Clause 7 - Meaning of “running charitable activities in a community building” etc

Small Charitable Donations Bill – in a Public Bill Committee at 3:30 pm on 25th October 2012.

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Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury 3:30 pm, 25th October 2012

I beg to move amendment 7, in clause 7, page 4, line 26, leave out from ‘if’ to ‘(and’ in line 28 and insert ‘, on 6 or more occasions in the tax year—

(a) it carries out a charitable activity with a group of people in the community building, at least 10 of whom are in the class of people for whose benefit the charitable activity is being carried out,

(b) the activity is of a kind that the charity makes available to the public or a section of the public, and

(c) none of the group is required to pay to access the building, or the part of the building, in which the activity is carried out;’.

This amendment alters the definition of “running” charitable activities in a community building so that, in particular, the activity must be of a kind made available to the public and none of the group may be required to pay for access to the building or the part of the building.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

With this it will be convenient to discuss Government amendments 8, 9 and 10.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

The amendments change the community buildings rule in two ways. Amendment 7 makes it plain that in order to qualify as a community building, entrance to the building or the part of the building in which the charitable activities are taking place must be free of charge. Amendments 8, 9 and 10 change the rules to allow anyone to count towards the quorum of 10 people constituting a group, provided they are attending the activities in their capacity as a beneficiary of the charity. It even applies if they are a trustee, employee or other officer of the charity.

In our debate on the last group of amendments, I explained that extending the community building rules to commercial buildings would increase the cost of the scheme. Restricting donations to those collected during the charitable activities helps to limit any extra costs, and so does amendment 7.

I appreciate that some charities that had expected to benefit from the community building rules will be disadvantaged by the amendment. I do regret that those charities, such as the National Trust, will no longer be able to access so much under the scheme. However, I have to look across the whole charity sector and keep in mind the policy objective behind the small donations scheme and the community building rules.

To recap, the Government want charities to benefit from top-up payments up to a maximum of £5,000 of small donations. The community building rules are being introduced to deal with the most significant unfairness that this basic policy objective might bring. It will be up to each charity that charges an entrance fee to decide whether it would be more beneficial to lift the entry charge in order to benefit from the community building rule.

Turning to amendments 8, 9 and 10, the original policy consulted on in the spring excluded anyone working for the charity from counting towards the minimum number of 10 people constituting a group under the community building rules. This rule was included to prevent abuse of the rule. However, we adjusted the rules to meet concerns raised in responses to the consultation. That meant that volunteers who were also beneficiaries of the charity could count towards the group of 10. However, stakeholders told us that those adjustments did not go far enough. We have therefore tabled amendments 8, 9 and 10 in response to concerns raised at public reading stage and on Second Reading.

Some charities are structured in such a way that all officers are also beneficiaries of the charity, so they would not have been able to benefit from the community building rules. We think it is fair that trustees, employees and other officers attending charitable activities in their private capacity as beneficiaries of the charity should count towards the group quorum of 10.

I appreciate that amendment 7 is likely to disappoint some charities, but I hope I have explained why it is needed, and that hon. Members will welcome the effect of amendments 8, 9 and 10. I therefore commend all four amendments to the Committee.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

The Minister has briefly and succinctly set out what the amendments mean and do. It will be interesting to hear the comments of some of my  hon. Friends and perhaps some other hon. Members on the particular issue of the National Trust. I will come to that in a moment.

I will briefly go through each of the amendments. As the Minister said, amendment 7

“alters the definition of ‘running’ charitable activities in a community building, so that in particular, the activity must be of a kind made available to the public and none of the group may be required to pay for access to the building or the part of the building”.

The Minister seemed to suggest that certain charities might have to think about whether to lift entry charges in order to qualify for this top-up under the community building rule. That is perhaps the first time we have heard the Minister make that point. I am interested to hear of the types of activity or situation to which he refers. There are a number of charities and organisations, such as community amateur sports clubs—which we have not been given a huge amount of time to debate—where there would be subscriptions or entry fees. For clarity I would like the Minister to consider the scenario of a community amateur sporting organisation meeting in a leisure centre to which there is a general access fee. It would be helpful if the Minister could talk about that kind of situation.

The original clause said that there must be 10 or more people in the building, but it did not necessarily specify what kind of people they would be. The amendment changes that to state that at least 10 of the people needed to be

“in the class of people for whose benefit the charitable activity is being carried out”.

I will not repeat the concerns that have been raised in previous clauses, but the amendment also states that

“none of the group is required to pay to access”.

During the evidence session, the National Trust said that it wanted us to look carefully at the amendments because under the original provisions, it was expecting to be able to take advantage of the scheme at a number of the visitor properties. It expected to engage with visitors as part of that process. It might have been doing educational work or whatever in the way the Minister suggested. The most recent change, encapsulated in these amendments, to exclude the properties where the visitor has to pay some entrance fee, would obviously exclude a number of its properties. The National Trust is concerned that although some properties could still qualify, it would be a much smaller number, and it was very disappointed with the amendment.

Since those disappointments were expressed in the evidence session, has the Minister had any face-to-face discussion with the National Trust about the implications of such a change? How many properties are affected? How much, in monetary terms, does the National Trust fear that it will lose, given what the original intention was going to be? Given that it did flag up its concerns during the evidence session, it would be reasonable to expect the Minister to have considered the matter.

Amendment 8, which the explanatory statement makes reference to—

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party 3:45 pm, 25th October 2012

I should declare an interest as a member of the National Trust. Before my hon. Friend gets into the meat of her speech, one of the properties owned by  the National Trust, as opposed to English Heritage, which will benefit under the Bill, is Hughenden manor, the home of Benjamin Disraeli, author of that one-nation concept which we, on the Labour Benches, believe in. Does my hon. Friend agree that the Minister’s amendment further proves how far his party is moving away from that concept?

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I thank my hon. Friend. It certainly proves that as far as English Heritage and the National Trust are concerned, they are not in it together in terms of a one-nation approach, which the Government may wish to promote. I do not want to continue on that divisive note with the Government because I want to be, as always, consensual and helpful and try to move towards solutions. My reason for asking the Minister about those discussions was to see whether there was any scope for ensuring that there was some parity between English Heritage and the National Trust in the context of the Bill. I am interested to hear what has happened in relation to that.

Under amendment 8, the staff of a charity can count towards the group of 10 or more people required for the charity to be running charitable activities in a community building so long as the staff are beneficiaries of the activity. Again, what I was seeking to do, and I hope that someone will take a note of this so that the Minister will be able to respond more fully when he returns to his place, is to get a bit more information from the Minister on exactly the types of situation that he would envisage in which staff would be involved in that group of 10, which is also benefiting from the charitable activity being run in the community building. Although I ran a Scotland-wide charity, and was therefore a member of staff, have been a volunteer with several charities, have been involved in a whole range of organisations for children and young people, including running activities as part of a wider charity, as referred to by my hon. Friend the Member for Harrow West when he was discussing the Scouts and the Guides, and, of course, was a member of and ran a Woodcraft Folk group in my earlier years, I must confess that I am trying really hard to envisage the circumstances in which a member of staff, as part of that group of 10, would be a beneficiary of the charitable activities unless the Minister is drawing a very wide definition of what beneficiaries means.

Photo of Penny Mordaunt Penny Mordaunt Conservative, Portsmouth North

One example springs to mind. I was a director of Diabetes UK, which, as well as providing care and support to diabetics of all ages, has a charitable remit to supply education for both patients and health care professionals. The hon. Lady alluded to the fact that she was involved with organisations that work with young people and children. Diabetes UK relies on specialist diabetes nurses attending their summer camps to enable children to learn how to inject themselves and so on. It provides the health care professionals with the education that they need to go on and become specialist nurses, which their institutions rely on, at the same time as supplying care and support to young people. That is one example, but I am sure that there are many others where the actual staff at an event would also be beneficiaries.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I thank the hon. Lady for that intervention. Diabetes UK is an organisation with which I am extremely familiar and have known for many years  because my husband has type 1 diabetes. She has done her Minister a favour by ensuring that we are aware of the good work of that organisation and of how at least one charity would be able to meet these criteria. I was perhaps thinking of some smaller charitable organisations, which appear to have not been covered quite so well in the Bill. Diabetes UK is a very professional and well-run organisation that is well able to access advice and information to ensure that it complies with and takes advantage of legislation in order to promote the good work that it does. However, that may be much more difficult for smaller charities, and I hope that the Minister can give some examples.

Amendment 9 also gives cause for concern. To be fair, the Minister has dealt with some such concerns during the debate on an earlier clause, because there was a worry about staff who are also beneficiaries making donations during the course of an event. Whether they are a member of staff or a beneficiary, a donor or a recipient, all becomes very muddled in the real world, but the Minister gave some information about the relationship between donors and beneficiaries that clarified that concern. I hope that he can deal specifically with how payment to access particular buildings is being defined, picking up on the point about community amateur sports clubs, and with ensuring that the National Trust is not disadvantaged compared with similar organisations. It seems that, once again, in trying to solve one problem with amendments—as we saw earlier with the Churches and community buildings—another problem emerges. There is a knock-on effect.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

I know that the hon. Lady does not like these amendments; I understand that. However, as I set out in my comments about the Opposition’s amendments earlier, we cannot open up the community buildings rules to every single charity that operates out of a building or that has a number of separate branches.

Let me try to respond to some of the points that the hon. Lady raised. First, she mentioned the National Trust as an example of a charity—a very worthy charity—that will lose out under the community buildings rules. It is important to point out that, like every other charity, the National Trust has the £5,000 limit. However, as she said, it has a number of buildings, meetings and so forth around the country. She is right to say that, because of the rule for entrance into community buildings when charitable activities are taking place, there can be no charge. For that reason, if the National Trust is charging a particular community group to enter a particular building, it will not be able to benefit under the community buildings rule. It can benefit from the Bill, with its single £5,000 limit, but it will not be able to make another claim, because it is not meeting the free entry requirement.

I fully understand that the National Trust, or any other charity that might be caught in a similar situation, will not like that, but we have to go back to the purpose of the Bill, which is to help charities, particularly small community charities, with the small donations that they receive and allow them to get a gift aid-style top-up payment.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party

Will a National Trust property be able to qualify under this scheme if it has a number of days when it does not charge?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

As I said in my opening remarks when I tabled these amendments, it is up to each charity, including the National Trust, to decide whether there is a way for it to change its current charging structure to try to benefit from these community buildings rules. If the action that the hon. Gentleman just described is a step that gets a charity closer to using these rules, the charity can potentially benefit. Every charity can see if there is a way that it can legitimately restructure to try to ensure that it benefits from these rules. In the case of charging, if charging is the only impediment the answer to the hon. Gentleman’s question would be yes, but clearly the charity would have to meet the other rules and eligibility criteria set out in the Bill.

If I remember correctly, the hon. Member for Kilmarnock and Loudoun said that the National Trust will lose out. I think that is a rather strong term, because let us not forget that under this scheme, once it is up and running, we estimate that there will be at least £100 million of benefit for charities on an ongoing basis. That money will be a significant boost for charities, particularly small charities, for which any additional money can make a significant difference to their overall income.

It is unfair to say that charities will lose out. All charities can benefit from this scheme, as long as they meet the eligibility criteria, including the National Trust. The National Trust is a big beneficiary of gift aid and it can use its £5,000 limit under this scheme. I understand that an argument can be made that because the National Trust is charging for entry it does not have the same benefits as—let us say—the Roman Catholic Church, but the National Trust has decided to charge and, as I have just said, if it wishes to change some of the way that it operates in some cases that is a decision that it can make.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I hope that the Minister will understand that in using those words, I was perhaps paraphrasing some of the comments that were made in the evidence sessions. However, I also hope that he will accept that the National Trust expressed disappointment at the changes, and therefore that it was fair to make that comment.

On a technicality, if an organisation decided not to have an entry charge but to set a minimum donation, what would be the position then?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury 4:00 pm, 25th October 2012

As with all rules, particularly those relating to taxation, it is important to ensure that changes are done in the right spirit. If the change the hon. Lady suggests relates to genuine donations, that could be beneficial in accessing this. Again, I preface that with the three other criteria that the charity would need to meet.

The hon. Lady asked about the quorum of 10 people. She asked how a member of staff, who was considered part of a quorum, could also be a beneficiary of the charity. My hon. Friend the Member for Portsmouth North, with her example of Diabetes UK, successfully answered that question. Lastly the hon. Lady asked about community amateur sports clubs. CASCs are already excluded from the community building rule because by their very nature they are established at a  local level as community groups, so they would not fall within this rule. However, they do have their £5,000 allowance which for many of them may be a significant boost to their income.

In order to retain control of the costs of this scheme, we need to put restrictions on how these rules are used. Opening up the rules to commercial buildings means we need to impose a restriction on entrance fees to community buildings. Allowing trustees and officers of a charity to count towards the number of participants for a charitable activity to qualify is something charities have asked us for. I therefore hope hon. Members will welcome this change. I hope they will join me in supporting these amendments and I commend them to the Committee.

Amendment agreed to.

Amendments made: 8, in clause 7, page 4, line 31, leave out paragraph (a).

This amendment, with amendment 7, have the effect that staff of a charity can count towards the group of 10 or more people required for a charity to be “running” charitable activities in a community building, as long as the staff are beneficiaries of the activity.

Amendment 9, in clause 7, page 4, line 35, leave out subsection (3).

This amendment is consequential on amendment 8.

Amendment 10, in clause 7, page 4, leave out line 42 and insert ‘subsection (1)’.

This amendment is consequential on amendment 8.—(Sajid Javid.)

Clause 7, as amended, ordered to stand part of the Bill.