Clause 58
Finance (No.2) Bill
10:30 am

Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)

I beg to move amendment No. 95, in page 44, line 11 [Vol I], at end insert—

‘(3A) After subsection (3E) insert—

“(3F) Reliefs under this section shall be as follows—

(a) for donations not exceeding £100, 25 per cent. of the gift;

(b) for donations exceedings £100 but not exceeding £1000, £25; and

(c) for donations exceeding £1000, 2.5 per cent. of the gift up to a maximum of £2500.”.'.

I am sorry that my attention has been distracted from the amendment for a moment by the Paymaster General’s remark to my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) about the lesson that the Opposition should learn. I am still mulling over what that lesson should be, since we cannot all be married to Mrs. Gauke.

Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)

The hon. Gentleman could, but it would be illegal. That is the point of some of the amendments. [Interruption.]

Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)

I shall pass over that interjection, in case it finds its way into Hansard, which I fear it has. I do not know whether the Paymaster General was suggesting that the amendment would be illegal, but I can understand her impatience as I am about to tax her again with one of the examples that I have a way of raising. I hope that she will address it more directly than she did the previous example.

The clause will extend restrictions on gift aid payments by close companies to non-close companies. The argument has been put to me that it is likely to hurt charities that run substantial corporate benefactor schemes and that the maximum benefit of £250 is minimal and will discourage companies from entering into such schemes. An example was given to me by, needless to say, the Charities’ Tax Reform Group. Let us suppose that the National Trust were trying to raise £500,000 to repair a property and a corporate benefactor agreed to donate £250,000. The National Trust might begin to raise the rest by holding a fundraising dinner, selling tickets at £100 a head. The corporate benefactor might be given a free table in recognition of its generosity and to encourage other substantial contributions. If the benefit to the benefactor exceeded £250, the charity would lose gift aid on the whole £250,000 donation. The argument put to me was that if the Government are unwilling to delete clause 58, at the very least the upper limit should be raised from £250 to £2,500 to allow charities to devise effective corporate benefactor schemes and to encourage companies to be generous in entering them.

Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)

Company gift aid is a tax relief specifically designed for gifts to charities, not for payments that convey potential, substantial benefits on the donor company and those running it. In the Government’s view, the existing benefit limits are sufficient for charities to express their gratitude for a donation. We are talking about the benefits conveyed to the donor company by the charity when it says thank you for a donation. I say to the hon. Gentleman that there is no evidence to suggest that ensuring that donations to charities benefit principally the charity and not the giver—that is precisely what the clauses before us will do—will harm corporate giving.

A balance needs to be struck to ensure that companies do not benefit if they make a payment to charity with the aim of benefiting principally themselves and not the charity. The limit is there to prevent the glorious events that are designed to benefit those attending, but have little charitable benefit. That goes to the heart of the purpose of gift aid. I hope therefore that, given the narrow focus of the limit, the hon. Gentleman will accept that it is appropriate.

I remind the Committee that this series of clauses will deal with the misuse of charitable status by those who would put pressure on charities, or use them in order to benefit themselves, but not the charity. I want to reinforce that point. I hope that the hon. Gentleman will accept that explanation of why amendment No. 95 is unattractive and why I do not want the Committee to pursue it.

Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)

In short, the Paymaster General argued that the Treasury accepts the principle of a limit because charities might benefit from the relief given to the donor, such as in the example that I gave. However, given that a higher limit might actually benefit the charities, she did not justify why the level should be £250 rather £2,500. I was not satisfied with her explanation so I am inclined to press the amendment to a vote.