Small Charitable Donations Bill

Susan Elan Jones Excerpts

Tuesday 4th September 2012 Commons Chamber

[Miss Smith]

We hope that this scheme will be well used, and I have already set out that aspiration. I have set out the aspiration, too, that the scheme will get £100 million to charities. The hon. Gentleman will be aware of the numbers set out in the impact assessment, which has certainly been made available to him. The key point is that the scheme needs to be open and, as we have said, worth while for charities to access, which I think it will be. Equally, we need to be able to keep track of the possible costs of the scheme, which I am coming on to deal with. I can reassure the hon. Gentleman that a pool of around 100,000 charities have claimed gift aid in the past four years. It might be possible to take that number as an estimate of the number of charities that could be eligible to apply to the scheme. We hope that take-up will be high, but by its nature, it is somewhat hard to predict at this point, but I am not suggesting that all those 100,000 charities will put in claims.

[Susan Elan Jones (Clwyd South) (Lab)]

Does the Minister accept that if organisations such as the National Council for Voluntary Organisations, the Charity Finance Group, the Charities Aid Foundation and, I believe, the Institute of Fundraisers have problems with the practicalities of what she has suggested, she should at least consider the details again? I am sure we all agree on the general principles, but this is about getting it right for predominantly small community and voluntary groups.

[Miss Smith]

It is indeed about getting it right for those groups that we all care about. I can reassure the hon. Lady that I have already made changes to the Bill on a number of points, in comparison with what was originally outlined. If I can make a little progress, I will come on to explain them. I further reassure her that the whole point of having a public scrutiny stage for the Bill is exactly to hear those points. I have made it my priority to work with those representative bodies and, indeed, to work directly with charities as much as possible, reassuring them about the benefits of the scheme and explaining why I designed it carefully in order to protect its aims.

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[Susan Elan Jones (Clwyd South) (Lab)]

It is a great pleasure to follow the hon. Member for Dartford (Gareth Johnson). He began his remarks by suggesting that people in the outside world might be more interested in the current reshuffle in Westminster. If it is any consolation to him, the first discussion of charities in this House took place in 1601 and the discussions about charities in this House have mattered far more than any reshuffle. I am therefore sure that what we are discussing matters more.

The modern charities sector in England and Wales is large and diverse—far more diverse than it was in 1601. A recent briefing by the National Audit Office for the Select Committee on Public Administration stated that in 2009-10, there were approximately 160,000 registered charities in England and Wales with an estimated combined income of £55.4 billion. It also stated that there were more than 191,000 unregistered charities with a combined income of at least £57.7 billion. That shows the size, diversity and importance of the sector. More than that, it shows the importance of our getting this legislation right.

When we think about the Bill, we have in our minds a selection of small, voluntary organisations that work against the odds to do the very best for their communities. Those are the organically formed groups that exist across the country. They are the groups that the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), who I think is still the Secretary of State for Work and Pensions, once noted are animated by “fire in the belly”. He went on to give the following description:

“For it is that which has traditionally motivated people to form voluntary and community organisations, and then to take action to correct some injustice which has made them angry, or fill some gap in services which has moved them.”

It is surely our task in this House to do everything we can to support the work of such groups. That is why I am sure that everyone in the House will want this legislation to be the best that it can possibly be.

All moves to encourage giving and to simplify the system should be welcomed, including the principle behind the Bill. There have been many welcome changes in this area in recent years. Many Members will remember that until 1990, one needed to enter into a four-year covenant for charities to be able to get tax back. Then came the welcome break of gift aid on cash gifts of £600 or more. Later, in the great spirit of the Jubilee 2000 movement, came millennium gift aid, which was introduced by the then Chancellor, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown). That major change in the support for charitable giving, which applied first to projects in the developing world, meant that charities could claim the tax back on gifts of £100 made in a lump sum or in instalments. Subsequently, that was extended to all charities and to all sums of money, which I am sure was welcomed by all.

The principle behind the Bill is very much in that tradition. The new scheme will enable charities to claim back the tax on small donations of up to £5,000 per charity, without the need for donors to fill in a gift aid declaration. Charities will therefore be able to claim a maximum of £1,250 a year, which is welcome. I urge the Government to consider carefully the concerns of groups in the voluntary sector, such as the National Council for Voluntary Organisations, the Charities Aid Foundation and the Institute of Fundraising, about whether the bureaucracy will make things too complex for the charities that the Bill is intended to benefit and that the Government and Opposition parties want to see benefit.

We will particularly need to see what happens with the matching principle. The Economic Secretary was absolutely right that the National Council for Voluntary Organisations does not like the existing provisions, but it does not really like these proposals either. It states:

“We recommend that the 2-1 matching principle is dropped. We would also welcome steps to open the scheme up so that start-up charities, and those that are currently not registered for Gift Aid, have the opportunity to register and begin using this scheme sooner.”

I hope the Government will take that on board sooner rather than later.

Under the Bill as it stands, charities will have to have been registered with HMRC for at least three years. Many voluntary groups are not registered with HMRC, and they are the exact small groups that would benefit most from the scheme and are doing good work in our communities. I urge the Government to consider that.

There is also cause for concern about community buildings. I very much welcome the impact that the Bill will have on certain churches and places of worship of other faiths, because I personally believe that there should be a special place in heaven for anyone who volunteers for the post of gift aid secretary. However, the Economic Secretary made an interesting point about how the scheme would benefit Catholic parishes. Indeed it would, but there is an anomaly in it. A parish doing fundraising work in its church premises would be able to benefit from the scheme, but not one running a cake bake or similar fundraising programme elsewhere, even if it were identical work. That matter needs to be considered.

There is also the issue of the Bill’s impact on hospices, which the hon. Member for Congleton (Fiona Bruce) raised earlier. There cannot be a Member in the House who does not recognise the excellent work done by hospices across the country.

A further anomaly involves independent care home that provides low-cost residential care for elderly people. It is registered with HMRC and so able to make gift aid claims. It is not independently registered with the Charity Commission, because it is part of a wider group of residential care homes and falls under the governance of a larger charity. The care home independently manages its own finances, human resources, business development and marketing, and being local it often receives small cash donations from collection tins positioned in shops in local towns and villages. It is also contracted by the local authority to provide services.

It is bad luck for that care home because it will not be entitled to a penny under the Bill’s provisions. As a small branch of a national charity, it may be considered “connected” and therefore fall under the community buildings rule, but as its services are not linked to one community building it will be unable to claim for small cash donations. Residential and commercial buildings will not be eligible, and as an organisation providing residential care on a contracted basis, the care home will fall under both those categories. Its donations are also not made during the course of charitable activities or within a community building being used for those activities, but through separate fundraising events and activities. That is just one of many anomalies that have to be considered.

I do not wish to discuss wider issues in detail, but we have to recognise that these are tough times for voluntary and community groups. The recent National Audit Office briefing that I cited earlier quoted the NCVO’s estimate that in 2015 the charity sector is likely to receive £1.2 billion less than in 2012. Moreover, back in July Mr Christian Guy, the managing director of the Centre for Social Justice, a think-tank that I believe the Secretary of State for Work and Pensions set up, said that

“the Government must do more to convince charities that it is supportive of the valuable work they do in communities. Support is all the more necessary during a time of austerity, when budget cuts could enable the most disenfranchised people in society to slip through the cracks.”

We could debate many more issues today, but as a start it is vital that we look at all possible anomalies and at evidence from pan-sector charitable groups, as well as from individual charities and people with an interest in the area. For those with fire in their bellies and those who will benefit from the legislation, we must ensure that we get it right.