-aged and the not-so-young to participate in sport, to remain healthy and to have a competitive interest. Nothing could be more in the interests of the community than that such clubs should continue. However, they are not yet eligible for the relief which recognition by the Revenue would afford them. For some such clubs the sums are extremely small in real terms, but in the budgets of the clubs and institutions they are sometimes of great significance.
I have concentrated on local sports clubs because they are the backbone of amateur sport in Britain. Following disputes in education, the need for local sports clubs has perhaps never been as acute as it is now. For reasons which we need not dwell upon, many schoolteachers now find themselves unable or unwilling to make the commitment and give the time that they previously felt able to give. Consequently, the responsibility for the introduction of young people to a whole range of sports which was previously in part shared by schools and teachers now rests to a far greater extent on the voluntary effort of local amateur sports clubs.
§ Mr. Beith
I hope that my hon. and learned Friend will commend those schoolteachers who are still giving up their time voluntarily and beyond the call of duty to maintain school sports, not least those who assisted my son and his under-14 team to win today the county cricket championship for his age group.
§ Mr. Campbell
I have no doubt that that intervention will be reported in some local newspapers. I have the honour to be the honorary president of the Scottish Schools Athletics Association and know well the contribution that many schoolteachers continue to make to school sports. I fully recognise the force of my hon. Friend's intervention.
Many of the clubs that I have mentioned struggle to exist. Often they remain in existence only because of the efforts of two or three dedicated people who sometimes work more hours for nothing on behalf of their local club as treasurer, secretary or fixtures secretary than they work in their everyday jobs. The case for sport enjoying charitable status is overwhelming. The new clause seeks to recognise contribution and voluntary effort. It seeks to make that effort yet more effective and to remove from those clubs the responsibility of paying tax.
The voluntary work and effort that goes into these clubs helps to relieve the financial burden that might otherwise fall on local authorities. It would be right for the House to do more to help those who help themselves to run sporting organisations. If accepted, the clause would make a substantial contribution in that direction. The clause covers the whole of the United Kingdom and would be confined to clubs, bodies or institutions whose principal purpose was the encouragement of the provision of amateur sport. Therefore, it could not be abused.
The clause makes clear the terms on which a club or institution would be eligible for recognition. It would not follow automatically that it would be recognised. It does not make relief compulsory. The Revenue would have to be satisfied that the club or institution was entitled to the relief that it sought. The Revenue would have the right to determine whether the proposal was being abused.
Estimates of the cost of the measure vary from £10 million to as much as £50 million. The proper approach to the matter is to say that, whatever the amount, if such relief were to be granted, it would constitute a substantial investment in amateur sport. Whatever the amount of the investment, the dividends realised would be a most generous return and a recognition of the efforts of many voluntary unpaid officials. It would be an expression of the extent to which the importance of sport is acknowledged by the community.
§ Mr. Bob Cryer (Bradford, South)
I am following closely the argument of the hon. and learned Gentleman and I am not unsympathetic to it. He will know that many sporting clubs—for example, cricket clubs—have social facilities, including bars, which generate a good income. Would there be a distinction between a genuine sporting club that did not have that source of income and the fairly well-placed clubs, financially, with social facilities, including bars, which do not really need the relief that the hon. and learned Gentleman is advocating?
§ Mr. Campbell
The principal purpose of the club under the new clause would have to be the "promotion" and 777 "encouragement … of amateur sport". If there were any suggestion that that was not its principal purpose, the club would not be entitled to relief.
There is some uncertainty about the income that is derived from bars. There is the view that if the purchase of drink in a bar is confined to the members of the club, it cannot be said, under the mutual trading rules, that the members are making a profit out of themselves. The issue of whether clubs with bars would fall under the provisions which the clause embraces would depend on the extent to which the principal activity of the club was the provision of facilities for the "encouragement … of amateur sport" and whether the social facilities, including the bar facilities, were conducted for the benefit of members and not for another purpose. I hope that the hon. Gentleman will regard that as a sufficient answer to his question.
§ Mr. John Carlisle (Luton, North)
I take up the question of the hon. Member for Bradford, South (Mr. Cryer) and refer the hon. and learned Member for Fife, North-East (Mr. Campbell) to his remarks about David Sole, of the Scottish rugby team, and the position of amateur rugby clubs and many so-called amateur soccer sides. Does the hon. and learned Gentleman recognise that the new clause may fall foul of his strictures? It can be proved in so many instances in amateur sport, and especially in rugby, that players receive some form of payment. In Wales, in colloquial terms, there is boot money. Professional coaches have been appointed by so-called amateur rugby clubs. I am sympathetic to the aims of the hon. and learned Gentleman, but I feel that he could run into trouble by taking a broad brush to amateur sport and including rugby, which he and I and the rest of the House know is not an entirely amateur sport.
§ Mr. Campbell
I hope that the hon. Gentleman will carry his sympathy in a concrete fashion and will support me if there is a Division on the new clause.
To the best of my knowledge, Mr. David Sole and his colleagues are not professional. As I understand it, they are not in receipt of any funds for their international participation. I know of no rugby football club in Scotland, or anywhere else, that does not have a continuing problem of balancing the books at the end of any year. Had the hon. Gentleman paid his usual diligent attention to the proceedings of the First Scottish Standing Committee, he would be aware of the observations of a former Minister for Sport, the hon. Member for Dumfries (Sir H. Monro), who has an intimate knowledge of rugby football, not least because he is a former president of the Scottish Rugby Union. The hon. Member for Dumfries explained just how considerable are the financial obligations of many clubs, especially rugby clubs.
The issues are well known to the House. For my purposes, they have been sufficiently well canvassed. I beg leave to have a certain amount of optimism that we shall receive something rather more than sympathy from those on the Treasury Bench and a signal that there is an appreciation of how important the issue is and how important it would be to many amateur sports clubs throughout the country if the new clause were agreed to.
§ Mr. John Carlisle
I hesitate to intervene, but I wish to take up the point that has just been made by the hon. and learned Member for Fife, North-East (Mr. Campbell). The 778 answer that he gave me a few moments ago did not cover English and Welsh rugby. He paraded his clause as though it applied to the whole of the United Kingdom, as does the Finance Bill, but he concentrated on Scottish rugby. Both the hon. and learned Gentleman and my hon. Friend the Member for Dumfries (Sir H. Monro) have consistently argued that it does not receive the type of payments that I described earlier. Therefore, his clause is flawed, because amateurs may not exist. If his clause were to be accepted by my hon. Friends and some Opposition Members, he would have to define who is an amateur. The majority of sports, especially those seen on television, receive substantial payments. They would therefore fall foul of his clause. On that point alone, the clause is flawed.
§ Mr. Campbell
Does the hon. Gentleman think that the British Olympic Association should have to pay tax?
§ Mr. Carlisle
The hon. and learned Gentleman sticks to the sport that he knows. However, he began his speech by saying that the new clause would encompass rugby. He referred to David Sole. The hon. and learned Gentleman has a distinguished track record. Therefore, he knows that what used to be known as the British Amateur Athletic Association receives substantial sums of money from sponsors. Individual athletes receive enormous prizes, some of which are money prizes. I hesitate to suggest that the hon. and learned Gentleman may be naive, but he is wrong to ask the House to accept that all amateur sport is truly amateur sport.
I sympathise broadly with the hon. and learned Gentleman's argument. His new clause may be aimed at the smaller clubs. They need some financial assistance from the Treasury and a more sympathetic ear. Whether that assistance will be provided by this Finance Bill or a future Finance Bill is another matter. Many thousands of men and women give their services voluntarily to sport and do their best to keep many clubs afloat. Many of them are in severe financial difficulties because of the old rating system, and even the new uniform business rate. The Government have offered some relief, but it has not been taken up by local authorities.
Sport is based on small clubs and to a certain extent on schools. It is tragic that many sports clubs have fallen by the wayside and are not attracting young participants because schools, for the reasons that the hon. and learned Gentleman described, are unable to provide the expert teaching and facilities that are needed. The hon. and learned Gentleman's ideas must be considered sympathetically. When we have been able to define who amateurs are, that sympathy may turn into assistance. However, the broad brush approach that he has adopted in the new clause will not attract much support on this side of the House.
§ Mr. Brian Wilson (Cunninghame, North)
I will not pursue what I can describe only as the casuistry of the hon. Member for Luton, North (Mr. Carlisle) in trying to get bogged down in definitions of amateurism. Clearly, the spirit of the clause leaves it to the judgment of the Charity Commissioners in England, and, presumably, to the Lord Advocate in Scotland, to find out whether the club satisfies the criteria for advancing amateur sport. As the hon. Member for Luton, North knows, if the argument about which club or which members are amateur is to be pursued 779 before such a clause is passed, we will be arguing until doomsday, with the desirable side effect, in his opinion, of nothing ever happening.
In offering his sympathy for the new clause, the hon. Member dispenses a commodity which is remarkably cheap and which has been around for some time on this issue. The issue was debated on 5 July, in Committee on the Law Reform (Miscellaneous Provisions) (Scotland) Bill. On that occasion, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), the Under-Secretary of State for Scotland, offered sympathy in abundance:I am not unsympathetic to the aims of the clause but I would prefer to bring the matter to the attention of Treasury Ministers and to discuss it with them."—[Official Report, First Scottish Standing Committee, 5 July 1990; c. 542.]We know that some Treasury Ministers have been busy since, but I wonder whether the Under-Secretary of State has had time to discuss the matter with the Treasury Minister.
The Under-Secretary of State put the cost of the measure for the United Kingdom at £50 million. That is what it would cost the Inland Revenue if it were to be approved. He said that it is not section 505 of the Income and Corporation Taxes Act 1988 which poses the obstruction to the extension of charitable status to sports clubs but the terms set out in the Pemsel case for the definition of charity. Those terms are the relief of poverty, the advancement of education, the advancement of religion or other purposes beneficial to the community. Those definitions are far from set in tablets of stone. They are capable of being amended to take account of changing social circumstances or of desirable social ends. There are manifest grounds for doing so in the present context.
There is another definition which we have to get round and which has to be cast aside in the argument: that is what has been termed the doctrine of "mere sport". That stems from the Nottage case in 1895, which is one of the benchmark cases in the definition of charities and the exclusion of sport. On that occasion, Lord Justice Lopes said:a gift, the object of which is the encouragement of a mere sport or game primarily calculated to amuse individuals apart from the community at large, cannot upon the authorities be held to be charitable, though such a sport or game is to some extent beneficial to the public … If we were to hold the gift before us to be charitable we should open a very wide door for it would then"—horror of horrors—be difficult to say that gifts for promoting bicycling, cricket, football, lawn tennis, or any other outdoor game were not charitable for they promote the health and bodily well-being of the community.I would say, "Well, exactly." Those are precisely the reasons why those activities should, in their amateur form, be eligible for charitable status. That may not have been obvious to Lord Justice Lopes in 1895, but to most people looking around society today it should be manifestly obvious.
It should also be obvious that the £50 million which the Exchequer might lose through this measure would not be a loss in a meaningful sense but an investment. Every £1 million spent on the promotion of amateur sport and encouraging young people to take up healthy pursuits or on equipment and facilities in which to pursue such activities is several pounds saved in terms of anti-social 780 behaviour, vandalism and the other activities that young people will find to engage in if such provisions are not available to them.
Any society that invests in its young people would put much more money into sport and leisure activities than ours does. The Government pay lip service to sport to try to get political mileage out of it whenever the opportunity presents itself. This is an opportunity to put something into sport.
The "floodgates" about which Lord Justice Lopes was so concerned have already begun to let through a trickle via court judgments. There is an unexpected symbol of liberalism in this debate in the person of Lord Hailsham. In Inland Revenue Commissioners v. McMullen in 1981, he observed that the legal conception of charity and the educated man's ideas about education are not static but evolve with the changing ideas about social values. With one leap, casting aside the views of lower courts, Lord Hailsham and his colleagues were prepared to extend charitable status to the Football Association Youth Trust. It is interesting to note the grounds on which the decision was reached. A report of the case stated:The trust was one which was 'to organise or provide or assist in the organisation and provision of facilities which will enable and encourage pupils of schools and universities in any part of the United Kingdom to play association football or other games or sports' in such a way as ' to assist in ensuring that due attention is given to the development of such pupils as well to the development and occupation of their minds'.That is exactly the purpose for which sports clubs, organisations and ruling bodies exist in—I stress—their amateur form. If the spirit of the McMullen case were extended to sport in general, it would meet the aims of the new clause. The Government should make that leap.
However, there was a caveat. Even in the McMullen case, sport was to be given that status not in its own right but as an adjunct to education. We can again see the elitism. According to the report:Lord Hailsham explained that he was not deciding even that a gift for physical education per se and not associated with persons of school age or just above would necessarily be a good charitable gift.The McMullen case was tied specifically to the fact that this sport took place within the school or university context. That is illogical. We are talking about social need and about the social benefit that sport can provide. In many communities, by definition sport takes place at places other than schools and universities. The places that most need sports facilities and active sports clubs and voluntary organisations are unlikely to have universities sitting in the middle of them.
According to the McMullen judgment, the only place to which charitable status can be extended is within the context of schools and universities. That anomaly should be corrected. The fact that youngsters are out working from the age of 16, without access to higher or further education, should not be grounds for further discrimination against them, the clubs to which they belong and the pastimes that they wish to pursue.
There is an overwhelming case for extending the definition of charitable status to include sports clubs. As long ago as 1976, the Goodman report recommended thatthe encouragement of sport and recreation should be recognised as an independent charitable object provided the necessary elements of altruism and benefit to the community are present.I stress the word "independent". In the past, sport has occasionally crept in for charitable purposes, as in the 781 McMullen case, as an adjunct to education, army efficiency, improving social welfare or even religion. In the McMullen case, the Charity Commissioners and the House of Lords recognised that healthy sport improves the conditions of life, and that was sufficient grounds to extend charitable status to it.
782 If the Minister recognises tonight that, alongside other definitions of charity, sport is wholly worthy of charitable status, it would do the Government credit, give some credibility to their posturing support of sport, cost them very little and be an excellent social investment for all of us.
§ Mr. Harry Greenway (Ealing, North)
There is much to be said for the amendment. I do not merely say that because my best man, Adrian Metcalfe, was in the great Olympic team with the hon. and learned Member for Fife, North-East (Mr. Campbell), who moved the amendment, so we have a close link. The hon. and learned Gentleman has put his finger on a most important and fundamental need in our society—to encourage amateur sport more.
The current membership of the England Schools Football Association is much lower than it used to be. The number of participating schools in the London schools sport's organisations—I know them well, as I am president of two—has declined seriously over the past few years, which reflects the serious decline in sport in schools.
I am keen on the clause for this reason more than any other. In some areas, only one primary school in eight plays cricket, in others no soccer or other team games are played, often because no teachers are willing to take part in activities out of school. That follows recent industrial disputes in schools, and it is a sad outcome. It is also a result of the movement, especially by left-wing education authorities—[Interruption.] The Labour party must face up to this and not start barracking. Well, they can barrack if they like, but I shall say it.
The Inner London education authority, in its early days, did a great deal to establish sport—I worked with it throughout its existence, so I know it well—including competitive sport in schools. Then it went through a loony period, when it was dominated by the left wing of the Labour party and it opposed all competitive sport in schools. It set up a committee, headed by its own former senior physical education inspector, Professor Peter McIntosh as he became, which recommended that competitive sport be reintroduced to ILEA schools, but by then it was too late.
Gifted boys and girls played no sport in London schools for 10 or 15 years because of the way that the Labour party behaved. It is a great tragedy. I remember one superb cricketer at Dick Sheppard School—a West Indian boy of about 15. The only cricket he could play at that school was with a bit of stick in the playground and a painted wicket against the wall, because the school would not allow competitive sport.
§ Mr. Greenway
I am glad to see that the hon. Member nods his head in agreement. It is absolutely true.
He could have played for England or the West Indies, whichever he qualified for. He was a fine boy, but he was denied cricket. If the new clause is successful, that would not happen again. I feel sure that he would be in Streatham cricket club or one of the many good clubs south of the river—there are many good clubs north of the river, too. Those clubs would be able to put more effort into encouraging youngsters into clubs and into their teams.
It is imperative to recognise that children are competitive and need competitive sport. These games always take place under the supervision of highly qualified referees, who can curb and control any displays of bad temper. If the English soccer team had been underpinned by the playing of soccer in every school, we, not West Germany, would have been world champions.
There is no sign that teachers will be paid to take schools out for sporting events. Some of us think that they never should be. Throughout my 23 years of teaching, I 784 took out a team every week and regarded it as part of my professional duties—I loved doing it, too. But many teachers will not do that unless they are paid for it. Perhaps they should be—but I do not think that they will be. So we have to look to the clubs to produce our future cricketers, tennis players, soccer players and rugby players. They need the support that they would get from Government acceptance of the new clause.
§ Mr. Bob Cryer (Bradford, South)
The new clause has a great deal of merit. I must declare an interest, in that from the age of 11 or 12 onwards I was a member of a Bradford league cricket club. I have continued to take an interest in cricket to this day. The great days of Yorkshire cricket came about because of the enormous strength of league cricket in that county, which provided a superb nursery for the Yorkshire cricketers who formed the backbone of all the good pre and post-war English sides.
Things have changed. I support some sort of tax concession for amateur clubs, whether they play cricket, soccer, or rugby league, a slowly growing sport in the north of England which should be encouraged. When I played for Saltaire in the Bradford league, the team was always handicapped because the beautiful ground in which the club played—Roberts park—was established by Sir Titus Salt, who owned the adjacent mill and the surrounding 800 or so houses. He was a strong temperance man, which meant that if the club had wished to do so it could not have sold alcohol to boost its proceeds in order to sustain the game of cricket.
Some clubs in the various leagues provide a bar and derive a great deal of revenue from it. It would, of course, be up to the Revenue to determine whether the resources of a club came mainly from its bar facilities or from the sporting element; if from the former, presumably clubs would fail to obtain tax concessions. That seems fair.
Many local authorities cannot afford to provide sporting facilities because their first priority must be to provide adequate wind and waterproof buildings—and textbooks and laboratory facilities to meet the needs of the national curriculum, for which they have a statutory obligation; so sporting facilities inevitably come lower down the list of priorities. Now more than ever there is a need for club facilities, because the schools are in some difficulty. My son, who, I need hardly add, went to a comprehensive school, wanted to play cricket at school throughout his time there, but he could not because the local authority could never produce the money necessary to lay on adequate drainage for the school playing fields.
Clubs are currently being subverted to a degree, because the Government tell them to go out into the private sector to obtain support. The tobacco companies, for example, are not averse to providing money in an ironic combination in which we all support the use and development of sporting facilities because that generates good health and good physique—and a number of other qualities—but that is often brought about because of the financial aid given by the very companies that want to sell cigarettes, which have precisely the reverse effect, and cause huge costs to the national health service.
If the provisions make amateur clubs more independent from the possibility of being subverted by dubious outside sponsorships, that is all to the good. If a club is promoting 785 either an amateur athletics team, which is to visit, say, a competition in London, it is tempting to receive £1,000 or £2,000 for support in the competition from a cigarette company, and it is hard to ignore such offers and to say, "We're going to stand on principle and won't accept the money." A tax concession will make the clubs that bit more independent, which is a very good thing.
In the past two or three years, when we have seen soaring house prices and the development of speculative building, sports grounds have come under increasing threat. Clubs often decide to sell all or part of a ground and to reduce their facilities because they have been tempted by the big money that has been made available from that source. That has now diminished to an extent, but it is an ever-present threat.
Saltaire, the club which I mentioned earlier, is under some threat—as is the park—from a possible trunk road development. The Government will not provide independent legal advice and representation for trunk road inquiries, but there is no reason why clubs should not have not financial comfort but some financial security that would enable them at least to meet such considerations with greater confidence than at the moment.
Most of the amateur clubs that I know are struggling, week in, week out to make ends meet and to meet the expenses of promoting the sport with which they are involved because they love it. That is the basic reason. They are committed to it and want to encourage youngsters to enjoy the pleasure, skill and exuberance that people find either in participating in or watching sport—of whatever sort, be it rugby league, rugby union, soccer, cricket or hockey.
The proposal has much merit and I shall be interested to hear whether the Government are to give it sympathetic consideration to the extent of accepting it. As has been said, sympathy is around in fairly large quantities in nearly every debate on tax matters and the House—and, more importantly, the sporting clubs outside—would welcome something more substantial. Provided there is the caveat of a definition that allows the Revenue to seek out the genuine cases, the new clause seems to have a good deal of merit.
§ Dr. Marek
I shall be brief but I hope that my brevity will not be taken as a sign of lack of interest. The new clause is important. Both Opposition and Conservative Members agree that something needs to be done to encourage more people to take part in sport and to give them the opportunity to do so. That could be done by giving local authorities more powers and the ability perhaps to undertake more sporting enterprises in their areas. It could also be done by bringing sport within the charity net. That is what the new clause seeks to do.
We on the Opposition Front Bench see difficulties with wording the new clause tightly enough to achieve the desired aims of the new clause and nothing more and to ensure that there are not too many loopholes. I shall be interested to hear what the Economic Secretary has to say, but I fear that the new clause drafted by the hon. and learned Member for Fife, North-East (Mr. Campbell) needs to be much longer.
Charity law is in an unsatisfactory state. I know that the Government have proposed measures to reform it. Perhaps sport should be examined carefully as part of any 786 reorganisation of charity law. Sport could perhaps be brought in under a reformed charity law which could require, for example, that accounts would be vetted by the Charity Commissioners. If accounts were not submitted or were not in order, a body would not be allowed to call itself a charity.
There are many difficulties in charity law. Clearly the law is not good enough at present. However, I do not wish to detract from the Opposition's general sympathy with the intentions behind the new clause. I said that I should be brief and I have been. I hope that the Economic Secretary will be able to give us some solace. If nothing can be done this time, perhaps the whole matter could be examined with a view to giving sport some encouragement in later Budgets.
§ Mr. Ryder
I shall follow the example of the hon. Member for Wrexham (Dr. Marek) and be as brief as possible. Sport has always played a central part in my life, as it has in that of the hon. and learned Member for Fife, North-East (Mr. Campbell). However, I have never participated in any sport with anything approaching his distinction.
As the hon. and learned Gentleman knows, section 505 of the Income and Corporation Taxes Act 1988 exempts from tax most sources of charity income, including investment income and trading income when the trade is exercised as a primary purpose of the charity or is carried out by beneficiaries of the charity. However, there is a further condition. The exemptions apply only if the income is used for charitable purposes.
As the hon. Member for Wrexham surmised, the new clause is seriously defective in the way in which it seeks to achieve what I assume to be its intention. It attempts to bring certain bodies involved in amateur sport into section 505 of the Income and Corporation Taxes Act 1988 alongside charities. However, that would not be sufficient to secure tax exemption. To achieve that objective, the income of the amateur sporting bodies would have to be used for charitable purposes. It is a well-established principle, as several hon. Members have made clear, that sport and recreation as such are not charitable activities. Therefore, the new clause would have little or no effect as it is drafted.
The case for providing a tax exemption for sporting bodies of various types has been considered many times in the past, as the hon. and learned Member for Fife, North-East observed and the hon. Member for Cunninghame, North (Mr. Wilson) emphasised with generous use of examples from the past.
A new clause on associations engaged in encouraging the development of sport or in representational functions was tabled by my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths). The hon. and learned Member for Fife, North-East mentioned it. That was two years ago during the Report stage of the Finance Bill. The hon. Member for Vauxhall (Miss Hoey) tabled a similar new clause in Committee.
The Government receive many requests for tax exemption from a variety of bodies, and I do not deny that amateur sporting clubs are a worthy cause, as are most of the organisations that make such a request. They can all plead that they are deserving causes in one way or another, but the tax system is not, and never has been, a good way of judging their merits.
787 One of the problems faced by those who propose exemptions is defining their targets. In the case of sporting bodies, it is particularly difficult to draw a suitable boundary. Where does sport end and other recreational and leisure activities begin?
§ 11 pm
§ Mr. Harry Greenway
It sounds as though my hon. Friend the Minister may not deal with the important argument of where children are to go if they cannot receive sports coaching and teaching at school. Does he accept that children are in every sense amateurs and that they would be assisted by the clause, were he able to accept it?
§ Mr. Ryder
I listened carefully to my hon. Friend, but I am not sure of the relevance of his point to new clause 13.
Does the definition of sport extend, for example, to chess; bridge, in which the hon. Member for Wrexham excels; fox hunting; tiddlywinks, which is a sport in which my hon. Friend the Member for Luton, North (Mr. Carlisle) excels; or even to synchronised swimming? As a Treasury Minister, I feel unable to pass judgment or to draw the line—and the terms of the new clause provide no help in trying to ensure a clear dividing line between sport and recreational or leisure activities.
§ Mr. Wilson
Fortunately, to comply with the spirit if not the letter of the new clause, the Minister does not have to make any such judgment. It is only necessary to accept that the fourth condition, in pencil—that the activity should be to the benefit of the community—encompasses sport or leisure activities. That matter, as with the first three conditions, should be for the judgment of the bodies that control charities. There is no strict dividing line, but none is needed. An organisation's case would be judged, just as in the case of any organisation applying under the other three headings, on its merits. All that is needed is for the definition of activities of benefit to the community to be more generously interpreted, to allow at least sporting and leisure activities to be included.
§ Mr. Wilson
I speak as a member of the Labour Front Bench on Scottish matters, and I assure the Minister that in our deliberations on the Law Reform (Miscellaneous Provisions) (Scotland) Bill, which overhauls the law in respect of Scottish charities, my party supported the principle embraced by new clause 13, with the caveat that the cost implications should be identified before we could make any blanket commitment. It is important to obtain from the Minister tonight the same degree of commitment to the principle involved, rather than get bogged down in specifics.
§ Mr. Ryder
The definition of a charity has been established by case law in the courts, which has confirmed that sport is not a charity. The Government stick by the decisions made by the courts and we have no present intention of changing charity law in that respect.
The new clause would have no cost, but, because of the drafting defects I have described, the cost of exemption for bodies concerned with sport and recreation is difficult to 788 estimate. It would depend on how the definitional problems I have described were resolved. If I were to take a broad definition of sport and recreational activities, the cost could easily be the £50 million a year mentioned by the hon. and learned Member for Fife, North-East.
Amateur sporting clubs unquestionably provide a great deal of pleasure to people. However, I cannot recommend that my hon. Friends should accept the new clause.
§ Mr. Cryer
If the Minister rejects the new clause, is he prepared to introduce regulations on it? Given the massive amount of legislation already approved by the House, I am sure that the Treasury has powers of delegated legislation. It has never baulked at providing definitions when that has suited its purpose. I do not agree with the reasons that the Minister has given for not accepting the new clause, but surely he would be prepared to introduce a draft statutory instrument to encapsulate our ideas on definition. At least that would show that the Government have some sympathy with our argument.
§ Mr. Ryder
My answer is similar to that which I gave to the hon. Member for Cunninghame, North—at present the Government do not have any plans to introduce a statutory instrument of the kind envisaged by the hon. Gentleman.
For the reasons I have given during the course of the debate, I ask my hon. Friends to reject the new clause should the hon. and learned Member for Fife, North-East press it to a Division.
§ Mr. Menzies Campbell
With the leave of the House I shall reply.
In the argot of the summer game, the Minister has played a straight bat. I would have taken his comments about what he described as serious defects in the new clause with a little more enthusiasm had he gone on to say how much he supported the principle and how soon the Government would introduce a clause, which met all his criticisms and which would achieve the result sought by the new clause.
The Government's reliance upon the law should be put in its proper context. The decision in Pemsel was taken in 1891 and I fancy that the notion of what is or is not the public interest for the benefit of the community has advanced since then. If there is concern about the demarcation between what might or might not fall on the side of charitable activity, the principle of the benefit of the community must be one that is open to interpretation, as is the argument on the promotion of education. I doubt whether amateur, sport would create greater problems than the existing four categories recognised in the decision in Pemsel.
Whether the payment of rugby players would negate the effect of the clause is a matter of fact and circumstance in each case. If the principal activity of the club in question was to promote professional sport, clearly it would not be entitled to recognition. An obvious example of that argument—perhaps not so obvious to you, Madam Deputy Speaker—is the Greenock cricket club. It presently plays in the western union in Scotland and for this season it has engaged the services of Mr. Gordon Greenidge, a well-known West Indian cricketer. That dub is an amateur club and Mr. Greenidge is being paid because the club has gone out of its way to raise funds for that purpose. The amateur purposes of the club are not in any way affected by Mr. Greenidge's employment. That is 789 a clear case where, although someone is employed on a professional basis, the club's primary purpose remains amateur. In each case, it will be a case of fact and degree, just as it must be a question of fact and degree in respect of any activity that falls within the four categories recognised as charitable purposes as a result of the decision in Pemsel in 1891.
It seems that the matter is of such importance that the House should have the chance to express its opinion, so I shall press it to a Division.
§ Question put, That the clause be read a Second time:—
§ The House divided: Ayes 26, Noes 145.769
|Division No. 294]||[9.36 pm|
|Barnes, Mrs Rosie (Greenwich)||Livsey, Richard|
|Beith, A. J.||Michie, Mrs Ray (Arg'l & Bute)|
|Campbell, Menzies (Fife NE)||Skinner, Dennis|
|Cohen, Harry||Taylor, Matthew (Truro)|
|Cryer, Bob||Wallace, James|
|Howells, Geraint||Tellers for the Ayes:|
|Kennedy, Charles||Mr. Alex Carlile and|
|Kirkwood, Archy||Mr. Simon Hughes.|
|Alexander, Richard||Hague, William|
|Alison, Rt Hon Michael||Hamilton, Neil (Tatton)|
|Amess, David||Hanley, Jeremy|
|Amos, Alan||Hargreaves, A. (B'ham H'll Gr')|
|Arnold, Jacques (Gravesham)||Hargreaves, Ken (Hyndburn)|
|Ashby, David||Harris, David|
|Aspinwall, Jack||Hawkins, Christopher|
|Atkinson, David||Hayward, Robert|
|Baker, Nicholas (Dorset N)||Heathcoat-Amory, David|
|Bellingham, Henry||Hicks, Mrs Maureen (Wolv' NE)|
|Bennett, Nicholas (Pembroke)||Hicks, Robert (Cornwall SE)|
|Benyon, W.||Hind, Kenneth|
|Bevan, David Gilroy||Howard, Rt Hon Michael|
|Blackburn, Dr John G.||Howarth, G. (Cannock & B'wd)|
|Blaker, Rt Hon Sir Peter||Howe, Rt Hon Sir Geoffrey|
|Body, Sir Richard||Hughes, Robert G. (Harrow W)|
|Boswell, Tim||Hunter, Andrew|
|Bowden, Gerald (Dulwich)||Irvine, Michael|
|Bowis, John||Jack, Michael|
|Braine, Rt Hon Sir Bernard||Jackson, Robert|
|Brazier, Julian||Janman, Tim|
|Brown, Michael (Brigg & CI't's)||Johnson Smith, Sir Geoffrey|
|Buck, Sir Antony||Jopling, Rt Hon Michael|
|Budgen, Nicholas||Kellett-Bowman, Dame Elaine|
|Burns, Simon||Kilfedder, James|
|Butcher, John||King, Roger (B'ham N'thfield)|
|Carlisle, John, (Luton N)||King, Rt Hon Tom (Bridgwater)|
|Carlisle, Kenneth (Lincoln)||Knapman, Roger|
|Carrington, Matthew||Knight, Greg (Derby North)|
|Carttiss, Michael||Knight, Dame Jill (Edgbaston)|
|Cash, William||Lawrence, Ivan|
|Chapman, Sydney||Lennox-Boyd, Hon Mark|
|Chope, Christopher||Lightbown, David|
|Clark, Dr Michael (Rochford)||Lilley, Peter|
|Clark, Sir W. (Croydon S)||Lloyd, Sir Ian (Havant)|
|Clarke, Rt Hon K. (Rushcliffe)||McLoughlin, Patrick|
|Coombs, Anthony (Wyre F'rest)||Marlow, Tony|
|Coombs, Simon (Swindon)||Maxwell-Hyslop, Robin|
|Cran, James||Miller, Sir Hal|
|Currie, Mrs Edwina||Mills, Iain|
|Davies, Q. (Stamf'd & Spald'g)||Moate, Roger|
|Davis, David (Boothferry)||Monro, Sir Hector|
|Day, Stephen||Montgomery, Sir Fergus|
|Devlin, Tim||Morris, M (N'hampton S)|
|Douglas-Hamilton, Lord James||Morrison, Sir Charles|
|Dover, Den||Moss, Malcolm|
|Dunn, Bob||Moynihan, Hon Colin|
|Durant, Tony||Mudd, David|
|Favell, Tony||Neale, Gerrard|
|Fenner, Dame Peggy||Neubert, Michael|
|Field, Barry (lsle of Wight)||Newton, Rt Hon Tony|
|Fishburn, John Dudley||Nicholls, Patrick|
|Fookes, Dame Janet||Norris, Steve|
|Forman, Nigel||Onslow, Rt Hon Cranley|
|Forsyth, Michael (Stirling)||Oppenheim, Phillip|
|Forth, Eric||Page, Richard|
|Franks, Cecil||Paice, James|
|Freeman, Roger||Patnick, Irvine|
|French, Douglas||Pattie, Rt Hon Sir Geoffrey|
|Gardiner, George||Pawsey, James|
|Garel-Jones, Tristan||Porter, David (Waveney)|
|Goodlad, Alastair||Powell, William (Corby)|
|Gow, Ian||Price, Sir David|
|Greenway, Harry (Ealing N)||Raffan, Keith|
|Greenway, John (Ryedale)||Redwood, John|
|Griffiths, Peter (Portsmouth N)||Riddick, Graham|
|Roberts, Sir Wyn (Conwy)||Thompson, Patrick (Norwich N)|
|Roe, Mrs Marion||Thorne, Neil|
|Rowe, Andrew||Thornton, Malcolm|
|Rumbold, Mrs Angela||Thurnham, Peter|
|Ryder, Richard||Twinn, Dr Ian|
|Shaw, David (Dover)||Viggers, Peter|
|Shaw, Sir Giles (Pudsey)||Waldegrave, Rt Hon William|
|Shaw, Sir Michael (Scarb')||Walden, George|
|Shelton, Sir William||Walker, Bill (T'side North)|
|Shephard, Mrs G. (Norfolk SW)||Waller, Gary|
|Shepherd, Colin (Hereford)||Wardle, Charles (Bexhill)|
|Skeet, Sir Trevor||Watts, John|
|Smith, Tim (Beaconsfield)||Wheeler, Sir John|
|Spicer, Michael (S Worcs)||Widdecombe, Ann|
|Squire, Robin||Wiggin, Jerry|
|Stanbrook, Ivor||Wilkinson, John|
|Stanley, Rt Hon Sir John||Winterton, Mrs Ann|
|Stern, Michael||Winterton, Nicholas|
|Stevens, Lewis||Wolfson, Mark|
|Stewart, Allan (Eastwood)||Wood, Timothy|
|Stewart, Andy (Sherwood)||Yeo, Tim|
|Stradling Thomas, Sir John|
|Summerson, Hugo||Tellers for the Noes:|
|Taylor, Ian (Esher)||Sir Anthony Grant and|
|Taylor, Teddy (S'end E)||Mr. Jerry Hayes.|
|Division No. 295]||[11.09 pm|
|Barnes, Harry (Derbyshire NE)||Meale, Alan|
|Beith, A. J.||Michie, Mrs Ray (Arg'l & Bute)|
|Campbell, Menzies (Fife NE)||Nellist, Dave|
|Carlile, Alex (Mont'g)||Parry, Robert|
|Cryer, Bob||Pendry, Tom|
|Dunnachie, Jimmy||Primarolo, Dawn|
|Godman, Dr Norman A.||Skinner, Dennis|
|Graham, Thomas||Spearing, Nigel|
|Home Robertson, John||Steel, Rt Hon Sir David|
|Howells, Geraint||Taylor, Matthew (Truro)|
|Hughes, Simon (Southwark)||Wallace, James|
|Kirkwood, Archy||Tellers for the Ayes:|
|Lewis, Terry||Mr. Richard Livsey and|
|Martin, Michael J. (Springburn)||Mr. Ronnie Fearn.|
§ Question accordingly negatived.