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Volume 301: debated on Thursday 27 November 1997

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What representations he has received from charities regarding dividend tax credits; and if he will make a statement. [16591]

We have received some 500 representations, half of which have related to VAT matters, about 20 of which have been concerned with tax credits.

Is the Minister aware that Mencap has confirmed that it will have to find £750,000 to top up its employee pension fund as a direct result of the pension tax introduced in the Budget? Does he agree that that £750,000 would be better spent on Mencap's important charitable purposes than on filling the Treasury's coffers? What remedies does he have to offer the large charities in this country, which would prefer to spend their money on charitable purposes than to fill the Treasury's coffers because of the unnecessary imposition of a swingeing pensions tax in the Chancellor's Budget?

The large companies will benefit from the 10 per cent. rise in the stock market that has taken place since Labour came to office. I was at a recent Mencap meeting, hosted by George Bull, and was very supportive of that charity, which does especially good work. The hon. Gentleman must be aware that, unprecedentedly, the Labour Government—acting much more generously than the Conservative Government did when they took action on tax credits—have delayed the starting date for two years, until April 1999, and there is a further five-year transition period, at a cost of £1 billion to the Government. That is very good treatment.

Will the Minister take into account the representations that I have received from many constituents, regarding their anxieties about possible tax changes and their effects on charity shops? Will he recognise how important charity shops are, not only to the charities that they work for, but to the local community?

I entirely agree with my hon. Friend and I can confirm to her that the position of charity shops is a fundamental part of the charities review, which is under way now and due to report in the spring.

As so many of the services that used to be public services are now rendered by charities, has the Minister made any assessment of the costs to the public purse if charities are forced to retrench on the services that they offer because of the various tax threats hanging over them?

It is a pretty poor reflection on the previous Government if their plans eventuated in charities undertaking necessary public services, but we are aware of the great work done by charities. The charities review is under way, which is considering VAT matters and other matters, and there is a seven-year transition period. Charities have time—I am sure that they will profit from it—to ensure that they can carry on the very good work that they do.

I welcome the assurances about tax credits and charity shops, but will the Minister bear in mind that many charities are suffering under the impact of the national lottery? The charity review needs to take into account not only pension funds but the impact of tax credits on charities' everyday money to help people in need.