I beg to move amendment 11, in clause 8, page 5, line 9, leave out from ‘include’ to end of line 10 and insert

‘any parts of a building excluded by subsection (1A) or (1B)’.

This amendment, with amendment 12, enables parts of a commercial building to qualify as a community building in certain circumstances. Broadly-speaking, the part must be available for use exclusively by a charity at the relevant time, and its commercial use must not be the sale or supply of goods.

With this it will be convenient to discuss the following:

Government amendment 12.

Amendment (a) to Government amendment 12, in subsection (1A), leave out “residential purposes or”

This amendment has the effect of including residential premises within the definition of ‘community buildings’ for the purposes of the Bill.

Government amendments 11 and 12 and Opposition amendment (a) relate to the definition of a community building. We have had some lively and lengthy debates on the community buildings rules already. They are limited to help balance out some of the worst unfairness in the basic rate of donations of £5,000 per charity. They are not designed, and were never meant to be, a free-for-all for every charity carrying out charitable work in a community. The original definition of a community building excludes commercial and residential buildings from qualifying as a community building. The Government have listened to concerns expressed that some charities might not have access to the sort of  building defined in the Bill as a community building, such as a town hall or another local building. Instead, some charities use rooms offered to them by hotels or in commercial offices, for example. That is a fair point, so we drafted amendments 11 and 12.

The amendments allow commercial buildings, excluding premises that are used wholly or mainly for the sale or supply of goods, to qualify as a community building. Amendment 12 also clarifies that a building is not disqualified from being a community building simply because it has mixed use, and is used for charitable and non-charitable activities. The part of the building used for wholly charitable purposes counts; the rest does not. I hope that that brings welcome clarification for charities.

The Committee should note that the Government amendments leave residential buildings outside the definition of a community building. Sub-amendment (a) to amendment 12, tabled by the hon. Member for Kilmarnock and Loudoun, however, seeks to allow residential buildings to qualify as community buildings. I sympathise with the sub-amendment, but I her to withdraw it. The effect of allowing residential buildings to qualify as community buildings would be profound. It would increase the cost of the scheme unacceptably, so much so that we would need to revisit and probably reduce the main £5,000 limit on small donations.

As I set out in our earlier debate, the cumulative cost of sub-amendment (a) together with the first group of Opposition amendments on community buildings could be in the region of hundreds of millions of pounds. Let us remember that the main objective of the scheme is to allow every charity to claim up to £5,000 of small donations. The community building rules serve as a proxy to identify one group that acts to all intents and purposes as a charity in its own right. Without the community building rules, such a group may have limited access to payments under the scheme, so the intention is for one group to get an allowance of £5,000. The rules are not intended, specifically, to reward a group working out of multiple buildings.

We recognise that the rules may on occasions enable some groups to access more than one set of allowances of £5,000. That is not our intention, but it may be the inevitable result of helping to redress some of the unfairness of the basic £5,000-per-charity proposition. Extending the rules to residential buildings would be a step too far and would increase the costs of the scheme unacceptably. Lots of charities, such as homeless shelters or children’s homes, provide services in residential buildings, but extending the rules to such buildings would be expensive. There is no policy reason to provide such charities with more than one set of the £5,000 allowance when other types of charities would not so benefit.

I recognise that some charities will not be able to benefit under the community building rules as a result of excluding residential buildings from the definition. Some groups meet in members’ homes and welcome any member of the public who attends the meetings, but I am afraid that there is no way to carve out such groups while maintaining the overall integrity of the scheme. There would be no independent record of a meeting having taken place, or of the admission of members of the public to the meetings. Unfortunately, that would give the green light to the unscrupulous people who  already exploit gift aid to claim multiple allowances under the scheme, and that is a risk too far for the community building rules.

I have explained that the community building rules are a broad set of rules to help iron out some of the worst unfairness of the main £5,000-per-charity rule. There will always be “me too” calls, wherever we draw the line between those inside and those outside the provisions. It is safe to draw the line in a way that includes most commercial buildings but leaves residential buildings outside. Moving the line to bring in residential buildings would greatly increase cost and the risk of fraud. It would leave us with no choice but to look again at whether the £5,000 limit on donations is sustainable, in terms of the cost to the public purse. I therefore ask the hon. Member for Kilmarnock and Loudoun to withdraw sub-amendment (a), but I also ask the Committee to accept amendments 11 and 12.

We are making good progress this afternoon, even if we are not getting all the answers or making all the headway that the charity sector might want.

I want to focus for a few moments on the definitions relating to residential buildings, as that is the main point we should discuss. As the Minister has said—his explanatory statement outlines the details—Government amendment 11 would leave out what was previously in the Bill, and insert,

“any parts of a building excluded by subsection (1A) or (1B)”.

As the explanatory statement makes clear, that would enable

“parts of a commercial building to qualify as a community building in certain circumstances. Broadly-speaking, the part must be available for use exclusively by a charity at the relevant time, and its commercial use must not be the sale or supply of goods.”

I note that the Minister did not give specific examples of circumstances in which that might apply, or how many charities or organisations it would help. I assume that some background work has been done, as he will have wanted to assess the cost implications of amendment 11, as well as speculating on the cost of amendments that the Opposition propose. I am interested to hear how many more organisations he feels will be helped to claim on the basis that they are covered by “community building” as a result of his amendment.

The issue of residential properties is important, and Members on both sides of the House have raised it—the hon. Member for Congleton spoke about it on Second Reading, as did my hon. Friend the Member for Harrow West during the Committee’s evidence session—particularly, but not exclusively, in relation to hospices. I am concerned that the Minister’s amendment maintains the restriction on residential properties, but we are still not entirely clear which organisations and properties the definition would catch. The charitable sector is worried about that matter, and has specifically highlighted its concerns over hospices, hospitals, care organisations and care homes.

In his evidence, the Minister implied that such organisations would not be caught, as patients of hospices would still be registered at their homes, and therefore, for the purposes of the Bill, hospices, and so on, would not count as residences. He said:

“Yes, I have given it consideration, so I hope that I can clarify the situation. The residency issue around community buildings does not really apply to places such as hospices—or hospitals for that matter. They are places of care.”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 63, Q107.]

Will the Minister be slightly more specific about what he means by “does not really apply”? There seemed to be a wee edge of doubt about whether it would apply in some circumstances. He also mentioned hospitals and hospices being “places of care”. Will he clarify whether other places of care would or would not be caught up in such scenarios? Residential provision for elderly people, or respite facilities, for example, could be affected. He may respond by saying that the residence will not count if it is permanent for someone—if, for example, a person had given up their home and was living in a care home on a permanent basis.

I shall give one or two examples to highlight what is happening in the real world. When I was looking back over the submissions we received about the Bill, I came across one from Camphill Scotland. It did not raise the specific point about residential care, as it was more worried about issues that we have debated under earlier clauses, which I will not revisit. It was particularly concerned about cash donations and so on, because it wants to look at expanding the ways it can collect donations and explore the possibilities of new ways of enabling organisations to be supported.

It struck me, however, when I looked at the background of that organisation—it runs a number of schools for people with special needs, called Camphill communities, which are home to around 800 people, of whom around half have learning disabilities or other support needs—that all the communities focus on the needs of individuals. The submission explains how the organisation goes about its charitable purposes. I would be interested if the Minister could give us some guidance or way forward in terms of some of the specific services offered. Its website states:

“Camphill School Aberdeen offers a wide range of services for individuals aged 1 to 24, including: residential provision (up to 52 weeks of the year)”.

Even though those people may stay there for 52 weeks of the year, it may not, to all intents and purposes, be their home under the definition. Will the Minister give us some indication of whether, in those circumstances, that kind of organisation would fall under the definition that he seems to imply applies to hospices and hospitals? Is it a “place of care”, or a different type of organisation?

Camphill School Aberdeen also runs

“a therapeutic community and residential home for young people with a wide variety of special needs, providing 12 places for young people from the age of 16 to 25.”

In the wider sense, that is probably not those young people’s permanent home, so it is a place of care for the period of time that they are there. It also has another project that works with elderly people, and it has set up what I believe to be the only Camphill community in the UK that offers a particular source of care and companionship to older people. It was established, according to its website,

“to pioneer care for older people in a mutually supportive community.”

It has 17 residents and 12 co-workers. Those people are living somewhere that is their permanent home, but they are none the less receiving some kind of care and therapeutic support during that time.

I hope that the Minister will see that we do not want the Bill to be expanded to take account of absolutely everything. We live in the real world, and we understand that there may not be an endless pot of money for everything. He has, however, implied at various points that no matter how many organisations were eligible, they would all be able to make use of this scheme.

Does my hon. Friend agree that we also have the interests of the hon. Member for Banbury at heart as well? He described his parish to us. My concern for him is that if he was attending an event at his parish vicarage, that might not be eligible under the provision, but if he was in the church hall, assuming there is a church hall, it would be. Does that not seem to be an anomaly?

My hon. Friend again makes an important point, and I am sure that we would not want to do anything that caused problems to the hon. Member for Banbury, or any other member of the Committee who is involved in charitable works.

I hope that the Minister understands why we tabled this sub-amendment, and I hope that, before I decide whether to push it to a vote, he will answer the questions around eligibility and give us more clarity. I assume that the hon. Member for Congleton is on other important business today, and it is important that someone speaks up for the points that she made. I take it that she is attending today’s other important debate, and that is understandable. I hope that the Minister takes on board the points that the hon. Lady made earlier and provides further clarity on hospices, hospitals, care homes and other forms of residential provision that involve people living for an extended period in a place that is not their permanent home. I hope that he will also deal with cases in which someone’s permanent home is in a charitable setting.

I thought that I understood clause 8, but what with the Government amendments, I am not quite sure what is included now, so I seek clarification from the Minister. The exclusion of residential and commercial premises from the definition of “community building” removes the possibility of claiming for individual charity shops, local groups that exist only for fundraising, or groups held in or operated from people’s homes. I understand that that is done to prevent multiple top-ups to the same organisation. However, the definition is slightly outdated, given how modern charities operate, and the exclusions are crudely applied. The definition of “commercial purposes” is ambiguous; it is unclear whether it would exclude charities that deliver contracted services or charge for part of their services. Charities may also operate out of commercial space that they have hired, or operate on land or a community space that does not have a building. Would these be excluded from the scheme, or does Government amendment 11 or 12 now smooth this out for them?

The definition of “community building” used here appears out of step with the Government’s agenda on asset transfer, under which a wide variety of public  buildings and spaces have been transferred to the ownership or management of community organisations for charitable purposes. It also seems out of step with the modern use of many community buildings, in which all or part of the space may be used interchangeably for charitable activity, fundraising or trading.

Will the Minister clarify why two different definitions of “community building” are used? Does he agree that the reference to commercial buildings does not fit with the modern view of public or community spaces, and that that could cause problems for some local groups? Do the Government amendments smooth that out? If not, will he look again at the definition of a community building, so as to ensure that he does not exclude residential charitable activities?

Are hospices in or out? I understand that they were out, and I think that they still are, but if they are, how can the Government and the Minister justify giving tax relief to large Churches and charities that are already relatively wealthy—in my part of the world, the Church of England is still the largest landowner, although the coal board comes a close second—but not providing tax relief for places such as Willow Burn hospice in Lanchester in my constituency?

I have to leave after asking this question—I will speak and run—because I have another meeting, so I may not get the answers, but I will certainly read Hansard next week to pick up the Minister’s detailed response to my questions.

We have had a thorough debate on the community building rules. I hope that Committee members now understand that the rules are not supposed to be a wide-ranging and all-encompassing extra provision for all charities. The principle stands that all independent charities should be entitled to only a single allocation of £5,000. The community building rules exist only to even out the discrepancy that would be caused for a number of charities that are structured differently from others, but are similar in many other ways.

The hon. Member for Kilmarnock and Loudoun made several points and started by asking, if residential places were included, what difference that might make in terms of the numbers, whether we had looked at the numbers and what estimates we had made. A lot is uncertain. We cannot be sure what would happen in terms of the cash amount or the number of charities. The reasons for that are fair. The reasons for that are fair. If work residences were allowed to be included, an almost limitless number of splits could take place for a charity that wanted to increase its £5,000 by multiples.

Perhaps my question was not entirely clear, and I apologise if that is the case. I was not asking the Minister to identify the costs associated with an unlimited amount of residential facilities. His amendment potentially changes the number of premises that can be used, now that commercial premises are included, so my question was about what costing had been done and how it impacts on the Bill.

I thank the hon. Lady for that clarification. We, or rather HMRC, have done some costings. They are not significantly different from the original costing that the Government had for the scheme. Until such  figures have been tested by the OBR and we have heard back, we would not ordinarily publish them. The difference is not large enough to change the overall cost envelope significantly. I hope she understands that we will publish the costs in due course, but it is normal practice for the Government to have figures checked by the independent OBR before they say that a number is x, y or z.

The hon. Lady and the hon. Member for North West Durham asked about residential buildings and hospices. They are right that in the evidence session I referred to them as “places of care” where people go for palliative care. The example I used then still stands and clearly has not changed. In general, when someone is, sadly, ill enough to go to a hospice for care, they do not give up their home, so their address is elsewhere. They are in the hospice for care. The restrictions on residential buildings would not apply in such cases. I hope that makes it clear.

I thank the Minister for clarifying that in relation to hospices. He may be going on to this, but will he clarify the other situations I described? People might live for a period in an organisation or in some form of care run by a charity. Would that count?

The hon. Lady used the example of Camphill school. She said that sometimes young people go there for up to 52 weeks of the year, and asked if that was residency. It depends on the fact pattern of each case. It would be wrong for me, as the Minister responsible for the overall legislation, to go into detail on certain hypothetical situations, but I understand why she asked the question. It is a fair and legitimate question. HMRC would have to look at the fact pattern before making a decision in such a case. I hope and believe that the guidance will look at specific examples, and the one she raises is the kind of example that officials should try to include.

While we are on the subject of guidance, which has come up several times, I can tell the Committee that, within a matter of weeks, HMRC will get together what I call the draft guidance. Even before the guidance is published, HMRC has established a working group with trusted partners from the charitable sector. Many of the organisations that gave evidence in our first session have members on that group. HMRC will share that guidance with them before it is published in draft form, to get their feedback and comments. At the beginning of next year, HMRC will publish the guidance in draft form before it becomes final to allow input from all charities and interested groups, including the hon. Lady and other Members of Parliament. HMRC wants to ensure that the guidance captures all the issues that come up, which it might not have thought of. That is an important part of the process—using examples and other methods to answer the kind of questions that have been raised by the hon. Lady and others throughout the debate—which will help us get the guidance right.

The Minister is being very helpful. He alluded earlier to the fact that there will be an opportunity for charities to meet HMRC face to face and go through the guidance, not only in the preparation of the draft guidance, but if they have any questions about the final  guidance before they submit claims after April 2013. Is there a timetable that the Minister can relay to us so that charities have some foreknowledge of those events?

HMRC has already been meeting, on a trusted basis, a number of representatives from the charitable sector in putting together some of the changes in the amendments that we are debating today. HMRC’s working group will sit down immediately the Bill is passed with the draft guidance that it has already started to prepare. That will happen in a matter of weeks. The idea is for the draft guidance to be published by the start of the year, so that all charities and other interested groups can comment before it becomes final ahead of the introduction of the scheme in April 2013. That is a sensible timetable, and it is important to go through that process.

Regarding residential buildings, it would be wrong of me not to emphasise the risk of fraud if the provision were increased to include all residential buildings. We often talk, rightly, about legitimate, genuine charities that only want to do the right things—exactly the charities that we want to help—but there are people out there who would take advantage of legislation such as this for non-charitable purposes. Clearly, we all want to prevent that. Allowing all residential properties to qualify as community buildings would dramatically increase the opportunity for fraudsters to take advantage of the scheme, because there is no way independently to police whether real charitable activity is taking place in a house, and we must be good guardians of the public purse.

Only today, the Metro ran an article about an individual, about whom we can now talk publicly because he has been convicted, who took advantage of gift aid to the tune of £5 million. That is a significant amount, and it is a timely reminder to us all of how unscrupulous people with no charitable intentions can take advantage of the Government’s action to help genuine charities.

Anyone who attempts fraud that would take money away from bona fide charities, even if not on that scale, should face the full force of the law. In his deliberations about residential provision, did the Minister consider whether it might have been possible, without making every residential property eligible, to amend the Bill to capture the situations that we are most concerned about, such as a charity that runs a residential care home? Did he consider whether there might be a way of ensuring that such charities were definitely included, rather than being maybe in or maybe out?

The hon. Lady’s question is very well intentioned. When we developed the amendment, we considered other ways of introducing legitimate use of residential property. The hon. Member for Clwyd South, who has just re-entered the room, which is good timing, asked about vicarages. Under the definitions we have presented today, they would not qualify, because they are residences of important people. In an ideal world, one would include vicarages and more residences of worthy people, but if we tried to do that it would make this complicated clause even more complex.

As we discussed on other clauses, we want to ensure that we have got the provision right. We do not pretend that we have dealt with every possible eventuality. Something legitimate could arise that makes us think there should be a change, and that is why we have taken powers in the Bill to allow us to introduce secondary legislation to make sensible changes. I hope that the hon. Lady will support the Government’s having that secondary power if future changes are necessary.

We have introduced the amendments to help charities that would otherwise be excluded because they use a commercial building for their charitable activities.

I am sorry to interrupt the Minister so near the end. Perhaps I have misunderstood, but if a charity chooses to meet in a spare room in a pub, rather than in a village hall, would that be allowed for these purposes, or would it be disallowed because the pub may be engaged in the supply of goods? Would it be allowed if the charity were using a separate room upstairs, or out at the back, as the room itself would not be for the supply of goods?

A commercial organisation that is engaged in the supply of goods is a category we are trying to deal with here. If I understood my hon. Friend correctly, he asked about a charity using a pub—

A charity meeting only.

Yes. If no commercial activity is taking place, there is no charge for entry, and the pub has genuinely allowed its property to be used by the charity, it would be allowed.

Under this new amendment?

Yes.

As I have set out, it would undermine the integrity of the scheme to open it too far to residential buildings of all descriptions. I commend amendments 11 and 12 to the Committee.

Amendment 11 agreed to.

Amendment made: 12, in clause 8, page 5, line 10, at end insert—

‘(1A) Any parts of a building that are used wholly or mainly for residential purposes or the sale or supply of goods are excluded.

(1B) Any parts of a building that are used wholly or mainly for other commercial

purposes are excluded, except at any times when—

(a) a charity is carrying out a charitable activity in those parts, and

(b) the parts are available for use exclusively by the charity in carrying out the activity.’.—(Sajid Javid.)

See Member’s explanatory statement for amendment 11.

Clause 8, as amended, ordered to stand part of the Bill.