Critics slam ‘sports tax’ on new leisure centres

Government insists any income will be retained by councils

Critics claim councils face a “crazy” assault on their finances from a Scottish Government clampdown on a costsaving scheme.

Scotland’s spending watchdog has hailed arm’s length organisations as a way of reducing the financial burden of running local services.

The Accounts Commission study highlighted the savings made in Dundee and Fife through ALEOs, not-for-profit companies that run leisure and other services on behalf of local authorities.

But opposition MSPs say the SNP administration is trying to stem their expansion by effectively ending business rates relief for new ALEO-run facilities.

Branding the government plan a “sports tax”, Labour MSP Jenny Marra said: “I can’t understand why the SNP have chosen to do this when our health record shows children desperately need to be doing sport and activity.

“The new Menzieshill complex in Dundee will have an annual tax bill of £300,000.

“The inevitable consequence of this crazy policy is that councils in the future simply won’t plan any new facilities.”

The report said Leisure and Culture Dundee has made £15 millionsavings in the six years since 2011, “allowing it to remove a £3.5m funding gap and invest £1.2m”.

The study added: “Income generated by the ALEO now exceeds the funding paid by the council.”

At Fife Council, the authors said there has been a “50% reduction in costs and 50% increase in service uptake for sports and leisure” between 2008-2016 through ALEOs.

Graham Sharp, chairman of the Accounts Commission, which publishes the report today, said: “ALEOs can and do provide significant benefits. But they are not without risk and changes in tax relief may make the creation of an ALEO a less attractive option.”

Mike Rumbles, for the Scottish Liberal Democrats, said: “The government needs to be doing much more to promote healthy lifestyles, not make changes that would limit access.”

A Scottish Government spokesman said ALEOs have been a way for councils to “avoid paying tax” worth about £45m in 2017-18.

“The Barclay review (into business rates system) recommended we address this,” the spokesman added.

“But in recognition of the impact this could have on existing facilities we took the decision to close this loophole only for new ALEOs, reducing the incentive for councils to place public services in trusts beyond the direct democratic control of local councillors.

“This will bring council-run facilities into line with private operators providing similar facilities who pay tax, and any income raised from new sporting facilities will be retained in full by councils.”