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New Clause 1 - Annual report

Part of Small Charitable Donations Bill – in a Public Bill Committee at 3:40 pm on 30th October 2012.

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Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party 3:40 pm, 30th October 2012

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.