Small Charitable Donations and Childcare Payments Bill — House of Lords, 2016-12-12
Topic: Social Welfare
Robin Granville Hodgson (Conservative, Centre-right): My Lords, this is a money Bill, so the horse is off down the road before we even have sight of the stable door, let alone a chance to bolt it. Nevertheless, it is a good Bill and certainly has my support. I shall focus my remarks on the charitable section. It is a good Bill for the charitable sector for two reasons. First, it simplifies the 2012 Act. Those of us who had the pleasure of seeing that pass through your Lordships’ House—as I recall it, the noble Lord, Lord Newby, was the coalition Minister in charge of it—drew attention to some of the complexities, which the Government are now addressing. It is important to place on record one’s thanks to the Government for having honoured their commitment to have a three-year review and coming forward with the result we have before us tonight Sometimes calling it the gift aid small donations scheme can confuse people because it is not gift aid. Gift aid is related to the donor’s ability to pay tax; this is a pure top-up. You just get additional money from the Government for raising a certain amount of money. That is an important distinction which sometimes gets lost in translation There are a handful of points I would like to make. First, I congratulate my noble friend and the Government on the simplification of the means for being registered for this and on the fact that you no longer have to be in existence for two years or to have claimed gift aid in at least two of the previous four years. This is self-evidently of huge importance to new charities struggling to get going. It is a very welcome step forward. However, the 25% or thereabouts take-up remains disappointing. It is hard to know exactly why this is happening. Partially, it may be the complexity and partially it may be ignorance of the scheme among smaller charities; I will come back to that in a moment, but this is a welcome development Less welcome is the continuation of the 1:10 ratio—the need for £1 of gift aid to access £10 of top-up—which obviously involves a lower level of record-keeping or no record-keeping. One of the challenges to charities, particularly small charities, is the moving ratio. You have to keep your eye on how much you have in each of these two pots in order to be able to claim the top-up. One does wonder whether it would not have been simpler to have a fixed amount. Under the present regulations, the maximum you can claim I think is £8,000, so you have to find gift aid of £800 to justify it. Do we really need to keep that ratio constant throughout, or would it be easier to have a fixed amount, say £250 or £300—I do not know what number, but some smaller amount—that you have to reach and then you are free to claim the full amount or any amount up to the full amount without further ado, further inquiry and further record-keeping? I suspect that what the Revenue is really concerned about is being able to convince itself that the claimant—in this case the charity—is a proper operation. Therefore, so long as a reasonably substantial sum of gift aid is being claimed—one could discuss what that would be—the Revenue should not be concerned about the amount, particularly given that there is a cap on it in any case. It would be able to see that there was a bona fide charity making the claim Thirdly, also disappointingly, a matter much discussed in Committee in the other place was the type of donations that qualify. I am sure my noble friend will put me right if I am wrong, but as I understand it, cash and contactless payments qualify, while cheques and text donations do not. I find this quite a hard distinction to justify. Arguments that a cheque writer can be contacted to fill in a gift aid form show, in my view, a touching faith in our fellow human beings. People will just not bother, and perhaps I can give the House an example One of the reasons that charities do not merge is the problems with standing orders. When a charity disappears, the standing orders in its name have to be re-signed in the name of the new entity. The banks will not accept standing orders to the old charity, even though it can be proved that it had merged perfectly satisfactorily and that everything was above board, blessed by the Charity Commission and so on. It has to be re-signed and readdressed. The failure rate of re-signing is about 85%, since you write to people, they do not bother to write back and gradually the whole thing falls away. I strongly suspect that in this case, where you are having to write to people and say, "Thank you for your cheque; we are very grateful, can you please sign this additional gift aid form?", nothing will happen at all, or it will happen only in a small minority of cases. If this is the case with cheques, for which there is a certain degree of effort in terms of finding a stamp, finding an envelope and writing the cheque, for a text donation, which you do on impulse—you are sitting watching a programme, you are moved by what you see and you think, "This is a terrible thing and I am going to text a donation"—the idea that you can be followed through to get the gift aid is slightly fanciful. In particular, there is an £8,000 limit, so the danger of this thing running away with the Revenue is quite small. I hope that the Government will think about that aspect and some of the weaknesses in the present approach My noble friend made an important point on the issue of low take-up. Clearly, ignorance and lack of knowledge and sophistication among smaller charities mean that quite a lot of them do not know about the availability of the scheme. Those of us here who are involved in the National Citizens Service Bill were mildly—I will put it no higher—surprised at the emergence of the Revenue as a recruiting sergeant for the National Citizen Service. There is nothing wrong with that, but as various Members of your Lordships’ House said, a brown paper envelope from the Revenue usually has bad news rather than something that is likely to encourage you to participate. But if we are going to use the NCS model again, and if the Revenue is going to be open-minded and even-handed about it and publicise the scheme through its network to those small charities that they are aware of, that is a very welcome development, and the Government ought to be congratulated on it To conclude, this is a good Bill, and the Government should be congratulated. Your Lordships’ House can do nothing about it anyway, but I hope that the Government will think carefully about the possible changes and improvements that I and no doubt other noble Lords will wish to suggest. Perhaps we can persuade my noble friend to follow the noble Lord, Lord Newby, and promise us a review three years from now, in which case I look forward to seeing Members of your Lordships’ House again in 2019.