My right hon. Friend the Chancellor and I have discussed the impact of the cut in the basic rate of income tax on gift aid and the need to build on the progress made since 1997, which has led to an increase in the resources going to charities through gift aid from £134 million to £750 million. The Charities Aid Foundation estimates that £700 million is potentially available from more tax-effective giving and we aim to come forward with measures at the time of the pre-Budget report, before the introduction of the basic rate tax cut next year.
Bearing in mind the fact that charities will probably lose a total of £70 million, can the Minister clarify what some of the strategies will be either for increasing the take-up of gift aid or reforming the system altogether so that it is simpler for people to use?
I agree that we need to do all we can to drive up tax-effective giving. Just in the last year for which figures are available, there was an increase of £125 million in the receipts to charities under gift aid. We want to take action on a number of fronts: first, by building on the improvements that have already been made in gift aid; secondly, by seeing how we can promote payroll giving, which is a very tax-effective form of giving; and, thirdly, by ensuring that there is greater awareness of how to give effectively—the Charities Aid Foundation has identified £700 million that could be available to charities and we want to do all we can to make that money available.
Last week I was pleased to organise for Oxfam a breakfast meeting in my constituency with leading Swindon companies such as Nationwide, Zurich, npower and Barclays, all of which have worked hard on payroll giving. Does the Minister agree that payroll giving will increase giving to charities, and would he encourage MPs to join in?
I agree with my hon. Friend. I have recently taken advantage of being able to give through the payroll giving scheme and I have written to all Members of the House to encourage them and their employees to do so too. It is still the case that too few employees take advantage of payroll giving. We want to do all that we can to promote the scheme. As I say, I encourage Members of the House both to take up the scheme themselves and to promote it in their constituencies.
Charities in Scotland will lose around £7 million as a result of the change and will also be badly affected as the Minister’s colleagues divert lottery funding away from good causes in Scotland and towards filling the Olympics deficit. What comfort can he give to charities such as Crossroads in my constituency, which are being hit hard by the changes at a UK level and also by unacceptable cuts at local authority level, so that they can continue to do their good work in supporting older people in the highlands and across Scotland?
The hon. Gentleman should join us in working on the different ways in which we can promote more tax-effective giving. We want to see improvements in gift aid. If he or the charity that he mentions have any suggestions, we would be interested to hear them. We want to find ways of promoting payroll giving and of raising awareness of how to give effectively. This is one of the occasions when there are greater resources available under gift aid if people give more effectively and charities encourage them to do so.
I agree with the Minister that payroll giving is effective. Has he had any discussions with the professional accounting bodies or the professional human resources bodies to ensure that, particularly in small and medium-sized enterprises and other small organisations, the staff who organise the payroll are aware of the process and the HR staff are making employees aware of the scheme?
My hon. Friend raises an important point. It is particularly hard for people working in small and medium-sized enterprises to take advantage of payroll giving. In the past, we have made resources available to encourage payroll giving by small and medium-sized enterprises, but I will take up her suggestion and ensure that we have discussions with the bodies that she mentions.
No one doubts the Minister’s good intentions, but he will be judged on his record. Since his role was created, the Government have taken £100 million from charities to prop up the Olympics. They have reneged on their promise on full-cost recovery and now they are taking £70 million a year from gift aid. That is a pretty disappointing record. Was he consulted by the Chancellor in advance of the Budget, and did he object, or does meekness before the Chancellor run in the family?
I did talk to the Chancellor about the issue. I thought that the Conservative party used to be in favour of cutting the basic rate of income tax, but clearly it is not any more. We on this side of the House are in favour of cutting the basic rate of income tax to 20p. I would have thought that the hon. Gentleman would come to the Dispatch Box to congratulate us on our record on gift aid, because the amount of money going to charities has gone up from £124 million to £750 million. It is not just we on this side of the House who think that we have a good record on gift aid; the Leader of the Opposition has said that
“there have been some positive developments.”