Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Charities

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 18th April 1991.

Alert me about debates like this

Photo of Mr Michael Latham Mr Michael Latham , Rutland and Melton 12:00 am, 18th April 1991

To ask the Chancellor of the Exchequer what representations he has received from charities about the value added tax increase in the Budget; and what reply he has sent.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

We have received a number of such representations.

Photo of Mr Michael Latham Mr Michael Latham , Rutland and Melton

Is my hon. Friend aware that charities estimate that the increase in VAT will cost them £33 million a year, bringing their total VAT payable to about £250 million. Help the Aged alone will have to find an extra £90,000 a year. This was an otherwise excellent Budget, so will my hon. Friend reconsider this most unconservative tax on charities?

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

European obligations mean that there is little flexibility in the extent to which zero rating of VAT for charitable purposes can be extended. Tax reliefs for charities amount to about £800 million a year, including about £150 million of reliefs on VAT. Charities benefit to a considerable extent. It is worth putting it in context: the cost of the incrsease in VAT to charities is no more than a quarter of 1 per cent. of charities' annual turnover. In almost every Budget since the Government took office, we have done something with tax to help charities, as we did this year.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

Is the Minister aware of the effect of the increase on cancer research work at the Paterson Institute in Manchester? Does he know that its vitally important and humane work has already involved it in paying more than £1 million in VAT and that it faces a charge of £200,000 more, every penny of which has been raised from private donations? Is not that a worrying comment on the Government's approach to voluntary funded cancer research?

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

I do not believe that it is. I am sure that the work about which the right hon. Gentleman speaks is excellent and is fully supported by the Government. I have spoken about the total amount of tax relief given to charities and I believe that it should be given. I have also made it clear that any Government, Labour or Conservative, have only limited flexibility, because of obligations within the European Community. I see no scope for making the changes that the hon. Gentleman suggests. The amount of voluntary giving to charities has doubled in real terms since 1979, and that is admirable.

Photo of Andrew Mitchell Andrew Mitchell , Gedling

Although it must be true that the modest increase in VAT will not benefit the incomes of charities, will my hon. Friend make it clear that no fewer than six specific measures have been introduced in he past five Budgets, which have had a massive effect on the amount of charitable giving?

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

That is entirely right. As I said, the amount of charity giving has increased and the Government have sought to encourage charitable giving by means of the gift aid scheme, which we introduced last year and extended this year, and the payroll giving scheme. They have been effective incentives to people to give generously. Everyone in the House will agree that it is good news that people have responded so generously to those incentives.