Small Charitable Donations Bill – in a Public Bill Committee at 4:00 pm on 23 October 2012.
I beg to move amendment 26, in schedule 1, page 12, line 9, after ‘any currency’, insert
‘cheques, text or internet donations’.
This would allow donations other than just cash donations to count towards the sum on which charities can claim.
The amendment essentially seeks to bring the Bill into the modern era in that it would allow small donations to be counted if they arrive in the hands of charities in a slightly different form from the very restricted manner set out in the Bill. Many people who donate relatively small amounts to charity increasingly do so by cheque, text or via the web. It is incumbent on the Minister to explain why these donations should not count towards the £5,000 cap. I believe it was the hon. Member for Amber Valley who raised the issue of our potential ability to make a donation to a charity when we put some additional money on our Oyster cards. At the moment, as he knows only too well, that would not be permissible under the terms of the Bill. It would be good to hear from the Minister why he feels the need to be so old-fashioned in outlining such a limited definition of small donations.
On reading the hon. Gentleman’s amendment, I am not sure that Oyster card donations would fall within the terms he proposes. Is that correct?
I would be very happy to support an amendment that the hon. Gentleman might move on Report to improve still further this clause, following, I trust, his support for this amendment.
It is interesting to note the comments of a number of the witnesses who gave evidence to us last week. Mr Warrellow, from the National Trust, said:
“there ought to be provision in legislation to allow HMRC to accept alternative forms of payment.”
He pointed out that
“Technology is fast-moving, and we have things such as contactless payments”— and suggested that such arrangements should apply to small donations under the terms of the Bill. He also suggested that
“HMRC should have the power to allow alternative forms of payment in the future, certainly once the scheme has bedded down and once the other technologies that are coming in are more frequently used for charitable donations.”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 43, Q69.]
Surely we ought to give serious thought to taking on board Mr Warrellow’s comments. John Low, the chief executive of the Charities Aid Foundation, made a similar point, making reference to the need for slightly more imaginative drafting of this part of the Bill.
Will my hon. Friend consider whether the Bill, as it currently stands, covers such circumstances where, for example, someone decides to give a £20 gift voucher to the local food bank, perhaps because they want to ensure that the money is used directly to benefit individuals in those charitable purposes? More and more supermarkets now have cards on which people can put money, and people may wish to make donations that way. As currently drafted, does the Bill deal with that, or is that something that my hon. Friend thinks ought to be looked at?
The Bill as currently drafted would appear not to allow for donation in the way that my hon. Friend describes. I recognise that that would not be covered by our amendment either, but if the Committee was so minded to agree to it, perhaps we could go a little further on Report and widen the provision to cover those particular examples.
In a previous discussion, the Minister, in response to a point made by my hon. Friend the Member for North West Durham, said that if one made a donation in any currency—euro, dollar, yen or whatever—then that would be acceptable in the current scheme. It seems a bit peculiar for all of them to be acceptable, when it is not possible for a donation to be made in British pounds by cheque, text or via the internet. Does my hon. Friend agree?
My hon. Friend makes a very good point. I urge the Minister to listen to the intervention and explain why he proposes to be such a dinosaur on this matter. I recognise that there are one or two other issues that are linked to the type of donations permissible. Perhaps, given how directly they are related, it would be permissible to reference them now. The most pressing issue for discussion relating to the schedule, particularly on how a donation might be made, is whether the £20 figure is too low.
Mr Robertson, you and other members of the Committee will be aware of the considerable concern in the House about the activities of payday loan companies. Let us imagine a scenario in which those payday loan companies come together and discuss how well all their businesses are doing. They are in a celebratory mood and think that they ought to make a donation to a charity. They are walking past the local citizens advice bureau or debt advice agency and they decide to make a small donation to them. If they are the chief executives of those companies, £20 will not be a particularly large amount for them to donate. They may well want to donate £50 or £100. Why should larger sums of money, but still relatively small in the context of their salaries, from the more well-off not be permissible under the terms of the Bill?
The scenario that I have described of the chief executives of payday loan companies coming together and meeting is not an unrealistic one. We know that it has happened and that it has happened recently. Indeed, we know that it happened at the Conservative party conference, where payday loan company chief executives paid—would you believe?—£1,250 for the privilege of meeting the Minister and a series of other people. It is possible that they emerged from meeting the Minister, having discussed the Bill, and thought, “Let us go away and donate some money to charity.” Under the terms of schedule 1, in order to allow that citizens advice bureau or that debt advice agency to benefit from their donation, they would have had to limited their donation to just £20. When replying to amendment 26 and in the more general debate on schedule 1, I ask the Minister to consider why the £20 figure is so low. Why are those on bigger incomes, who give proportionately more in small cash donations, not allowed to give a higher sum than £20?
I want to highlight an issue that charities have raised with me that relates to the sad circumstances of funerals, where charitable collections may be taken. In such cases, people may well put a cheque in a box for the charity. They may not be in a position to fill in a gift aid form and it would not necessarily be appropriate. None the less, why would it not be appropriate in such circumstances to treat those donations as small charitable donations?
My hon. Friend makes a good point, and that is one of the glaring inconsistencies that will be permitted unless the Minister is willing to show some imagination and to allow or encourage a change to the schedule as drafted.
The Opposition’s concerns can be gently summarised as follows. Why does the Minister want to stay a bit of a dinosaur in terms of the way in which he limits small cash donations? Why should those on larger salaries, for whom £20 is neither here nor there and who want to donate a larger sum in cash, be denied the opportunity to help charities to the extent that they would like?
It is a pleasure to respond to the amendment. I am sorry to disappoint the hon. Member for Harrow West, but I cannot support the amendment. However, I do have some sympathy with the principle that he is trying to establish. We tested the issue quite thoroughly during the evidence session last week, and I was persuaded by some of the Minister’s arguments that, for some of what is listed in the amendment, it would be possible to get the gift aid details from the donor. I am concerned, however, that we locking the Bill purely into cash. We may find in a few years’ time, or perhaps a bit less, that people will start to use cash less and will have some other electronic means that may not fall into the definitions in the amendment, which is why I cannot support it.
I can think of one current example. Coming through St Pancras station yesterday, I saw a box into which people can deposit Oyster cards with remaining credit that they no longer need, and Railway Children gets the money.
May I just say that my son is currently studying abroad in the Netherlands where apparently all outlets, businesses and so forth have to operate and provide services on a cashless basis, and so basically he does not carry cash but simply a card?
I am grateful to my hon. Friend for that intervention. That is, of course, the point. My point was that in a station someone can now donate money to the Railway Children charity by dropping into a box an Oyster card that has any money left on it. I think that that raised just under £5,000 a couple of years ago for that charity; that was the last detail that I could find. Coincidentally, £5,000 is a useful number for this debate. However, I cannot see any logical way in that situation whereby the charity or Transport for London could get me to sign a gift aid declaration, given that I had bought an Oyster card, did not give any details and was just donating the whole card. It is clearly an equivalent to a cash donation.
I suspect what we will find as the years go by is, as my hon. Friend just said, that we will all start donating with our funny new credit cards, whereby they are just swiped by a reader and someone donates £2 or £5, or it will even be possible to get some kind of app for a phone that does the same thing. I am not sure in that situation whether, if I am persuaded as I walk by a collection point to donate £2, I will want to stop to provide my name, address and all the other gift aid details. I think that that donation is meant to be the equivalent of my putting a £1 coin or £2 coin in the collection box.
I gently suggest to the Minister that he might want to think about future-proofing the Bill. I am not suggesting that he should bring something into effect from the start, but he could just insert a clause that will allow HMRC to have the power to redefine “cash” to include some kind of electronic equivalent. That seems a reasonable thing to have in the Bill. It means that if life moves on and we all change the way that we behave, he would not need to come back in a few years’ time with primary legislation to make this change; he could just pass that order. I think that it would be similar to the powers that are already being given to the Treasury in clause 13; it would just change “cash” to some kind of electronic equivalent. HMRC could then set out exactly what that would be. I accept that, for things such as credit cards or even texts, whereby we have heard it may be possible to get a gift aid declaration from people, there may be no need for that power, but I suspect that there are already some things, and there will be more in the future, for which getting that declaration just will not be possible and the change that I propose would simply extend the scheme to cash-equivalent small donations.
I just want to add to what my hon. Friend has said, with which I am entirely in sympathy. I would like to make a point that I raised during the evidence session and which I think the hon. Member for Kilmarnock and Loudoun mentioned in an intervention a few moments ago. It is about donations at funerals. Often large amounts of cash are raised, which are then split between two or three different charities. It is then the responsibility of the church, or wherever the funeral is held, to divide up the money that is received in cash between those particular charities.
Clearly, it is physically pretty impossible for the church to split the cash into two or three. What they will normally do is bank the entire amount and then give a cheque to each of those charities. I just wanted to ask the Minister whether, under those circumstances, the Bill will provide for that cheque to be treated as quasi-cash, or whether we can make a slight amendment that will allow these sums to be included as being eligible as small cash donations, which indeed they are and were originally, when they were given, but they have had to be—as it were—translated into cheque form for ease of administration.
I have been called many things, but I have never been called a dinosaur before. However, if opposing this amendment makes me a dinosaur, I am a dinosaur today, because the amendment would broaden out the gift aid small donations scheme to cover not only cash donations, but donations in non-cash form, namely donations by cheque or text, or donations made over the internet.
It might be worth reminding the Committee of the primary objective of the scheme. It is to provide a gift aid-style top-up payment in situations where it is difficult or unduly burdensome to collect a gift aid declaration from the donor. The most obvious examples of that are when a charity is making a street collection or when a religious group is passing a collection plate around during a service or prayer meeting. In such a situation, it would be difficult to ask everybody who is making a contribution to stop, inquire whether they are a UK taxpayer and request them to fill in a form with their name, address and other details.
The Minister makes the point about the practicality of getting a gift aid declaration. He says that it would probably not be practical, yet he also says that any currency is acceptable, but that cheques are not. I do not wish to do anything that would damage what my hon. Friend the Member for Foyle has suggested, but if one was making a donation of a euro, a dollar or a yen, may I suggest that they are probably not eligible for gift aid? It does seem a strange anomaly that if someone makes a donation to a charity by cheque, the charity concerned would be exempt from the scheme.
If the hon. Lady will allow me, I will come on in a moment to donations by cheque and why they are being treated differently.
I have recently been abroad and have €5 hanging around in my wallet. I would quite like to give it away to charity. It would be nice to have a scheme whereby the Government got a bit of extra money for the tax that I have paid.
In relation to a donation that is just a couple of pounds, if someone has given a few pounds to a church collection, it would be unrealistic to ask for the details that would be required for a gift aid declaration. That means that charities are missing out on potential gift aid donations that are received in such a way, and it is exactly what the gift aid small donation scheme is designed to tackle. The scheme will fill this gap in the context of donations for which it is difficult or unduly burdensome to collect the necessary paperwork.
The Minister does not want to be described as a dinosaur, but he is perhaps assuming, as we all did until relatively recently, that if someone gave small amounts to organisations, they would do it in cash and if they gave bigger amounts, they would write a cheque. They may even do it online. Increasingly, is it not the case that people are making even very small donations in a way that they would never have thought about doing before—they may use things such as Text to Give or go online—so there is no longer the distinction that once existed?
Giving by cheque or through using digital technology means that the donor is already giving their details to the charity, and the extra amount of information needed to make a gift aid declaration is relatively small. Where a charity has an ongoing relationship with a donor, they should use gift aid if at all possible. Compared with a bucket collection on a busy street, it is considerably less burdensome to ask someone to provide their details if they are prepared to sign a cheque or go to a website to make a donation.
I want to echo the point made by my hon. Friend the Member for Edinburgh East. If one goes on eBay, wanting to sell or buy something, I believe that there is the provision to make a donation to charity. When someone is busy and leading a hectic life and they want to get their bid in or they want to put their property up for sale, why is that different from the couple of scenarios that the Minister has painted of the money going into the box at a prayer collection, or the person in the street who is busy doing their shopping? They are comparable, albeit different situations. One is eligible under this scheme and the other is not.
Perhaps the hon. Gentleman could clarify his question. I thought that he was referring to buying products on eBay. I am not sure what the connection is between that and charitable donations.
My understanding is that there is provision on a number of auction websites, including those that eBay run, for one to make a donation to charity at almost the same time as one is seeking to make a purchase through eBay. Why should the donation through that route not be eligible, when it is a similar scenario to that of the busy person throwing some coins into a box or some money into a collection tin at a prayer meeting? The level of busyness of the person concerned is broadly the same, yet one donation is eligible and the other is not.
The hon. Gentleman will agree that if someone is using something like eBay, by definition they must be providing their details, including their address and other bits of important personal information. The next step of finding out whether they are a UK taxpayer—that kind of donation could go through the gift aid system—is not so big, because we would already be more than halfway there. It is clearly not the same as a bucket collection where someone has thrown in £20. Hopefully that helps answer his question.
I want to clarify a point that I made regarding text messages in the evidence session last week. I explained how one mobile phone company was looking at new ways of giving by text. It is already possible to attach gift aid to donations made by text message under current law. There are different ways in which that can be done, but the simplest involves the donor sending a text saying how much they want to donate. I understand that the donor then receives a text confirming their donation, and that this message asks them if they want to gift aid the donation and explains the qualifying conditions, such as the need to be a UK taxpayer. The donor can then respond to the text giving the gift aid declaration. The mobile phone company I mentioned earlier was looking at ways to simplify that, such as requiring only one declaration a year, but that would require a change to current gift aid legislation.
I welcome the support of my hon. Friend the Member for Amber Valley. He made a point about the evidence session when we heard from several representatives who either were from charities or work with charities. John Low, from the Charities Aid Foundation, which most hon. Members would accept has considerable experience of working with all types of charities, said that
“cash is important for many charities. We are addicted to giving by cash in this country. It still remains a very significant proportion of the giving.”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 54, Q84.]
My hon. Friend discussed future-proofing and he is right to point out that while many small charities rely on cash donations currently, things may change in the future. I point him to the commitment that the Government have made to review the measure in three years to ensure that it is working as intended and helping the charities that it is intended to help. If I happen to be the Minister responsible at the time, I will seriously consider my hon. Friend’s proposal.
Before the Minister moves on to other issues, will he clarify for the record situations where someone has collected small charitable donations or is responsible for such donations? For example, a school may decide to solicit some donations or, as I found recently, there may be a charity event where people are making donations, and someone has to take responsibility for collecting the money and giving it to the intended charity. Rather than literally handing over bags of cash, would everything be in order if they chose to do it safely by handing over a cheque? That is exactly the kind of real world situation that people need to understand.
The key requirement—meaning the requirement in the Bill—is that the donations are raised by the charity in cash. When the donation is given, it must be in cash form, meeting the other requirements of £20 or less and the other eligibility criteria. The key requirement is that it must be a cash donation, and it must be banked in the UK by that charity.
Sorry if I seem to be pressing the case, but the important point concerns the people who are perhaps intermediaries and are handing over that money. What would be expected of them, or would the charity have to check with the intermediary that it was receiving the proceeds of donations made in cash? What would be the expectations at that point, for the intermediary and for the charity?
The charity in question would need to certify to HMRC and be comfortable that those receipts were cash donations made to that charity. Clearly, in some cases the community buildings rule is relied on, and there are other restrictions concerning the charitable activity taking place when the donations were accepted. Again, the key requirement is that the donations were in cash, and the charity must be able to verify that to HMRC to ensure that it satisfies the terms of the Bill.
Finally, I will sound a note of caution about complexity. Text messages and internet donations can be made from anywhere in the world, but I hope the Committee agrees that the UK Government should not be paying a top-up on donations made from outside the UK unless there is firm evidence that the donor is a UK taxpayer or resident. We heard at the evidence session that charities are keen for this to be as simple for them to administer as possible.
I say gently to the Minister that the dilemma of the foreign national making a donation exists at the moment with small cash donations. A large number of foreign nationals perambulate up and down Edgware road, for example, and they might be tempted to donate money to an organisation. Under the scheme, potentially, if they put money into the collecting tin, no one will know if the donation came from a foreign national or from the British citizen who was the next person to put money into the tin. Small cash donations do not necessarily offer the comfort that the Minister seems to think, compared with text donations.
I take the hon. Gentleman’s point, but I think he will agree that if the rules were changed to the design in the amendment, the number of potential donations made by non-UK residents or taxpayers would only increase. Clearly, that is not the intention of the Bill, nor something he supports or advocates.
Introducing other forms of giving into the small donations scheme would necessarily make it more complicated because, in order to pay on UK donations only, charities would need to keep records of the origin of the donation. That is comparatively straightforward to handle when dealing with cash, through the requirement that it be banked in the UK, but it would clearly introduce significant complexity for other forms of giving.
I turn to a couple of other points that were made. The hon. Member for Harrow West asked if the £20 limit on cash donations was too low. I remind him that the scheme is aimed at small—I emphasise “small”—cash donations. For most people, if not for him, a donation above £20 is a lot of money, which is why we have kept it at £20.
My hon. Friend the Member for Stafford cited the example of collections at funerals for several charities. Again, it is important to emphasise that the requirement is that small donations need to be banked by the charity concerned in order to be valid under the scheme. That is important in respect of protecting against fraud, and best practice for charity cash handling. If he would like to discuss the issue further, I should be happy to do so.
It is harder for charities to collect gift aid declarations in the street or at a religious meeting than through other channels. That is why the focus of the scheme is on cash donations. Gift aid can be claimed on text and online giving, so it is not necessary to include those forms of giving set out under the amendment. I therefore ask the hon. Member for Harrow West to withdraw it.
We have had a useful discussion on the amendment and some wider issues raised under the schedule. I was genuinely sorry to have felt the need to describe the Minister as a dinosaur; it was said in sadness. I wanted to describe him as a moderniser but, given the harsh, restrictive measure that he is determined to defend, he has not allowed me to do so.
Nevertheless, the debate has been encouraging. I see greater signs of warmer hearts among Opposition Back Benchers than I first thought there would be. The hon. Member for Amber Valley finally surfaced to share his worry about the Bill as drafted. The hon. Member for Congleton is conscious that her semi-rebellion has not been stamped on by the hon. Member for Chelsea and Fulham, who also shared her worry about the schedule, and the hon. Member for Stafford secured a meeting with the Minister to discuss his concerns about the provision. I hope he will use the meeting to discuss not only the issue he raised in the evidence session, but other matters. We shall reflect on the Minister’s comments, not least about donations from overseas. With that response, I beg to ask leave to withdraw the amendment.