Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 5:25 pm on 15 January 1996.

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Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Treasury) 5:25, 15 January 1996

Of course that is true. The point is that a promise was made, on which agencies based their plans. The agencies now expect that the reversal in policy will reduce the number of people who will receive the benefit of home energy insulation by 200,000, which is one third. That is the point at issue, as well as the fact that it was a link which the Government accepted and have now broken.

A number of developments have hit charities particularly hard, and unfortunately, to date, the Government have not responded to them. The national lottery has clearly hit charities extremely hard, but so has the switch from income tax to VAT. Charities estimate that they will have an extra £350 million of costs as a result of that policy. As a consequence, the reduction in the standard rate of income tax means that more revenue will be lost to charities, because, of course, people who benefit from covenants will get back one penny in the pound less in tax relief than would have been the case. It is estimated that that change in policy will cost charities some £17 million a year.

I hope that the Government will consider, for example, allowing covenants which were signed before the Budget to continue to qualify for a 25 per cent. relief, on the basis that donors could not have taken into account when making their donations the fact that the relief would be less than anticipated. I see the Financial Secretary nodding. I hope that his nod is a sign that the Government will either accept or propose such an amendment.