I am grateful for the opportunity to catch your eye and ask a couple of questions under this clause about the financial cost of the scheme. I think I saw somewhere the Minister say that in the first year of operation, 2013-14, the scheme will cost some £60 million, which is a rough estimate. That obviously assumes that there will be no problems with the new online computing system, to which the Minister has alluded. He says that he has received assurances that the scheme will be up and running and perfect. It would be helpful to hear from the Minister the specific amounts that he and his advisers in the Treasury have set aside for the first three years of the scheme. Those first three years are 2013-14, 2014-15, which takes us up to the general election, and 2015-16. The coalition will have set the budget for 2015-16, and we will be stuck with it, at least initially, when we come to power. As I understand it, the estimate is some £60 million for 2013-14. I think the Minister or his predecessor hinted somewhere that by 2015-16, when the scheme is fully running, the scheme will be costing the Treasury some £125 million. I may be wrong with those figures, so it would be helpful to get some clarity on the Treasury estimates for the scheme’s costs.
Clause 18 is a technical provision known as a “sink clause”. It specifies that the top-up payments under this scheme will be paid out of money provided by Parliament. The scheme is a public spending measure and clause 18 makes that plain, but the scheme would still be a spending measure even without clause 18. There is a specific purpose for including clause 18. By convention, any provision in a Bill that involves public spending must be printed in italics, but nearly all of the Bill’s provisions involve public spending—directly or indirectly—so without clause 18, most of the Bill would need to be printed in italics, and many people would find that hard to read, including, I am sure, the hon. Member for Harrow West. Actually, given his love for Latin and other things, perhaps it would help. The inclusion of a sink clause means that only the provisions that make direct reference to public spending need to be printed in italics, which is therefore necessary only for clause 18 and clause 1(1).
Turning to the hon. Gentleman’s specific question, the Government gave some estimate for the scheme in Budget 2011. I will remind him of the numbers.
No, it is okay. I can provide the estimates that have been given previously. I put it that way because we have tabled several Government amendments and, given those changes, it is normal for us to ask the independent Office for Budget Responsibility for an assessment of any impact on our original costings. Our current estimate is that for 2013-14—effectively, that will be the first year of operation—the cost will be about £35 million, for 2014-15 the cost will be about £65 million and for 2015-16 the cost will be about £70 million. After the first two or three years of operation, when the system is running at full steam, our original estimate is that the cost will be about £100 million a year.
I am grateful to the Minister for his helpful clarification about the italics in the Bill—at least that should reduce the guidance for charities by about five pages. It is also helpful to have clarity about the figures of £35 million, £65 million and £70 million for the first three years. If I remember rightly, the Treasury is either preparing a comprehensive spending review or will do so soon. What guarantees will he give those in charities who read our debates that those figures will not be affected during the Treasury’s negotiation of the comprehensive spending review?
In proposing the initiative and progressing with it, including by tabling amendments after listening to the useful input from charities and others, the Government have been committed to the Bill, as has been clear from our debates. I have given the hon. Gentleman an estimate of the costings. I stress that it is only an estimate, and should be prefaced by what I said earlier. To link this to our discussion on an earlier clause, once the Bill has received Royal Assent, we do not, because of the review that the Government want in three years’ time, anticipate making any significant changes for at least three years, so there should not be any significant changes to the costings.
To be clear, is the Minister saying that the Treasury is not seeking to reduce expenditure under the small charitable donations scheme? It is clearly seeking to reduce a whole series of other parts of Government expenditure, but will this scheme be untouched?
The Minister has helpfully confirmed the Treasury’s rolling estimates of the expenditure drivers in the Bill for the next few years. In relation to issues raised during our evidence sessions, is he in a position to clarify how much of that cost the Treasury believes will come directly as top-up payments and how much will involve increased gift aid, as more charities use it and are encouraged to use it more? Does he have any breakdown of the estimates between gift aid proper and top-up payments?
That is a good question. It is clear that when the Government make estimates and have the OBR look at them, we need to take into account behavioural changes. I think that that is what the hon. Gentleman is getting at. Changes to gift aid are likely, perhaps in both those directions. I hope that he respects that that is difficult to estimate, because it is a behavioural change and this is the first time that any Government have done something of this nature. I have no numbers that could give that breakdown, but as we progress past the first year and move into subsequent years that behavioural impact will become better known, and I hope that HMRC will provide further information at that time. We will discuss reporting in a later clause, but HMRC usually releases annual information and key statistics on the changes in claims for gift aid and other charitable reliefs, and I hope that that kind of information can be included.
As the Minister will know, a certain proportion of gift aid payments are attributed to overseas development assistance when making the calculations under the OECD rules. Would the same apply for donations made to charities giving overseas development assistance with these gift aid top-up payments as it does for the original gift aid?
I am sorry if that was not clear. The Minister will know that a proportion of gift aid—the figure ranges between £60 million and £100 million a year—is attributed to overseas development assistance expenditure under the OECD rules, as part of the total overseas development assistance that the United Kingdom gives. I am asking him whether the same procedure will apply for the gift aid top-up payment as it does to gift aid itself, where any proportion of that gift aid on donations to charities conducting overseas development assistance is included.
I thank my hon. Friend for that clarification. If I understood him correctly, he is effectively asking whether charities whose charitable purpose is overseas aid, perhaps for Africa or Asia or for schools or medical aid, are eligible for this scheme in the same way that they are eligible for gift aid. As long as they meet the other criteria within the Bill, those charities are not excluded. For example, if a small local community charity was collecting for an African school, as long as it meets the definition of a charitable purpose under the Charities Act 2011, it would not be excluded from this top-up scheme.
I am most grateful for that confirmation, but I want to go a little further. When one thinks about overseas development assistance as a percentage of GDP, under the OECD rules all the bits of overseas development—the hon. Member for Harrow West, who was an overseas development Minister, will know this—that do not necessarily come under the Department for International Development, but perhaps under the Foreign Office or the Ministry of Defence, are assembled, and a part of that attribution is gift aid. I am seeking confirmation that the gift aid top-up will be treated in the same way as gift aid for this OECD calculation. It may not be a very large sum of money, but it is significant and should be counted as part of Britain’s overall overseas development assistance, as gift aid already is.
I thank my hon. Friend for making that clear. I understand his question now. It is not something that I have specifically looked at, but it should be treated in the same way as gift aid is for the OECD calculation. I will look into it in a bit more detail. The concern is, if I have understood my hon. Friend rightly, that the total top-up payments in a specific year are treated, as far as OECD calculations for UK overseas development aid are concerned, in the same way as the total amount of gift aid that goes overseas. I believe it is the same way, but I will look at that. That is a good question.