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New Clause 1 - Annual report

Part of Small Charitable Donations Bill – in a Public Bill Committee at 3:00 pm on 30th October 2012.

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Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party 3:00 pm, 30th October 2012

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—