Second Reading and Remaining Stages

Part of Small Charitable Donations Bill – in the House of Lords at 7:10 pm on 18 December 2012.

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Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Cabinet Office) 7:10, 18 December 2012

My Lords, first, I thank the noble Lord, Lord Hodgson, as through a small misunderstanding the names on the speakers list got put in the wrong order. I am not he. I also thank the Minister for introducing this welcome Bill.

The recent fall-off in charitable income-20% according to one recent report-particularly affects small and medium-sized charities, and this Bill is perhaps therefore even more important than it was when it started its life. Indeed, we understand that some one in six charities is threatened with closure and up to 40% worry that they may have to close if the economic situation fails to improve. A recent ACEVO report commissioned by the Cabinet Office revealed that charities stand to lose £1 billion this year as a direct result of government actions, at a time when demands on many charities are increasing, not least as a result of the Government's economic policies. Nearly half the charities covered in this month's CAF survey have been forced to use reserves to cover income shortfalls, with a quarter cutting some of their services.

We welcome the intention of the Bill and, indeed, its timing. We are not alone. The RNLI called it,

"a great opportunity for charities".-[Official Report, Commons, Small Charitable Donations Bill Committee, 16/10/12; col. 36.]

The Institute of Fundraising estimates that it will benefit "a range of charities".

The idea is good but the Government have made things far more complicated than they need to be. "Overly bureaucratic", says the National Association for Voluntary and Community Action. Peter Lewis of the Institute of Fundraising said:

"The way that it has been drafted makes it far more difficult than Gift Aid itself".

The Charities Aid Foundation, with all its experience and knowledge in the field, believes that,

"many charities that should be eligible for the Small Donations Scheme will struggle to access it".

In particular, it stated that,

"linking the Small Donations Scheme to Gift Aid ... means that there is a hidden codicil"- to the scheme-

"which should read 'as long as they are also claiming sufficient normal Gift Aid on other donations, and have been doing so for at least two years'. This makes it less likely that very small organisations will be able to benefit from the scheme".

Although we heartily wish the Bill well, we ask the Minister to think seriously about the problems raised repeatedly in the other House, especially where no movement was made by the Government. Of course, we are delighted with the changes that were made, in particular the changed ratio from 2:1 to 10:1, which opens up the scheme to many more charities, and the reduction from three to two years to qualify. I pay tribute to my colleagues in the other place, Cathy Jamieson and Gareth Thomas, whose determination and hard work, and in particular their understanding of the sector, enabled them to change the Minister's mind. I hope that I will have similar success this evening; if not in amending the Bill, at least in getting a commitment out of the Minister. I will come on to that.

In seeking to assist small charities, the Government have come up with the most complicated of procedures that will involve far too much paperwork. This risks undermining their whole purpose. Of course, given that there is so much paperwork, there will undoubtedly be charities-Eton comes to mind-that will be well placed to take advantage. I am sure Eton has a large staff and, no doubt, a whole office dedicated to fundraising and gift aid. However, small grass-roots charities, parent-teacher associations or groups looking after victims or those with drink problems will not be able to. Many have no full-time staff, and they are exactly the charities that are answering phones, seeing clients, teaching riding to disabled children or running food banks. There is too much bureaucracy for them to handle.

Indeed, it seems that HMRC is more concerned with fraud than helping charities-the same HMRC, we must remember, which fails to tax Amazon, Starbucks, or Google, whose own executive chair said that he was,

"very proud of the structure that we set up", which was based on government incentives.

Will the Minister assure the House that those small but essential charities will be able to operate the complexity of this scheme, without the mass advice of a Google-sized team of lawyers and accountants? What thought has been given to those small charities which, by virtue of their size or lack of big donors, are not able to take advantage of gift aid and will therefore be excluded? Even those who do use gift aid are concerned, as the noble Baroness, Lady Barker, said in your Lordships' House on Wednesday, that despite the fact that,

"the number of donations being given online and by text is increasing ... charities are losing out, because gift aid is not yet fully digitised".-[Hansard, 12/12/12; col. 1059.]

The scheme will succeed only if small local charities are aware of it, but these are precisely the ones less likely to be involved with the Charity Finance Group, the NCVO, CAF or the other umbrella organisations. How are they going to hear of it? We were disappointed that the Charity Commission chose not to give evidence to the Public Bill Committee. It makes us wonder how big a role it sees for itself in promoting the scheme-but if the commission does not do it, who will? Will the Minister outline his plans for publicising the scheme? We have heard talk of road shows, but we know that small charities do not have the time to spend time at those. I hope there will be something a bit more imaginative.

Perhaps the biggest problem with this overcomplicated scheme is the set of regulations covering community buildings. Although this might have been designed to assist church collections-which we thoroughly understand and endorse-it has ended up disadvantaging some of our most important groups. The RNLI is one organisation that has concerns, given that lifeboats, needless to say, carry out their work not in buildings but at sea. Where does the defined charitable activity take place: at sea or in the lifeboat station? If donation points are outside the station, how can one determine whether a donation was made during charitable activities or events? The definitions are too specific and not grounded in reality. Given such concerns about the workability of the new scheme, will the Minister tell the House whether HMT-or HMRC-consulted with relevant experts on the charity sector and, if so, which ones?

I come to the point where I seek a commitment from the Minister. We want this Bill to work. We need this Bill to work. However, it is key, given that we cannot amend it, that the Government look long and hard after two years at whether it is achieving all that we hoped for it. I therefore ask the Minister, quite simply, to commit to undertaking a review that will ask that question and report its results to Parliament. We need to know: how many charities are benefiting from the scheme; which are full, exempt or excepted charities; what the total outgoings on the scheme have been and how much extra money reached the charities, as well as the cost of administering it; and, finally, the level of identified fraudulent claims.

I feel certain that the Minister himself will want to know the answer to these questions. Will he undertake to share them with this Parliament-not after five years but after two? If the scheme does not work, those charities will need help by some other route to enable them to continue to do their work.