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‘(1) The Treasury must, within 12 months of this Act coming into force and annually thereafter, prepare a report on the operation of the Small Charitable Donations scheme and lay it before the House of Commons.
(2) Each such report must provide details of—
(a) the number of charities benefiting from the scheme;
(b) total expenditure on the scheme;
(c) the level of fraud in the scheme.’.—(Gareth Thomas.)
New clause 1 seeks to add a requirement that the Treasury, within 12 months of the Act’s coming into force, publish a report to enable the House of Commons in particular to consider carefully how the Act is working and to provide an opportunity for us to make the case for further reform.
There has been much debate during the two weeks we have considered the Bill about the number of charities that will benefit from the scheme. It would be useful to see a report within 12 months to see how many charities are in practice benefiting. It was useful to have the Minister’s clarity about the Treasury estimates of expenditure under the scheme in each of the next three years.
This might be a good point at which to clarify the following. The hon. Gentleman asked me earlier for estimates; the issue also links to what the hon. Member for Foyle asked about behavioural changes. I have some further information that gives some flavour of the behavioural changes. It would perhaps be best for me to say the numbers for each year that can then be matched against the static numbers that I gave earlier. This is an estimate of potential behavioural changes.
In the first year, 2013-14, the total cost is estimated at £50 million; in the second year, 2014-15, it is estimated at £85 million; and in the third year, 2015-16, it is estimated at £105 million. The difference between the two sets of figures—the ones I gave earlier when we discussed clause 18 and now—is static versus behavioural. I hope that I have been helpful. I want the Committee to have the maximum information.
We are grateful to the Minister for his intervention. Nevertheless, a year after the Bill has been enacted, it would be helpful to know more specifically how much had been actually spent in the £35 million to £50 million range. It would give us a flavour of where, in the likely range between £65 million and £85 million in 2014-15, the ball will stop.
Does my hon. Friend think that it would also be useful to have the figures, as my hon. Friend the Member for Foyle mentioned, in respect of the increase in charities claiming gift aid? I am sure that that would incentivise many charities, especially smaller charities, to take up the scheme so that, in three years’ time, they will also benefit from measures under the Bill.
My hon. Friend has made a good point, as indeed did my hon. Friend the Member for Foyle. If the Minister is right, there will be a huge surge in the number of charities registering for gift aid in order to benefit three years down the line from the small donations scheme. It would be helpful to get some sense of whether the behavioural change predicted by the hon. Gentleman in that sense was coming to fruition. My hon. Friend the Member for East Lothian was absolutely right that one of the ways in which we could know whether that was happening would be to have the total expenditure on the scheme broken down in terms of the extra gift aid claims as well as the money spent under the small donations scheme.
Many attempts have been made by the Minister to justify the scheme’s level of complexity on the basis of the level of fraud. I repeat that Opposition Members are absolutely committed to taking proportionate measures to stop fraud under the scheme. It would clearly be helpful to hear, 12 months down the line after the scheme was in operation, HMRC say how much fraud it actually estimates in its operation. That would allow us to have a meaningful debate about the success or otherwise of the scheme.
Does my hon. Friend consider that it would be useful if HMRC said how much it has had to take back from charities? We would then know whether charities were struggling to operate the scheme within the rules. The arrangements could really affect charities’ cash flow projections and the management of their budgets in difficult times.
My hon. Friend is right. Perhaps I should have been slightly more clear in the drafting of new clause 1(2)(b) and referred to the total “net” expenditure on the scheme. That would have allowed the Minister even less wriggle room and made him be more clear about the level of overpayments. It would indeed give us a greater sense of the problems for HMRC in managing the scheme and, in turn, a sense of whether charities were benefiting from it.
Linked to new clause 1 is the suggestion that there needs always to be a review of the Bill’s operations after two years in practice, and I shall outline some reasons why. There is considerable scepticism about how the Bill has been drafted and, indeed, the method chosen by the Minister to provide what is an estimated £105 million grant scheme for small charities in the year when the next Labour Government come into power.
In the early parts of the line-by-line debates on the Bill, we had plenty of opportunity to look at the Government’s many other grant-giving schemes—many with equally low levels of fraud, sometimes even lower levels of fraud. New clause 2 would provide an opportunity for Government to consider whether the Bill, with all its complexity, and the scheme, with all its complexity written into its heart, are still the best way to administer this small grants scheme.
New clauses 1 and 2 are perhaps an opportunity to reflect on our two weeks of line-by-line scrutiny to see essentially what we have learned about the scheme and the Government’s motives and intentions. We set out at the beginning of this two-week process wanting to help the Government get the money to small charities. However, we were extremely concerned about the level of complexity in the Bill.
We raised a series of concerns reflected to the Committee by those who represent the charity sector about the requirement that access to this scheme be linked to gift aid registration; then the requirement that there could not be a benefit unless there were three years of gift aid claims. There were concerns about the wholly new concept of community buildings written into the scheme—a concept completely alien at the moment to most charities. It is not necessary to understand that concept at the moment. We have gone on to listening to the concerns of charities, to raise concerns about issues relating to charity mergers and the sheer amount of guidance set to be required.
We were also extremely worried about the potentially small number of charities, proportionately, that would benefit under the terms of the Bill. In its evidence to the Committee, the National Council for Voluntary Organisations suggested that only a third of charities across the country would benefit from the Bill. We were seeking to understand from Ministers why they wanted to exclude the other two thirds of charities from access to the scheme, given how much other moneys have been cut in Government spending from which charities might otherwise have sought to benefit.
The third area of concern we sought to raise was the divisive nature of the scheme. Members of the Committee will remember me posing, in terms that I hoped Government Members would clearly understand, the contrast between Eton, a charity registered for gift aid with considerable capacity to help those donating register for gift aid, and the charity linked to the best primary school in the country—the Friends of Newton Farm, based in my constituency. That is not registered for gift aid and therefore not able to claim under this scheme. Why do the Government think it fair that Eton should be able to benefit from the scheme while the best primary school in the country, that happens to be in my constituency, is not?
We heard two other examples of division under the scheme. We heard that English Heritage will potentially benefit from it; we heard that the National Trust will largely not potentially benefit from it. We heard that well established churches in the Church of England will benefit but churches that have been planted in communities—just getting up and running—are not likely to benefit. We were concerned about why the Government wanted to allow a scheme that pitted one small charity against another—that allowed one small charity to benefit from the scheme but not other small charities.
I cannot speak for every Opposition Member, but my instinct is that our concerns have deepened in those three areas.
We now know that the scheme will be far more complex than we even imagined at the beginning of these debates. Potentially 160 pages of guidance on the website—80 pages just to register for gift aid, as we heard as the result of an intervention from my hon. Friend the Member for Leeds East.
The Minister confessed in an interesting aside this morning that he expected the guidance under the scheme to be at least as long as that for registering for gift aid. If in January he is successful at his meeting for Bromsgrove charities in persuading the 2nd Bromsgrove Scout Association, if it is not already registered, to register for gift aid—the hon. Member for Birmingham, Yardley is not here, but perhaps the 1st and the 3rd Bromsgrove Scout Associations are not registered for gift aid either—it will have to wait three or possibly four years to get its gift aid claims in and to benefit, as a result, from a maximum of £1,250.
I suspect that the Minister will not say at the January meeting to the 1st, 2nd and 3rd Bromsgrove Scouts that they will need to wade through 160 pages of guidance on the website. He probably will say, “Speak to this excellent HMRC official that I have brought along today and he will help you to claim, fill in your forms for gift aid and get registered for this scheme”.
We have also learned during the passage of the Bill that the estimate that a third of charities would benefit from the Bill and that two-thirds would not benefit is not as accurate as we expected. A letter sent, I think, to all members of the Committee by the National Council for Voluntary Organisations, which I hope to come to later, appears to suggest that only a fifth of charities will be eligible. So the scheme is even more divisive than we had been led to believe. Four out of five small charities will not be able to benefit under the terms of the Bill. Only one in five charities will be able to benefit. As we have come to understand, it is even more divisive than we expected. We know about Eton versus the Friends of Newton Farm—
The hon. Member for Chelsea and Fulham says that I am obsessed, but I pose it in terms of Eton to help Government Members to understand just how divisive the scheme is. Its pits the favourite charity of many Government Members against other charities. We are not trying to prevent Eton from benefiting from the scheme; we just want to make sure that other charities have the same opportunity to benefit.
What the hon. Member for Chelsea and Fulham has against the idea of the Fulham and Chelsea parent-teacher association, the First Chelsea Scout Troop, if it is not registered for gift aid or, indeed, the Chelsea and Westminster hospital radio station, benefiting from the scheme, I do not know. What we do know from the evidence presented to us is that the favourite charity of some Government Members will potentially benefit under the scheme, but many parent-teacher associations, many hospital radio stations and many scout groups will not benefit.
May I request that the hon. Gentleman uses another example of a school? Most Government Members do not particularly relate to Eton, because we did not go there. I went to a local comprehensive in the north of Scotland. He should feel free to cite Chiswick community school, which might be a better example.
I am delighted to use Chiswick community school or perhaps an Isleworth community primary school, if there is one. Has the hon. Lady had the chance to check whether such a school has a parent teacher association, and whether it is registered for gift aid and has had three years of gift aid claims? She does not seem quite so sure about that, but that Isleworth community primary school risks not benefiting from the Bill. I suspect that she is a deeply influential Government Member, and I simply used the example of Eton versus the Friends of Newton Farm—I will now cite the example of that Isleworth community primary school—to encourage her to use her influence with the Minister to persuade him to reflect on the divisiveness of the scheme as it now stands and to introduce further amendments on Report.
We do not seek to hold against the Minister his descriptions of the merits of the clauses. Out of generosity, we understand that he has been in the Treasury only two minutes and that that is hardly time for him to demand and secure the rewrite that we gently suggest is merited for some parts of the scheme. On Report, he will have been in the Treasury a little longer.
You are right, Mr Robertson.
We look forward to the Minister’s being enthusiastic about using the opportunities given by new clauses 1 and 2 to persuade his officials to rewrite some of the Bill. Our concerns have grown and, as Opposition Members, we have seen one of our central tasks in Committee as highlighting, for the Minister’s benefit, the Bill’s complexity. New clauses 1 and 2 were tabled to give him the opportunity to reflect on what he has said.
I said earlier in our debates that I hoped that some of our points about the complexity and the obstacles—the obstacle race, indeed—that smaller organisations will have to jump over and which might lead to people not taking up the opportunity to benefit from the scheme, would be looked at. As that has not happened, does my hon. Friend agree that it is important to have regular reports back to see whether our concerns are justified, so that changes might be considered?
My hon. Friend makes a good point. The purpose of an annual report or a review is to provide a trigger point for the House and the Treasury to recognise the difficulties inherent in the Bill, to begin further conversations about how to address concerns and to take appropriate action.
In support of new clauses 1 and 2, it is worth reflecting on what the Minister has said in recent sittings. On 23 October, in the sixth sitting, he said:
“The hon. Gentleman is right that the rules are complex”.
Later, he said:
“I readily admit that this part of the Bill is complex and that we do not know exactly how it will work until it comes into practice.”––[Official Report, Small Charitable Donations Public Bill Committee, 23 October 2012; c. 206-207.]
On 25 October, in the seventh sitting, he said that
“the very nature of trying to capture issues such as connectivity—whether it is here where we are dealing with charity, or in other laws where we are dealing with trusts—is complex.”––[Official Report, Small Charitable Donations Public Bill Committee, 25 October 2012; c. 225.]
I give those three examples to suggest that the Minister already recognises the complexity that he has had to defend.
I have already picked out three of the Minister’s most compelling clips, but there are two others. The three previous ones highlighted the Minister’s confession that the rules of this scheme were complex—that we would not know exactly how they will work until they are practised. In the fourth clip from the Minister’s speeches that is worth reflecting on in the context of the debate on new clause 1, he admitted that mistakes can be made. He said:
“Clearly HMRC is like any organisation; mistakes can always be found.”––[Official Report, Small Charitable Donations Public Bill Committee, 25 October 2012; c. 223.]
In the Minister’s fifth set of comments worth recording in Hansardfor the purposes of the debate on new clauses 1 and 2, he talks about a complicated clause being made even more complex. It was in the eighth sitting on 25 October at column 271. That, I suspect, was in the context of an amendment about which we were probing him. The fact that he admitted that the clause as initially drafted was complicated was revealing. We have four examples of the Minister admitting in Committee that the rules of the scheme are complex, and a fifth one of the Minister admitting that HMRC, like any organisation, can make mistakes. Those suggest that we need to ensure that we write into the Bill an opportunity for a series of triggers to examine how the scheme is working in practice.
We have not been blessed today with the presence of the hon. Member for Banbury (Sir Tony Baldry). When he was probing the Minister in the evidence session on 16 October, he asked Questions 98 and 99 at column 61 —questions that indicated that he, the much-respected elder statesman of the Committee, was not sure how the Bill would work in practice. So we have the Minister admitting that the Bill is complex and one of the most senior Members of the Committee clearly not understanding exactly how particular parts of the Bill would work. That suggests that we need to ensure that we have the opportunity to examine how the Bill would work.
I drew attention in the earlier part of my remarks on new clauses 1 and 2 to a further letter we received from the National Council for Voluntary Organisations exploring the issue of the number of charities that will benefit and will not benefit under the Bill as drafted. The letter from NCVO echoes some of the concerns that were forwarded to us from the Institute of Fundraising. It points out that at the moment there is limited information in the public domain to enable proper scrutiny of the scheme as it stands. It argues that that is because:
“HMRC does not release its data in a way that enables direct comparison with the Charity Commission’s data.”
That is a familiar worry in the charity sector.
The Minister would get at least one good mark if he were to endeavour to resolve the lack of comparability between HMRC data and Charity Commission data. NCVO said that published data from HMRC show that about 65,000 organisations made gift aid claims in 2011-12, which is, broadly speaking, a similar number of claims since as far back as 2006. In his evidence to the Committee on 16 October, the Minister said that there are about 100,000 organisations on the books with HMRC, presumably registered for gift aid but not necessarily claiming it consistently.
NCVO went on to say that HMRC has not received information that would enable further comparisons to be made of the different types of organisations claiming gift aid. Therefore, a range of organisations is not covered by Charity Commission data. For example, the Church of England’s evidence to the Committee referred to the possibility of about 12,500 Church of England parishes using gift aid, which suggests that the number of general charities consistently accessing gift aid is considerably lower than the 65,000 to which the Minister alluded.
Initially, NCVO suggested that about a third of charities could benefit from the scheme. Taking into account the new evidence about the number of organisations that claim gift aid, but which do not have to be registered with the Charity Commission, it argued that it is now more appropriate to use the National Audit Office’s estimate for the size of the voluntary sector—the one that Lord Hodgson used—and suggested that there are about 350,000 charities in the voluntary sector. So taking the 65,000 charities that claim gift aid regularly and setting that against the 350,000 charities that we know exist, only one in five charities is potentially able to benefit from the scheme. One of them is Eton, a provocative example to capture the attention of hard-hearted Government Members, such as the hon. Member for Chelsea and Fulham, and to highlight the unfairness of only one in five charities being able to claim under the scheme, and four out of five charities, including Isleworth community primary school parent teacher association and Stafford hospital radio station, not able to benefit.
It is simply not the case that such charities could not claim. If the Stafford hospital radio station were registered as a charity, it would be able to register for gift aid and, after time, to claim it. It is not the case that it would not be able to benefit from the Bill. It might not be able to benefit as soon as the Bill becomes law but, within a certain period, it will be able to do so. Does the hon. Gentleman not agree?
It is good to see Government Members waking up. I draw the attention of the hon. Member for Stafford to the evidence that we heard from Cath Lee, the chief executive of the Small Charities Coalition. As for the type of charities that are not likely to benefit from the scheme, she said at column 17 of her evidence on 16 October that the
“first is start-up charities, because it will be a huge challenge for them to develop and keep going to the stage when they can meet the three-year eligibility criterion. The second group is those charities that do not already use the gift aid system and whose main sources of income are not easily gift aidable or are not gift aidable at all… The third group is those charities that just lack the capacity to engage with the gift aid system as it is.”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 17, Q31.]
That is perhaps because of the pressure on the managers and trustees of the scheme.
I gently suggest to the hon. Gentleman that the theory may be that in the great scheme of things every charity could benefit, if they all had the same level of capacity as Eton, but Ministers should be dealing with the real world outside the House and demonstrate that they are more in touch with the situation that charities face. They should recognise the reality that four out of five charities are not likely to benefit under the Bill as it stands.
Does the hon. Gentleman not agree that the process for registering a charity, which is after all a given, is just as complex, if not more so, than the process for registering for gift aid? He underplays the skills and ability that many of these small charities have demonstrated in registering as charities with the Charity Commission. The engagement with HMRC over gift aid is therefore not a great step. I acknowledge that they will spend two or three years waiting if they are start-up charities, but after that they will be able to benefit from the scheme in a substantial way, because £1,000-plus a year is not an insubstantial amount of money.
I agree that £1,000 is not an insubstantial sum of money. For a small charity it could go a long way indeed. Rather than have a sterile debate in which I cannot persuade the hon. Gentleman to recognise the reality outside these walls and the number of charities that do not benefit, why does he not support our amendment and let us see the evidence in a year’s time? His encouraging intervention in the debate on clause 1 hinted that he would be sympathetic to the idea of an annual report and prompted a number of similarly supportive comments at different moments thereafter by other Government Members. If he is convinced that what the Minister has said will bear out in practice, why does he not support our amendment and let us see what happens?
Order. Before we go any further, may I point out that we are discussing an annual report and a post-legislative report. We are not here to debate the whole Bill from start to finish again. I have been very lenient, but can we draw back in please?
Speaking very specifically to the matters that you, Mr Robertson, brought our attention to, my hon. Friend is right to highlight that there is a risk that the Government are out of touch here. With three food banks opening every week across the UK, £1,250 would feed many families and is not an insignificant amount.
My hon. Friend is right. Those charity food banks that are opening as we speak are not likely to benefit under the terms of the Bill until well into the period of the next Labour Government. Clearly it is a concern that many of those charity food banks will not benefit in the next two years.
The hon. Gentleman is being generous. I will take heed, Mr Robertson, and stick to the point about the report. My point in my intervention earlier in the Bill was that it will be quite possible—all hon. Members should make a diary note—in April 2014 to require through a parliamentary question or an Adjournment debate a report on the Bill’s impact. It is not necessary to have it in the Bill.
That is true, but equally would it not be better to have it in the Bill, rather than have to make the necessary diary note in the first place? Where there is controversy—as there clearly is on whether the eligibility criteria written into the scheme will benefit as many charities as the Minister says they will—surely it is sensible to have in place the mechanism for an annual report, and for a sensibly timed review of the Bill. We think that two years for a proper review is sensible, and that to help set the agenda for such a review we should have an annual report looking at the implementation of the Act after 12 months.
I encourage the hon. Gentleman to show the same flexibility of spirit that he hinted at in his speech on clause 1 and support us on new clause 1. I think he wants to. The hon. Member for Chelsea and Fulham is out of the Committee Room at the moment. Let us hope he stays out of the room. Perhaps the hon. Member for Stafford will feel less intimidated and want to be with us on the right side of the argument.
The NCVO, in its letter to us, went on to suggest that the Minister had perhaps inadvertently given the impression that a lot more charities would benefit under the terms of the Bill than will actually do so. I gently suggest to members of the Committee that the idea that four out of five charities will not benefit from a scheme that is potentially worth £105 million in the third year of its operation, when roughly £3.3 billion is set to be lost to the charity sector from Government financial support by 2015, ought to be seriously alarming for all of us, because that could mean that relatively huge numbers of small charities in all of our constituencies will not benefit in the way that they could have done.
It would be good if the Minister, before Report, committed to providing answers to a series of questions relating to new clauses 1 and 2. Let me set out what those questions are, because they will help to inform the run-up to publication of an annual report and to influence the context in the run-up to a formal review after two years. Specifically, how many organisations claim gift aid that are not covered by Charity Commission data? It would be helpful for HMRC, through the Minister, to release that figure. How many general charities are claiming gift aid? How many organisations have made claims for gift aid in three of the past seven years? How many of the 65,000 organisations that the Ministers hinted he thinks will claim in the first year under the scheme would be eligible if the track record was reduced to one or two years of successful gift aid claims, instead of three?
The Minister also hinted at flexibility on the matching rule. That was good to hear, but it would useful to know. The NCVO hinted that it thinks there are approximately 25,000 charities putting in gift aid claims in the range of £0 to £1,000. It is difficult to break that down further to see how many charities have claimed less than £625 per year. It would be helpful if the Minister was willing to ask HMRC to give us a bit more information, so we can break that down further and have a more meaningful debate on Report and, crucially, in the run-up the publication of the annual report and the review clause.
In the evidence session, we heard the NCVO's serious concern that a series of small charities might miss out because the harsh eligibility criteria, which the Minister insists on defending, have the potential to put them off. We heard about the Telford and Wrekin Senior Citizens’ Forum, the Wiltshire Rural Music School, Cumbria Action for Sustainability and Southside Young Leaders’ Academy. A review clause would give the Minister and HMRC time to reflect on whether more could be done to help such crucial organisations. I am sure that we can all think of similar organisations that do huge amounts of good in our constituencies, which would benefit from the £1,250 in full, but which are likely to miss out.
I suspect that the hon. Member for Brentford and Isleworth is secretly sympathetic to the concerns we have raised about the Bill. It was not clear from her facial expressions, I think it is fair to say, whether the Isleworth community school parent teacher association has registered for three years of successful gift aid claims. I am sure that she, with the background of the type of school that she says she went to, would not want that very worthy charity in her constituency to miss out. She will recognise the unfairness of Eton benefiting from this scheme and the Isleworth community school PTA not benefiting—it seems a huge unfairness.
I do not know whether the hon. Member for Stafford knows of the Telford and Wrekin Senior Citizens’ Forum, but I am sure that he will recognise a similar Stafford senior citizens’ forum and it seems a huge shame that such an organisation, perhaps registered for gift aid, but not for three years, should have to wait until he loses the election and a Labour Government reforms this system for it to benefit under the terms of the Bill.
The hon. Member for Congleton may not know of the Wiltshire Rural Music School, but perhaps there is a Congleton or a Macclesfield music school, perhaps it is a charity registered for gift aid but does not have three years of claims. An annual report and a review mechanism would allow her time to reflect on our exchanges today, perhaps allow her time to use her influence on the Minister, perhaps allow her time to do what the Minister says he is going to do and get HMRC to a charity day in her constituency and try to help charities benefit, not only from gift aid but from the small donations scheme.
Again, why should such a Congleton or a Macclesfield music school have to wait for the election of a Labour Government to get a review clause? Why does the hon. Lady not back our amendment and get an annual report locked into the framework of the Bill to serve as a useful trigger for an opportunity for her to use the considerable influence we saw in the debate about the matching rule to persuade the Minister to reflect on further changes to the eligibility criteria? I urge Government Members to recognise the merit of an annual report and to look at the detail of implementation of a formal review clause.
We hope that the Minister will be particularly persuasive on new clause 1 and new clause 2. We would not want to have to divide the Committee when there has been so much consensus, when we have been able to persuade Government Back Benchers to be so sympathetic to our concerns. I hope that the Minister is ready for the challenge of responding persuasively and articulately to convince us that he is willing to consider further changes to the eligibility criteria implicit in the Bill, such that an annual report and a review mechanism are not required.
To be honest, I have absolutely no idea. We are not debating the previous Government’s gift aid reforms; we are here to recognise that this scheme is vastly more complex. Gift aid has been a huge success, in no small part thanks to the many reforms made by my right hon. Friend the former Prime Minister to the terms of the legislation. Indeed, such was my right hon. Friend’s commitment to the charity sector that the House had a series of opportunities to debate whether the gift aid system worked and whether charities had sufficient other sources of funding.
Given that so much funding has been cut from the charity sector, it is particularly important that we are confident that this scheme will work in the interests of all charities, as opposed to just 20% of them, as the NCVO says it will. It is even more important that we have an annual report and the opportunity for a review clause. The hon. Member for Stafford was sympathetic to the idea of an annual report; I am not clear why he has changed his position, or whether it has anything to do with the presence in the room of the hon. Member for Chelsea and Fulham. Perhaps he will say in his intervention.
It has absolutely nothing to do with that; it simply has to do with my desire to keep legislation as short as possible and use other means for bringing out such information. However, I ask the hon. Gentleman this. Given that the very good gift aid reforms made under the Labour Government—the original gift aid, as was rightly said, having been introduced under a Conservative Government—were and are so successful, why is it a problem that so many charities are not registered for gift aid? That is the point I want to get at.
Can I persuade the hon. Gentleman to look at it for once as a glass half full rather than half empty? There is an opportunity for small charities that have not been able to register under the provisions—
Mr Robertson, I am grateful for your intervention. I am simply trying to encourage the Minister to recognise that Labour Members want to lift up opportunities for every charity to benefit from this comparatively small sum of money. We recognise that the eligibility criteria are not fair as they stand, and we have clearly not persuaded him to show enough flexibility at this stage. We hope that he will use the period between now and Report to show more flexibility, but we think that we should build into the Bill the triggers for an annual report and a review mechanism in order to ensure ongoing debate about the fairness or otherwise of the eligibility criteria that he has insisted on defending so hard for so much of the past two weeks. With that, I commend the new clauses to the Committee.
I rise to support both the new clauses. I do not wish to rehearse many of the wide issues relating to the Bill that have been aired articulately by the hon. Member for Harrow West, but I wish to pick up on one point. Why should this Bill carry a clause for report and a clause for review? By clause 15, the operation of the Bill will become an excepted matter under the Northern Ireland Act 1998. As we know, the Bill requires legislative consent from the Northern Ireland Assembly, which has remitted primary consideration of that to its Committee for Social Development. That Committee has expressed an interest in the benefits that the Bill may extend to many charities, but has also voiced concerns about the eligibility criteria that it thinks need to be widened, the donations limits and the impact that the bureaucracy will have on charities in Northern Ireland.
One benefit of having a clause for report and a clause for review in such a Bill is that that would assure a Chamber that has to give legislative consent but has concerns that it will receive formal reports at clear dates. Such reports are tabled in the House of Commons, so they would also be available to the devolved Chamber and the devolved Administration. These issues will affect charities in Northern Ireland—and, no doubt, in Scotland—where charities have a different regulatory status, so when its legislation affects so many of the interests and activities falling into devolved areas, it would be good practice and good manners for this Parliament to receive formal reports.
With all due respect to the hon. Member for Stafford, it is not enough to rely on informal undertakings about some of us tabling parliamentary questions, to which answers with the amount of available detail may or may not be given. Of course, it would be helpful, when the sort of report posited under new clause 1 is received, if HMRC not only gave the aggregate figures for charities benefiting from the scheme, total expenditure and the level of fraud, but gave relevant territorial indicators, so that the devolved areas—perhaps including Wales—could see how they are affected. I know that not all charities operate on a definable or trackable territorial basis in relation to the different jurisdictions within the UK, but I am sure that HMRC can provide such information in a way that is articulate enough to allow people to see what is happening in respect of the overall intent of Parliament and in their own areas.
We have to be transparent and accountable, and to take responsibility as a Parliament for the legislation that we pass. Too often, it is very easy for us to pass legislation without taking responsibility as legislators. In Committee Rooms and the Chamber, we always hear the Government being cited—the last one as being responsible for all the legislation passed in previous Parliament, and this one as being responsible for all the legislation passed in this Parliament—but we, as legislators, have to take some responsibility. When, having put forward my name, I become a member of a Public Bill Committee, I actually feel some responsibility for the quality of the resulting legislation.
One good discipline for such a Bill is that several Members on both sides of the Committee recognise the worth of the positive measures, but wonder about the workings and workability of some of the detail and about whether it could not be made more accessible to others. If that is our shared spirit as legislators, we should give Ministers, HMRC and others the opportunity to modify and improve the implementation of the Bill—perhaps even to review its detail—by providing for such clauses. Given the range of responsible and measured concerns that we have received, neither new clause 1 nor new clause 2 would be a particularly radical or heady change to make.
To that extent, I commend both new clauses to the Minister for his consideration, although he will not be in a position to support them today. However, as the Bill goes forward, a report and a review clause would give extra assurance to those in the Assembly as well as to many charities that the intention is to review the Bill and its workings in their interest. The hon. Gentleman has oft promised us reviews after three years. Given that that has been his refrain during our debate, I do not understand why it would be so objectionable for him accept the new clause.
I take this opportunity of discussing the new clauses tabled by the Opposition and to thank them for their contribution to the debate. On Second Reading, they said that they would be supporting the Bill in principle, but would be providing constructive scrutiny. Those on the Opposition Front Bench have done that admirably throughout our proceedings, as have other members of the Committee, and have done a good job in bringing up issues and asking questions, which I shall try to answer.
I will be upfront with the hon. Member for Eton, West—sorry, Mr Robertson, I mean Harrow, West. I do not know why I said “Eton”. For some unexplained reason, it has been mentioned so often in Committee. Such places have two great public schools, one of which I am sure that the hon. Gentleman represents well.
I shall not be supporting the new clause. Before I set out my reason why, I wish to tackle the charge made indirectly by the hon. Gentleman that I have dismissed every proposal out of hand. I reassure Opposition Members that I have considered with care each amendment and new clause they have tabled. They will remember my saying that I will consider again the level at which the matching rate is set, following their amendment to clause 1. Will they also note the range of amendments that I have introduced to the Committee, many of which were in specific response to the arguments advanced by hon. Members on both sides of the House on Second Reading? For example, several hon. Members drew attention to their anxiety about the single shared trustee connecting two otherwise unrelated charities. I tabled an amendment on that matter. Mention has also been made of the difficulty that excluding commercial buildings from the community building rules would create for some charities, so we have made changes to reflect that view.
The hon. Member for Kilmarnock and Loudoun asked whether charities that merge can continue to be eligible for the scheme. We had a good debate about that earlier, as the Government had tabled an amendment to deal with that issue. The hon. Member for Foyle drew attention to his worry about charities that had received penalties, but had them suspended or repealed. We also tabled an amendment to take account of that. The Government cannot be accused of not listening to Opposition Members and charity representatives on the Bill.
I am opposing both new clauses not because I do not want such information to be in the public domain, but because we are already doing much of what they ask and it would not be a good use of civil servants’ time to duplicate such work. Let me start with the annual report. HMRC publishes national statistics on the cost of the various charitable tax reliefs three times a year. When the scheme is up and running, HMRC will include the cost of the gift aid small donations scheme in those regular publications, following the practice established for transitional relief. Those figures will be national statistics. I have said before that HMRC does not publish the details of fraud rates in particular schemes or tax reliefs. That would be tantamount to advertising them to fraudsters, so I cannot give a commitment to publish such information. It is not necessary to provide an annual report to Parliament. All the information that the hon. Member for Harrow West has asked for and that HMRC can reasonably publish will be published. Interested members of the Committee will be able to find all the relevant information on the HMRC website.
I move on to the review of the scheme, which the hon. Gentleman says should take place two years after the legislation comes into force. I have said a number of times during our debates on the Bill that we are committed to undertaking a review of the scheme three years after it has started. Three years will be enough time for the scheme to get up and running, and for charities to learn about it and get used to claiming under it. Any less time than that would mean that we would be undertaking a review that would not be representative of the scheme, as the scheme would just be starting up. A two-year review would be premature.
However, I do not want hon. Members to think that the scheme is going to start on 6 April next year and that no one will look at it for three years until the review happens. HMRC continually engages with charities; staff on the helpline will be speaking to charities probably every day about their experience of the scheme; and outreach and audit teams will be visiting charities, and hearing what they are saying about the scheme. In addition, HMRC has a charity tax forum that brings together a wide range of charity representatives every quarter to discuss all matters relating to HMRC’s interaction with charities. The forum has been discussing the scheme since it was first announced in March 2011, and it has a working group to discuss the scheme in a more detailed way. The forum will share experiences of the scheme as it beds down and it will identify areas for improvement.
Perhaps this would be a useful moment for the Minister to reflect on the five questions that were triggered for me by the NCVO's letter, which raised concerns about the comparability of the Charity Commission’s data and HMRC’s data. If he was able to get HMRC to try to provide answers to those five questions, I suspect that would be useful for the charity tax forum in its meetings with HMRC officials, so that it could probe the organisation and effectiveness of the scheme.
Yes, this is a good point for me to turn to some of the points that were made by the hon. Gentleman, including that particular point. He referred a number of times to the NCVO letter. If I remember correctly, he said that it claims that only one in five charities will be eligible for this scheme. I must say that that is not a figure that I recognise.
I will repeat some numbers that I have mentioned before during our debates. About 65,000 charities claimed gift aid last year, but not all charities claim gift aid every year. There are around 100,000 charities that are currently recognised by HMRC for tax purposes. The fact that that number is lower than the overall number of charities is not because gift aid is inaccessible to some charities. Many charities are reliant on income from other sources, such as private trusts or foundations, grants from charitable bodies or other statutory bodies, or public sector contracts. If a charity does not receive donations that are eligible for gift aid, clearly gift aid is not something that it will register for. Perhaps that helps to explain why not all charities are expected to benefit from this scheme or indeed from the gift aid scheme, but I repeat that the one in five number is something that I am sceptical about; I do not recognise it at all.
Related to that, the hon. Gentleman also raised the issue of complexity. As I have readily admitted in the past, the Bill is complicated in parts. However, it is worth pointing out that the complicated parts, for example those relating to community buildings and connected charities, will not be relevant to most charities, because in most cases charities will not use community buildings—we have discussed the reasons why that is the case—and will not be connected with other charities or going through mergers. So, hopefully the vast majority of charities need not be too bothered about the more complicated elements of the legislation.
We have often talked about the complexity that exists in some parts of the Bill and the need to have complete and good guidance. Again, I just want to make a few points clear; I may have mentioned them in the past, but it is important when charities are looking to get the most out of the Bill that HMRC provides good guidance. HMRC has already started working on draft guidance, which it will share over the next few weeks with representatives from the working group in order to get their feedback. Once they have the initial feedback, they will publish the guidance before it becomes final so that a wider group of interested parties can read it and feed in their comments too.
HMRC’s final guidance will be produced at two levels. One will be entry-level guidance setting out the rules in a simple and approachable way supported, for example, by flow charts. It is anticipated that most charities will need only the entry-level guidance. HMRC will also produce more detailed guidance setting out with detailed explanations and many more examples how the law works. That guidance will most likely be of use to larger charities; members of their management teams can take the information and explain it to branches or parts of the charity that use the community buildings rule, for example.
HMRC will also support charity representatives who develop their own guidance aimed at specific sectors or their members. I think that that is a good thing. Some charities are large enough to want to produce their own guidance, and HMRC will work with them at an individual level to help them produce it, get it right the first time and make it as simple as possible.
We will publish the draft guidance in full in the new year after the Bill has received Royal Assent, so charities will have plenty of opportunity to see it, understand it and comment on it before the scheme gets up and running. As always, and as we rightly expect, HMRC will keep its guidance under review in order to take any new developments into account.
Turning to the five or six questions asked by the hon. Member for Harrow West, I have noted his questions, as have officials. I will have that information collated where it exists, and I am happy to write to the Committee to provide it. If he wants to use similar information on Report, hopefully that will be useful.
The hon. Member for Foyle raised the issue of a legislative consent motion with regard to Northern Ireland only. I take his point. It is well intended, and he raises a valid issue. He might not agree, but I have given reasons: HMRC will provide information regularly, on a more than annual basis, and we as a Government have committed to review the provisions in three years’ time. If I understand correctly, he would like a commitment on the face of the Bill. For the reasons that I explained earlier and would like to avoid having to explain again, I do not think that it is necessary to put it on the face of the Bill. The Government have committed to a review of the Bill and its workings in three years’ time.
In making some of that information available, will HMRC be able at some point to profile it on a territorial basis? I do not mean that absolutely every report should detail what the numbers are for Northern Ireland or Scotland, but can HMRC make a commitment that at some point from time to time, it will give an intelligible, articulate account of what is happening?
If the report does not go far enough in terms of the information that the hon. Gentleman is looking for—I am not sure how much detail he wants at a territorial level, but let us assume that some detail exists—once the Bill receives Royal Assent and charities start to benefit from the scheme, including, I hope, many in Northern Ireland, he can write to me when further information would be useful to him and his colleagues in Northern Ireland, and I will consider it carefully and respond.
I hope that I have addressed the points raised by the new clauses and assured hon. Members that they are unnecessary because the Government are already doing what they ask of them. I ask the hon. Member for Harrow West to withdraw the new clause.
The Minister was characteristically generous in his opening remarks and helpful in his willingness to get answers to the questions triggered by the NCVO's letter. We will reflect on what he said and his response to the new clauses. We take extremely seriously the point that my hon. Friend the Member for Foyle made about our responsibility not to forget the debates that we have in Bill Committees. It would be helpful to write into the Bill the trigger of an annual report, to ensure debate on the scheme’s eligibility criteria and how they have bedded in and played out in practice.
The hon. Member for Stafford encouraged us to see the scheme as a glass half full. I accept that it is a bad analogy, but the Opposition see the scheme as a glass 20% full, so we want to continue to press the Minister. He was not at the helm when the Bill was introduced and we accept that he has sought to respond to some of the charity sector’s concerns. Nevertheless, we hope that he will use the period between now and Report to recognise the case for further reform and that, with hindsight, he will welcome the trigger of an annual report as a means of delivering further reforms.
The Opposition recognise that the Minister is at the start of his career. We want to protect him from the charge of those hard-hearted souls on his Back Benches, who might want to cast him in such a light, that he is in danger of becoming the Minister for red tape. I gently tell him that 80 pages of guidance about registering for gift aid and another 80 pages to come about the scheme ought to worry him. It certainly worries us.
We fear for many of the small charities that would find £1,250, or even half that sum, extremely beneficial in keeping them in business. I say that on the day it was revealed that four fifths of the charities that belong to the National Association for Voluntary and Community Action—the smallest ones—expect their finances to get worse over the next 12 months. This £100 million scheme could be their saviour, but I fear that far too many will not benefit. For that reason, I am afraid that on this occasion the Minister has not convinced me to withdraw the new clause, so I wish to push it to a Division.