What plans he has to assist charities to benefit further from the gift aid scheme.

In Budget 2008, the Government committed to a transitional gift aid rate of 22 per cent. for three years, worth £300 million to the sector, which was widely welcomed. Alongside that, we are making significant changes to the auditing, record-keeping and claims process to reduce the administrative burden on charities. We will continue to work with the charitable sector to see how the take-up of gift aid can be improved.

Gift aid has been such a successful scheme that there was real concern about detrimental effects when announcements were made about changes to the tax regime. Will my right hon. Friend ensure that there is close contact with the charitable sector, including the many small organisations, to ensure that it fully understands the changes so that the scheme can be as effective as it has been in the past?

My hon. Friend is right. The Government have a good record on gift aid. Gift aid receipts were £385 million in 1996-97 and were £830 million in the latest year for which figures are available. The transitional relief that we have been able to provide has been widely welcomed by the charitable sector. My hon. Friend is right that there is still a lot of unclaimed money in gift aid, and both the Government and the charitable sector must work to ensure that it is taken up.

Is not the Minister concerned that the amount that charities receive in gift aid will fall as a result of the cut in income tax, and what will he do to ensure that they have more funding opportunities?

With respect, the hon. Gentleman must have missed my reference to the announcement in the Budget. The Chancellor of the exchequer announced three years of transitional relief to tide over charities that face a cut in gift aid as a result of the cut in the basic rate of income tax to 20p.

In the long term?

The charitable sector thinks that the tax rate and the gift aid rate need to be tied together in the long term—and it is right—because it removes the Government's discretion to vary the amount the sector gets. We need to use the next three years to see whether we should reform the gift aid system further—I welcome any suggestions that he has—and to increase the take-up of gift aid.

Will my right hon. Friend look sympathetically at the representations that have been made to extend gift aid to subscriptions to junior sports clubs? That would be an excellent way to encourage young people to participate in sport and to reward parents and others who run the clubs, who make an enormous contribution to our communities.

I was not aware of the specific campaign, but I clearly should be. I will endeavour to look at my hon. Friend's proposal. Sports clubs play a huge role throughout the country and are an incredibly important part of the charitable sector. I shall make representations to my right hon. Friend the Chancellor of the exchequer.

As the Secretary of State will be aware, many charities will have a hole in their budget when the transitional period is over. Surely this is the time to look again at the ability to recover VAT on charities. He will know that the EU commissioner has confirmed that member states—although not including Britain—are implementing systems compatible with EU legislation that would allow the whole charge to be reclaimed and recovered.

I understand the hon. Lady's suggestion, because it is a long-running issue for the charitable sector. To be candid, the costs would be significant, running to hundreds of millions of pounds. EU legislation also poses barriers, although I will look into the point that she makes. My feeling, from talking to people in the charitable sector, is that the argument has moved on. People welcome the gift aid reliefs, and they want to build on the system that we improved and have protected through the transitional relief that I have mentioned.

It is good news that charities now have three years to prepare for what will be a hit when the gift aid rates come into line with income tax rates. This is a good time for charities and employers to encourage the use of payroll giving. Will my right hon. Friend do what he can to increase the amount of payroll giving on which gift aid can be claimed?

My hon. Friend is right. Payroll giving can play a big role in increasing the income that is available to charities. We should be honest about the fact that we can do much more to promote payroll giving. Outside work is being done on how payroll giving can be reformed to make it more attractive for people to take up, because there is nothing like having people committed to giving to a charity through their payroll. It means that the charity has some certainty about the income that it will receive. I would welcome any suggestions that my hon. Friend or others have about how to improve the system of payroll giving and increase take-up.

Relate is a fantastic charity that offers a valuable service in many of our constituencies. I met Sue Andrew, the Hertfordshire director of Relate, who said that the charity had previously been entitled to gift aid but was not now. Relate stresses that it suggests a voluntary donation of approximately £40 in Hertfordshire, but it does not withdraw services if a donation is not forthcoming. Indeed, some families give more. Will the Minister investigate why gift aid has not been available for Relate?

The hon. Lady raises an important issue. I have a local interest in Relate, as one of its offices is based in Doncaster. Even if that was not the case, I would endeavour to look into that point. I shall write to her.

We miss the Secretary, Cabinet Office, Mr. Watson from his usual place, but he has courteously explained why he is away. I am sure that the whole House will want to send him and his wife all its good wishes for the forthcoming event.

We welcome the transitional relief to which the Secretary of State refers, which has been given to compensate charities for the shortfall in gift aid income as a result of the Prime Minister's income tax changes, after my hon. Friend Greg Clark raised the issue in the Budget debate last year. What assessment has the Cabinet Office made through its social exclusion taskforce of other groups in society that are losing out as a result of the income tax changes?

I pay tribute to the right hon. Gentleman's ingenuity in bringing that point into a question about gift aid. I think that it is good that we are cutting the basic rate of tax to 20p. As we can see, that has an effect on the charitable sector, and it is right that we should try to help the charitable sector out. As I said earlier, I think that the transitional relief has been widely welcomed.

Is it not clear that the belated introduction of the transitional relief on gift aid shows that the income tax changes were simply not thought through? After the kick in the ballot box that the Government received last week, do not Ministers realise that it is now time to set out in detail what relief there will be for the millions of low-paid victims of the 10p tax hike? Is it not unfair to Ministers such as the hapless Communities Secretary to send them out night after night on "Newsnight", unable to answer the most basic questions on that point? When will she be put out of her misery?

This Question is on gift aid, but I will happily answer the right hon. Gentleman's question on the other issue, with your permission, Mr. Speaker. My right hon. Friend the Chancellor of the exchequer is looking at the issues in relation to the 10p rate and he will make a statement at the appropriate time. If the right hon. Gentleman wants to have an argument between now and the next election, either about the charitable sector or about people in poverty in this country, and about which party is best to deal with those points, I say, "Bring it on". Not only do this Government have a good record on gift aid and the charitable sector, but we have a record on poverty of which we can be proud.