I beg to move, That the Bill be now read a Second time.
I obviously welcome the number of colleagues who have remained in the Chamber after the important debate that has just happened. I am sure that they will contribute to the debate on this important and, I hope, uncontroversial topic, as we set out to give further support to our fantastic charity sector. Although the Bill proposes relatively minor changes, they are really important none the less, because they can further the practical support that we give to our outstanding charities sector in this country, and the childcare payments provisions will help families with childcare. I shall take both aspects in turn and start with the measures to help the UK’s charity sector.
I am sure that I speak for everyone in the House when I say that I am enormously proud of the fantastic work done by charitable organisations in this country. Obviously, as the Member for Battersea, I might be forgiven for pausing to make special mention of just one of those charities: the fantastic animal charity, the Battersea Dogs and Cats Home—one of the most famous animal charities in the world, let alone in this country, which finds new homes for more than 8,000 animals every year. Indeed, the Treasury has been a beneficiary of its efforts recently, with the appointment of the new chief mouser, Gladstone the cat, which managed to make me only the second new arrival from Battersea to the Treasury over the summer.
Right across this country and our constituencies, we see charities of all shapes and sizes right at the heart of our communities, whether large charities working here in the UK and across the world, researching cures for diseases or running relief efforts for those who suffer from conflict or crisis—obviously, Haiti is in our minds at the moment, and the House has just debated Syria, where so many charities are doing such brave and important work—or the smaller, more specialised charities run by just a handful of dedicated volunteers. We want to give them all the support that they deserve.
Last year alone, we provided more than £5 billion to help our charities to do more of that brilliant work. Of course, one of the biggest ways that we give them that additional revenue is through gift aid, which was worth about £1.3 billion last year. We want as many charities as possible to benefit from that, but as things stand, it is not always practical or feasible for charities to claim it. If people are out there, collecting money with a bucket, for example, they can hardly ask someone to fill in a gift aid declaration form, alongside giving a handful of small change. That is why, as many colleagues who were here during the last Parliament will remember, we introduced the gift aid small donations scheme in 2013, to allow charities and community amateur sports clubs to claim a gift aid-style top-up payment on donations received in circumstances where it is difficult or burdensome to obtain a gift aid declaration.
It is important to point out that that scheme is not a replacement for gift aid. Where charities can obtain a gift aid declaration, they should do so. Unlike gift aid, which is a tax relief linked to donors’ tax contributions, the gift aid small donations scheme is a public spending measure, under which the Government pay a top-up of 25p for every pound of eligible donations received, regardless of the donor’s tax status. This scheme was designed to complement gift aid. When we introduced the scheme, we promised that we would review how it was working after three years, and we have done so. It is therefore a pleasure, as a result of that review, to introduce three measures in the Bill that will make further improvements to the scheme.
I thank my hon. Friend for giving way before going into more detail. I fully appreciate the need for extra simplicity. Would not a bold step be to assume that all charitable donations are subject to tax relief overall? I appreciate that that cannot be done straightaway because enormous sums are involved, but could that be the trajectory that the Government take ultimately to make the tax treatment of charities incredibly simple indeed?
My hon. Friend is right to suggest that we are seeking as much simplicity as we can get, but I will perhaps come on to and tease out during the debate why we want to ensure that that simplicity and light touch goes alongside a degree of assurance. Finding that balance is perhaps one of the areas where a range of views will be expressed. We are keen to have a degree of assurance about the claims made and the public money given to charities.
On the consultation that took place, it might help colleagues to know that John Low, the chief executive of the Charities Aid Foundation, has said:
“The inclusion of a Small Charitable Donations Bill could be good news for charities, particularly for smaller organisations which have often struggled to unlock the benefits of Gift Aid. This provides a real opportunity to simplify the scheme”—
that is the point made by my hon. Friend the Member for Rochford and Southend East (James Duddridge)—
“and make it fit for the 21st century”.
Small charities in my constituency include the Leasowes walled garden project, which is part of the Halesowen Abbey Trust—a small organisation dependent on small donations. What plans does the Minister have to communicate to those small charities the benefits of the scheme that she is outlining?
My hon. Friend might be interested to know that Her Majesty’s Revenue and Customs has a team that goes out promoting these schemes. I was really impressed to read that since 2014 it had given more than 600 presentations to charities of all sorts of sizes, up and down the country, but he is right to say that we can always do more. I really hope that as a result of the Bill and this debate, colleagues will feel that they, too, can play an important role in telling charities in their area the good news that the scheme just got easier. Obviously, we all have a lot of contact with smaller charities in particular, and we get to know them over the years in which we represent them.
The changes are the result of months of consultation and constructive discussion with the charity sector. I thank the hundreds of charities, representative bodies and other organisations that worked with HMRC to make this review work.
Let me turn to the first of our proposed changes. The Bill will make an important change to the criteria for eligibility for the gift aid small donations scheme. Currently, to be eligible, a charity must have been registered for at least two full tax years, and have claimed gift aid in at least two of the previous four tax years, without a gap of longer than a year; obviously, that is around the assurance process. The Bill removes both those criteria, allowing newer and smaller charities to access the scheme sooner. As we all know, for a charity, those early years are important. The change will provide a welcome financial boost when it is most needed. This is a substantial simplification of the scheme; the only remaining eligibility criterion that charities and community amateur sports clubs will need to meet is the gift aid matching requirement, under which charities must claim £1 of full gift aid for every £10 claimed under the small donations scheme.
There are two reasons why we feel it is necessary to retain this rule. The first is to incentivise charities to engage with the full gift aid scheme, which will provide them with even greater income over the longer term. The second is to protect from fraud the small donations scheme, which has substantially fewer record-keeping requirements than gift aid—an important factor that was looked at when the scheme was first designed back in 2012. It is by retaining the rule that donations under the scheme must be matched with gift aid donations that we can best do that. We are simplifying the rules on eligibility as far as possible to allow as many charities as we can to benefit, while protecting the integrity of the scheme.
While I fully support the point that the Minister makes, I can conceive of a time when it is decided in a review that that link is not the correct one. Will the Minister consider adding a clause in Committee that would allow us to take out that requirement without going through the cumbersome primary legislative process in this House again? That would effectively allow her successors to make a slightly different decision in future, without having to come back to the House.
Clearly, all the points that colleagues make on Second Reading will be carefully considered and debated again in Committee. I understand my hon. Friend’s direction of thinking, but perhaps that will be discussed further in Committee.
The second important change enabled by the Bill is the future proofing of the small donations scheme to ensure that charities that use modern, innovative ways to collect money such as contactless donations will still be able to benefit. The small donations scheme was never intended to cover other methods of donation such as direct debit, online and text messaging, for which well-established and well-used processes for claiming gift aid exist. That remains the case, but we recognise that cash transactions have declined as new, innovative payment technologies have become more prevalent. We believe that the gift aid small donations scheme should keep pace with these amazing modern techniques.
Contactless donations collected using dedicated charity collection terminals share many of the same practical problems as bucket collections. Transactions are instant, and there is little opportunity for fundraisers to engage with donors to solicit a gift aid declaration. The Bill will therefore extend the scheme so that donations made using contactless technology will be eligible for top-up payments.
I welcome that decision by the Government. I should say, as I tabled an amendment to the original Bill to suggest exactly that future proofing, that I am glad that the Government have got there, perhaps a few years later than they might have done. However, is it really fair to end up with a different treatment if I swipe my phone cleverly at some terminal rather than if I happen to text the number that comes up on my screen? My sense is that I would not be willing to give details of my address through my mobile phone provider, so can we not be a little more generous and allow text donations in that situation?
Text messages can, as my hon. Friend knows, be gift aided, so we do not expect problems in that regard, but the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), will seek to respond more fully on those points at the end of the debate.
The final change proposed in the Bill is simplifying the rules on the top-ups that charities can receive on donations that they receive in their community buildings. Those rules were designed to ensure fairness and parity of treatment for charities structured in different ways. Without those rules, some charities are entitled to hundreds of thousands of pounds more than others simply because of differences in their historical structures. The gift aid small donations scheme is particularly well used by local churches. That was made clear by the Archbishops Council, which recently noted that in 2014 parishes could claim record levels of gift aid, with a significant part of the increase arising from the use of the gift aid small donations scheme. We want churches to continue to benefit from the valuable extra income provided by the small donations scheme, but it is important that the scheme continues to deliver the policy intention of providing fair and equal outcomes regardless of structure. The Bill will therefore address an anomaly in the original legislation.
I support the Bill, and I am grateful to the Minister for her explanation, but does she accept that the majority of charities, especially in my constituency, are small and rely solely for governance on volunteers? There has been a reduction in volunteer numbers across the United Kingdom. For many the Bill does not go far enough in promoting equal access to fundraising opportunities for charities that do not rely on staff.
Perhaps that is something that we can look at in more detail in Committee.
These are important simplifications. Throughout the consultation, we received supportive comments from charities, as demonstrated in the quote I gave earlier. There are always additional asks, and we would all want to be open to ideas about how we can further support charities. However, we think that the measures that we have introduced in the Bill are important next steps to make it easier for charities of all sizes.
There is a lot of merit in the Bill, which reaches out to ensure that smaller charities benefit from the scheme. Does my hon. Friend recognise that many smaller charities do not even know that the scheme exists, so part of the challenge that we face is communicating with them properly so that they know that the scheme will be a lot less complex and that they can benefit from it? What measures will she put in place to ensure that that happens?
I have already mentioned HMRC’s outreach work, which I will certainly be encouraging. More promotional opportunities are planned, and I know that the Minister for Civil Society will say more about that at the end of the debate. It is a fair point and we want to make it easier, but obviously there are people who just do not know about this and still perceive barriers, so everything we can do to challenge that is welcome. We are extremely keen to hear thoughts from across the House on how we can do that, so we are always listening. I am very happy to put those suggestions to HMRC, and I know that my ministerial colleague will be happy to consider that in his Department as well.
Let me clarify the anomaly and how we are addressing it. The anomaly in the original legislation allows some charities to claim more than others, based only on how they are structured. The Government welcome the supportive and constructive approach adopted by the Church of England, the Roman Catholic Church and other religious groups during the recent consultation on the change.
The Bill also considerably relaxes the rules on where charities can receive donations that are still eligible for the gift aid small donations scheme. Currently, the scheme’s so-called community buildings rules mean that charities can claim top-up payments only on donations received during charitable activities that take place within the community building. However, we know that many local charities, although based in community buildings, carry out most of their activities in the local community, away from the building itself, which means they are unable to benefit fully from the small donations scheme. The Bill therefore relaxes the rules to allow charities based in community buildings to claim top-up payments on donations received outside the building but within the local community area. Colleagues will be delighted to know that, among the many small, local civil society groups, the scouts and guides, the air and sea cadets and other local uniformed groups, in particular, will benefit significantly from this change and will be able to receive the support they deserve for the vital work they carry out in our communities.
Taken together, this package of reforms has the potential to provide a real boost to many charities, particularly the up to 9,000 new charities that apply for recognition by HMRC each year. Based on provisional estimates, these changes are expected to benefit charities by £15 million a year, a significant increase that underlines the Government’s commitment to supporting a greater number of charities and a greater number of donations. The final figures will be certified by the independent Office for Budget Responsibility as part of this year’s autumn statement.
So far I have talked about the changes that will further support our charities. Let me turn briefly to the tax-free childcare aspects of the Bill, which will help us ensure that it is easier for hard-pressed parents to receive the support they need. In the previous Parliament we legislated to introduce tax-free childcare. That will provide up to £2,000 of Government support for childcare costs per child a year, which parents can use with any childcare provider they choose. The idea is that they can simply apply online to open an account for each child, and that for every £8 a parent pays in, we will pay in an additional £2. The system will be trialled later this year and then gradually rolled out to parents from early next year.
During our user testing of the system to date, we have found a couple of minor technical issues that we need to resolve in order to make it as straightforward as possible for parents. The Bill therefore makes two minor technical amendments to ensure that the scheme operates as intended. The first technical change relates to the duty of parents to confirm that they remain eligible to receive tax-free childcare each quarter. The Bill will allow greater flexibility over when parents are asked to make this confirmation. It will mean that once a quarter parents can confirm their eligibility for all their children at the same time, rather than having to do it separately for each child if they registered them at different times.
The second technical change will mean that parents can use a standard online form if they want to query a decision. That will make the process much more straightforward and convenient. We still want to ensure that everyone can ask for a review, so anyone who would struggle to get online will still be able to raise their queries in other ways.
Can the Minister confirm that what she has said is that credits will be available for each child, and that there will not be a two-child limit, as is proposed for working families tax credits? Can she compare the regime that will be offered under this Bill, which has shown great consideration to parents, with what would be the case for families on working families tax credits?
I might have to come back to the hon. Gentleman on the latter point about the comparison, because it is not really within the scope of the Bill. I can confirm that we are proposing only two changes—everything else is unchanged from the original legislation, and we are not proposing that there should be any other changes in the Bill.
As I said at the outset, the changes made through the Bill are relatively minor and technical, but they are important, whether they are making it easier for more of our charities to claim extra funding to support the fantastic work they do up and down the land in our constituencies, or whether they are making sure that hard-working parents can access tax-free childcare in the most simple and efficient way possible when it is introduced. The Small Charitable Donations and Childcare Payments Bill delivers against both those objectives, and I therefore commend it to the House.
It is a pleasure to debate opposite the Minister today, as always.
The Bill primarily makes changes to the gift aid small donations scheme and some technical changes to the tax-free childcare scheme. The Opposition are broadly supportive of the specific measures in this nine-clause Bill, but we have a few concerns, which I will briefly outline.
The gift aid small donations scheme was established, as many are probably aware, in 2012 with cross-party support. The idea behind it was that, in situations where it is impractical to get a gift aid declaration in the usual way, such as through collection boxes or church plates, a charity can claim a gift aid-style top-up payment from the Government. A charity can claim 25% on cash donations of £20 or less, up to a yearly total that is now at £8,000.
Since April 2016, a charity has been able to claim £2,000 in a tax year from the Government under the scheme. However, that is subject to a number of qualifying criteria, which must be met if a charity is to access the scheme in the first instance. The Bill removes a number of those qualifying rules to make it easier for smaller charities to access the scheme. I will run through those changes only briefly, as the Minister has already given a fantastic overview of them.
The scheme currently includes a requirement to have been registered as a charity for at least two full tax years—the two-year eligibility rule. The charity must also have made a successful gift aid claim in at least two of the previous four tax years, with no more than two years’ gap between claims—the two-in-four-years claims rule. Clause 1 removes those two rules entirely and makes consequential amendments to the Small Charitable Donations Act 2012 and the secondary legislation that provides for the administration of the scheme.
Clause 2 amends the definition of a small payment to include donations via contactless payments, as we have heard. Clauses 3 and 4 widen the community buildings rules. Clause 3 would essentially allow a charity to claim £8,000 for small donations raised anywhere or up to £8,000 for donations collected from each community building it has. In the latter case, donations would include those
“made in person in the local authority area in which the community building is situated”.
Clause 4 would make a series of amendments to the rules for connected charities making claims, where one or more of the charities runs charitable activities in a community building. A group of charities would then be entitled to make a claim of up to £8,000 for small donations made in the local authority area in which each community building is located. Alternatively, it would be able to make a claim of up to £8,000 for small donations made anywhere in the UK.
When the gift aid small donations scheme was implemented, Labour was generally supportive of the initiative, as the Minister is aware, but we raised concerns at the time that it was quite complex and could create barriers for small charities that could be eligible to claim the top-up payment. Indeed, the Opposition spokesperson at the time said:
“The Bill will make a difference to charities and perhaps changes will be made after the three-year review.”—[Official Report, 26 November 2012; Vol. 554, c. 110.]
The complexity has since been confirmed by the charity sector in practice, and I am pleased that, in this Bill and the consultation preceding it, the Government have acknowledged that there is a problem. However, I am aware that the charity sector has expressed disappointment that the Government have not gone further, a little of which has been reflected in the interventions made so far. The Charity Finance Group, for instance, has said the changes were a missed opportunity for widespread reform of the scheme and that the Government were “locking in future failure”.
In particular, some charities have been calling for changes to the matching requirement, which stipulates that to make a claim under the small donations scheme the charity needs to receive gift aid donations in the same tax year. The total of eligible donations on which the charity can claim a top-up payment is restricted to an amount equal to 10 times the amount of the net donations on which gift aid is claimed for that year. Charity organisations have made representations arguing that changing the matching requirement would remove a significant barrier, particularly for small charities. Indeed, a survey carried out by the National Council for Voluntary Organisations found that 50% of respondents with an income under £10,000 want the matching requirement to be removed or reduced. Will the Minister take the opportunity when summing up to explain in more detail why the Government have not addressed the charity sector’s main concern about the matching requirement?
When discussing eligibility criteria for any kind of Government grant, the issue of fraud must be considered. The Opposition have several concerns about how loosening the eligibility criteria could have an impact on that risk. It is widely known that some charities have been abused in the past, being used as a vehicle to avoid tax and indeed to launder money. In the 1960s and 1970s, there were some high profile cases involving large companies, such as Metal Box and Imperial Tobacco, which used supposed charities to provide education for the children of the UK, but actually spent the money solely to pay the school fees of their directors’ children. That may seem a long time ago, but I am trying to make the point that there is always scope for abuse in such schemes. I hope that the Government will look carefully at any potential loopholes. We must make sure that any loosening of the rules for access to Government grants or tax reliefs does not provide a further incentive for tax avoiders, albeit a small minority, to set up a charity.
I will turn briefly to the elements of the Bill relating to tax-free childcare. Clause 5 will make three minor technical amendments to the tax-free childcare scheme. As the explanatory notes to the Bill explain, under the tax-free childcare scheme, parents will receive top-up payments quarterly and will have to reconfirm at the end of each quarter that they still meet the eligibility criteria. This entitlement period is currently three months, but can be varied by no more than one month by secondary legislation. Clause 5 changes that period to two months, which simply allows for the alignment of eligibility periods for additional children. The other minor change is to the way in which applications for a review of a decision by HMRC can be made. The Bill will allow secondary legislation to be introduced to enable such applications to be made digitally.
Although I appreciate that the Bill makes only minor changes to the tax-free childcare scheme, I believe it is within the scope of a Second Reading debate to discuss the wider policy background. As the Minister will be all too aware, the Opposition have some concerns about tax-free childcare. In particular, the policy is hugely regressive. For instance, the saving is capped at £2,000 per child, as an additional 20p from the Government on top of every 80p spent by the parent, so to get the maximum benefit people would need to spend £10,000 a year on childcare. That is not an option for many working families, and it is not therefore the most efficient way of providing Government support to cover the cost of childcare.
Families certainly need help with childcare costs, which have soared in the past six years of Tory Government. Parents now spend £1,600 more each year than they did in 2010, according to Labour party analysis. According to new data taken from freedom of information requests, costs in some local areas have risen by more than 200%. Labour has established a childcare taskforce, led by the shadow Secretary of State for Education, to bring forward proposals for a comprehensive system of universal, affordable and good quality childcare.
Quite often in these debates, we hear the House of Commons Library quoted, but very rarely do we hear the words “Labour party research”. In order that we can look at those figures in a little more detail, would she be prepared to put that work and the workings that underlie her assertion in the House of Commons Library, so that we can all probe them and reassure ourselves that they are correct and valid figures?
I certainly would. If the hon. Gentleman contacts my office directly, I shall be happy to have a chat or to provide him with details directly so that he can peruse them at his leisure.
I want to point the Minister in the direction of the findings of Labour’s childcare taskforce when they become available. I hope the Government can glean some good ideas from it, because they have a bit of form for borrowing ideas, shall we say, of late. I am pleased that the Chancellor has gleaned some good ideas from the Opposition, especially in respect of investing in our economy. However, I am digressing slightly, Mr Deputy Speaker.
I confirm that the Opposition are broadly supportive of the Bill and the steps within it that will make the gift aid small donations scheme more accessible to smaller charities. That said, we do have some concerns, which I have outlined, and I hope the Minister will address them when he sums up.
I have to declare an interest, as I am sure will many Members who are present, as a Member of Parliament who has set up a charity. In fact, I have set up two. The fact that, 20 years on, only one still exists shows part of the experience of people who set up charities for good causes, because it is often hard to sustain the funding. The first is a charity that supports people who suffer from substance abuse and it is flourishing, but with the second, which was set up to support the victims of domestic violence, I found it hard to continue to secure funds. That is the nature of charitable work and it will not stop any of us from setting up new charities. Hopefully, the Bill will encourage more of us and our constituents to take such opportunities.
Speaking on behalf of the Church of England, I welcome the Small Charitable Donations and Childcare Payments Bill because it contains important provisions to ensure that gift aid donations are effective and benefit as many charities as possible. The Lloyds Bank Foundation and the NCVO, to which the hon. Member for Salford and Eccles (Rebecca Long Bailey) referred, have found that donation income has been falling for small charities and that the scheme that was put in place in 2013 has not fulfilled the potential for which it was invented. We are here today to improve that situation.
Conversely and encouragingly, parish churches across the country raised a record sum of £953 million in 2013. That is why the Minister referred to the fact that the Church received record levels of gift aid in 2014—the two things go hand in hand. That figure represents a combined increase of £24 million on the previous year, and that happened despite the economic challenges parishioners face in the post-2008 world.
In addition to supporting the work of the Church at parish, diocese and national level, parishes continue to give more than £46 million to other organisations working around the world, from food banks and local children’s charities to international aid appeals—the range is huge. Contrary to the general trend of reducing donations to small charities, church congregations have clearly been giving sacrificially. I am sure that they would give more still if we made it easier, simpler and more compelling to do so. That is what I believe the Bill will achieve.
The changes the Government are proposing should produce a simpler and more equitable system. Some churches and charities found the previous system complex. Technically, they were eligible to claim up to £8,000 for donations received during charitable activities and to use the so-called top-up elements for donations collected in home communions and wall safes, but not those collected in services.
It is clear just from my trying to explain it to Members that that is quite a complex distinction, and it proved difficult for record keeping. I am sure all of us have had the experience, during our constituency duties, of sitting in a civic service, conscientiously filling out the little envelope in the pew in front of us—of course while paying absolute attention to the sermon being preached. Every time I have done that, I have thought to myself that I do not envy the church treasurer’s task in trying to decipher my writing. I cannot help but feel that the innovative suggestions of my hon. Friend the Member for Rochford and Southend East (James Duddridge) could be applied to a better way of doing that in future —one feels there just must be a better way.
More than 100 parishes and dioceses responded to a call for evidence from HMRC and the Treasury. The Government have clearly listened to their concerns about the perceived imbalance between the two elements of the original scheme. The greater simplicity of the revised gift aid and small donations scheme should bring greater equity and greater compliance, especially for small churches. I do have a few questions for the Minister, however.
I want to ask about the progression towards contactless payment, provision for which is made in the Bill. How does that sit with the responses that the National Council for Voluntary Organisations received from 340 charities that showed that cheques were the most favoured method for inclusion, and that more than two thirds of respondents wished cheques to be added to the scheme? Two thirds of charities also wanted one-off online donations to be included. Events give rise to occasions when people want to give a donation on a one-off basis. Will the Minister look at that?
Perversely, only 36% of respondents wanted contactless donations included, yet those are in the Bill. Now, far be it from me to look backwards in time to the way in which things have always been done; we must of course look forwards, and make contactless giving the way of the future, especially so as to embrace the next generation. But we should acknowledge that many older donors are among the most generous. There is no question but that for them the trusty old cheque book is one way of making sure, for their own records, that they know how they are managing their money and where they are giving money. I hope the Minister will be able to reassure me that there will be no demographic discrimination as a result of the Bill.
Our society has a strong tradition of philanthropy, reflecting its Judaeo-Christian origins, in which we are enjoined to help those less fortunate than ourselves. With so many good causes, and challenges facing us every day, surely we should be doing all we can to promote that tradition of digging deep and giving as much as we possibly can to those who need it. We need to make sure that more charities are able to benefit, and I am pleased that the Bill will assist new charities. Hardly a day goes by without the need for a new charity to be born, even perhaps at the hands of a Member of Parliament acting as its midwife. I hope that the Bill will reinforce the tradition—a hallmark of British society—of being willing to give to others in need.
I am a fairly new Member of Parliament and was not here when the Small Charitable Donations Act 2012 was passed, so it is interesting to hear some of the history of how the small donations scheme started and how it has got to where it is just now. It was also interesting to hear about some of the changes being made as a result of looking back, three years in, and thinking about how the scheme has worked. I am pleased that the Government have taken on board some of the suggestions charities have made, to ensure that the scheme works as well as possible for those charities using it and for the Government, who have to administer it.
Some of the measures in the Bill are welcome. The SNP welcomes the removal of the eligibility criteria for new charities. That is a sensible way to go—it is sensible to make changes particularly in respect of the two-in-four-year criteria. The inclusion of contactless payment is to be welcomed. There was an interesting comment about text donations. I am not entirely sure how they fit in, but I would be keen for text donations to be included in the small donations part of gift aid and not just in the general part of gift aid, because so many people nowadays give by text message—it is a very easy way for people to give—but do not follow up with a text about their address. I have done the same thing.
I could be wrong, but from my reading of the Library briefing, I understand that the UK Government have the ability to change the matching requirement without the need for further primary legislation, as introduced in the Small Charitable Donations Act 2012.
Like the hon. Member for Salford and Eccles (Rebecca Long Bailey), we have concerns about the 10:1 ratio. My hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) mentioned charities that are run solely by volunteers. Some of those charities do not do gift aid because the paperwork is far too cumbersome. Doing general gift aid and gift aid small donations claims paperwork would be doubly cumbersome, particularly for those that do not have staff. Those are among our smallest charities. In some cases, they never get donations of more than £20. They work in our most deprived communities and therefore are most in need of those donations—they get £3 here and there but it is just too complicated for them to jump through the hoops of any of those schemes. They believe that they are unable to deal with the small donations scheme because of the requirement additionally to take part in the matching for the gift aid scheme.
It would therefore be good for the Government to consider the impact on small charities. As was mentioned, for those small charities, it will not involve huge sums of money and people spending thousands of pounds sending their children to private schools. For example, a local organisation in my constituency buys shovels so that people can clean the pavements in the winter time—they are smaller-use pavements that the council does not get to. It receives a very small amount of money, but is most in need of access to those schemes and is being excluded because it does not have the staff and the ability to fill in the paperwork. If the Government could consider that and the matching requirement, it could have an impact on small charities.
The hon. Lady is making a thoughtful and constructive speech and highlights some of the challenges for smaller charities that are mostly comprised of volunteers, who do not always have the understanding of and expertise in complex legislation when they are in post. That will clearly be the challenge of this and other legislation in the field. In that respect, is she saying—there may be merit if she is—that some of the anti-fraud measures are too restrictive and add complexity in respect of the funding requirements? Given the other anti-fraud measures in charities legislation, is there an argument for scrapping some of those measures altogether?
I would worry about the unintended consequences for anti-fraud legislation—I would not want to scrap those measures for very large charities that deal with large sums of money. We need to consider how very small charities, which cannot defraud the Government out of thousands of pounds in gift aid claims because they get donations of only £500 in total in a whole year—they will not break the bank—will access both the gift aid small donations scheme and the gift aid scheme in general. That is the majority of what I wanted to say on the gift aid small donations scheme.
On tax-free childcare, I cannot declare an interest in having set up a charity. As the parent of a five-year-old and a three-year-old, however, I can declare an interest in the current childcare voucher scheme and I am likely to be a beneficiary of tax-free childcare from next year when it is introduced. The childcare voucher scheme has been useful but limited, so I welcome some of the changes that will come in through the tax-free childcare scheme. These schemes will be easier to access for parents from less traditional employment backgrounds. That is a positive benefit, as is the uplift in the amount of money they will be able to claim. However, the UK Government’s proposals do not go far enough.
The Bill’s proposals on flexibility of dates and the ability to make requests digitally are hugely positive. The childcare voucher scheme has sometimes fallen down because of the inability to make some changes digitally. I know parents who have not changed the amount they claim when they needed to because it takes 15 days or so to make a change, and it involves a lot of printing out, posting and so on. The three-month rule is much clearer.
The UK Government’s proposals on childcare and inequality are not universal enough. The Scottish Government pledged in their manifesto to almost double the free early learning and childcare to 30 hours a week. Both my children have benefited from the uplift in free childcare and nursery places, and that has been hugely positive. Nursery places are now for three hours and 10 minutes a day. That is a length of time one can do something with, whereas two-and-a-half hours is not. By the time you get home and make a cup of tea, your morning has gone, whereas you can pop out and do a full shop in three hours and 10 minutes. Having those extra few minutes makes the biggest difference. The additional changes will make even more of a difference, with full days for two, three and four-year-olds. It is important that the changes are not just for three and four-year-olds, but some two-year-olds too. The changes mean that some three and four-year-olds will receive free school meals. Primary and one, two and three-year-old children in Scotland already receive free school meals. Again, that is a huge benefit. Again, I declare an interest as someone whose child receives free school meals—they are absolutely brilliant and he loves them. Nursery children will now also receive these meals.
The benefits that families in Scotland receive are universal, not means-tested. There is not a complicated means-testing system to decide which families receive them. There is no requirement for both parents to be working. Children across the board receive the benefits, which benefit both children and families. All children, whatever their demographic or socioeconomic background, are benefiting from high-quality free childcare.
We are also introducing baby boxes, again on a universal basis. They are an import from Finland and they have been hugely successful. The issues with the tax-free childcare scheme relate to it not being universal and not being provided to enough families. Some of the families most in need will not benefit from access to free childcare, particularly if they are going through the process of job seeking or anything like that. They are the ones who would benefit most from free childcare, which would enable them to access appointments, interviews and interview preparation, so the lack of universality is a concern.
We are largely supportive of the specific proposals in the Bill. We have concerns about gift matching and we will likely return to that next week, but I appreciate the opportunity to speak today.
Thank you, Mr Deputy Speaker; it is great to catch your eye. It has been a while since I spoke from the Back Benches, and I have certainly never before spoken after the hon. Member for Aberdeen North (Kirsty Blackman).
This place is at its best when we can use real-life examples and be a lot more passionate than when we are simply reading from a briefing document. Whether we are talking about the two-and-a-half hours, or however long it takes to make a cup of tea, about charities shovelling snow, which we do not have in Southend—I suspect we do not have the snow, which is something my children would very much like—I share with the hon. Lady some understanding of the credits. My youngest is five, so I greatly sympathise with her. In particular, I thank her for pulling me up and correcting my intervention about whether it was possible under the existing legislation to change the 1:10 ratio, although I would like to return to that in a lot more detail later in my speech.
This is the first time I have spoken from the Back Benches in some time and it is a particular pleasure to do so on the subject of charities. My constituents are an awful lot more interested in charities and what we can do for them in Southend than they are in some of the very good work that I did overseas. Important as that work was, charity begins at home, and in this case it begins in Southend.
Does my hon. Friend not agree that there are some tremendous small charities founded in our communities that seek to help communities abroad, whether by helping orphanages or schools? Does he agree that we need to support them as much as our charities at home?
I thank my hon. Friend for pulling me up. In fact, round the corner from my office is a charity that supports people in Uganda, which was within the geographic patch that I was responsible for. It is indeed a Southend charity and it would receive some of the benefits of this legislation.
The Second Church Estates Commissioner, my right hon. Friend the Member for Meriden (Dame Caroline Spelman), mentioned the great value of churches in the community. Like perhaps other Members, I want to pepper my speech with examples from my constituency. I want to pay particular credit to the Southend Association of Voluntary Services, which pulls together charities and best practice and allows charities to be given the expertise to utilise the types of benefits that the Government are introducing.
It seems like only a hop, skip and a jump since 2006, when I remember throwing two lever-arch folders into my bin in Portcullis House, in the knowledge that I would never again have to look at charities legislation. I should have kept those two Bills, but I went back and looked at the Charities Act 2006. It was a much bigger Bill, with 78 clauses, rather than the nine clauses we are considering today. There are a lot of things that are still relevant today: the debate about whether schools should be charities, and whether education is in itself a charitable good or whether charities need to go out and prove themselves over and above. A lot has changed. My hon. Friend the Member for Isle of Wight (Mr Turner) was speaking from the Opposition Front Bench, and there was also a gentleman from Doncaster North—a junior Cabinet Minister with great, or maybe not so great, things ahead of him—who did a good job on that Bill.
One charities issue that was raised during the passage of the 2006 Act was “chugging”, or charities mugging. I notice that the short title of this short, nine-clause Bill is quite wide, so there are perhaps opportunities to insert a few more clauses, whether proposed by Her Majesty’s official Opposition or enthusiastic young Members of Parliament such as myself, or—[Laughter.] It does not say “Pause for laughter” in my notes; that was not a joke. Maybe the Minister will bring forward a review of charities mugging. Even now we get harassed at tube stations, and it is a distraction from the passion for charitable giving that, really, everyone wants to engage in.
It would probably help my hon. Friend to know that we have reformed the self-regulation of charities. There is a single regulator that is now responsible for those activities, rather than the three that there were before, so we are in a much better position to deal with complaints from the public.
I thank my hon. Friend for that; perhaps he will take this as a complaint from a humble member of the public. If he joined me in trying to get from Fenchurch Street station to Tower Hill in the morning, on the way to the House of Commons, he would see not only the appalling works and the way people are funnelled through, but that the number of charities operating there creates a physical boundary between the two stations, which is a real problem for commuters who otherwise would donate. There are quite a few instances when I have felt less positive about charities, which I am naturally passionate about. I thank my hon. Friend for highlighting the work. Perhaps I could review what has been done while I was looking at other things since 2006, and also perhaps invite him for a cup of coffee on the corner of Fenchurch Street to meet some of my constituents coming into London and encountering the problem.
We are debating the “Small Charitable Donations” Bill, but I am not quite sure what “small” is. A Southend charity set up by Charles Latham and Howard Briggs has looked to provide a capital amount that could be used to provide small loans to micro-opportunities—non-charities but, in some cases, registered charities as well. That developed from a level of £60,000 or £80,000 to become a £1 million or £2 million fund. Even at that level, it considers itself small and has to do all its fund management via the Essex fund. My constituency predecessor, Sir Teddy Taylor, is involved in that fund. It deals with small charities, but I am not sure that it would be helped by the definition of small charities in the Bill.
I am generally a believer in small being beautiful—my wife is very petite—and in relation to charities, the closer the charity stays to an individual cause, the better. The shovels example is, I think, great. Southend’s charity that wants to do some something for targeted HIV/AIDS patients within a certain age category is another fabulous example. There are, however, some bigger charities—I am not going to name them; they do good work—that have somewhat lost their way. These are the ones that we see on the back pages of The Guardian, in case any of my hon. Friends sully themselves with such things—they are very good for the fireplace. We can often find a job with such a charity paying significantly more than an MP’s salary—shock, horror. This could be running a charity, or doing a junior, second-tier director job, but, as I say, small is beautiful and the more we can help small charities with the sort of provisions in the Bill, the better. At the moment, there is a flight for merging charities, meaning that charities get much bigger. When they do, I fear they move too far away from their communities. We should encourage those charities to stay small but numerous.
My hon. Friend is making an amusing but serious point. If I am fortunate enough to catch your eye, Mr Deputy Speaker, I, too, will mention some charities in my constituency. When it comes to small charities, does my hon. Friend agree that many of them are struggling at the moment, and that the measures in the Bill will give them boost, especially if we help to publicise them?
I entirely agree with my hon. Friend that some charities are struggling and that there is a constant shift in funding. I remind Southend charities not to believe all the doom and gloom that was talked pre-Brexit. We are still growing strongly; we are the strongest-growing economy in the G7. Rather than squirreling away money for the rainy day that might come, we should encourage people to spend, enjoy and donate some of that money to charities. The Bill’s measures should allow more of such money to come back to charities.
In common with previous speakers, I should like to mention a charity with which I was involved, although I did not start it up. I was appointed by a charity known as the Bulldog Trust, which is based just down the road from here. Its website said that it was a philanthropy organisation. I thought that it was no good for me because I do not have any significant cash to give to it—it would certainly be a £20 donation from me rather than a £20 million donation—but what this charity does is to link up people who have a skill and want to use it within a charitable organisation. That sent me to the Grow Movement, which at that time was a charity operating in Uganda, Rwanda and Malawi.
I mention that example because I am a little unclear about what happens when a charity such as the Grow Movement is UK based but international. Of the trustees, I think I was the only one domiciled in the UK; it has an international virtual board. We need to make sure that small sums, wherever they might come from, can go to such organisations. At one time it was inconceivable that someone would send a few quid from France or the United States, but now, because of the way the internet is set up, when we purchase something we are quite often asked to “click here” to enable an extra £2 to go to a charity. I urge the Minister to review the position and ensure that charities like the Grow Movement can benefit from this and future legislation.
My hon. Friend is making a series of good points about the impact that the Bill could have on small charities. He has mentioned several in Southend, and I suspect that all of us could mention others in our own constituencies. Is he aware that the inability to reclaim through texts is a possible issue for some of those charities, and does he think that the Minister should reflect on that when winding up the debate? May I also ask what he thinks might be the impact on charities such as scouts groups that sometimes, for example, raise funds using buckets outside supermarkets. Under the new provisions, I think that they will be able to—
Order. I know that the hon. Gentleman is doing a Whip’s job, and I do not mind that, but what we cannot have is the making of speeches rather than interventions. I want to try to help everyone, but I cannot allow myself and the Chamber to be tested by a speech rather than an intervention.
I am sorry, Mr Deputy Speaker. I in no way meant to challenge your ruling, but I did want to deal with the issue of SMS messages. I have absolute confidence in these two excellent Ministers, and I look forward to what will be said today. I shall go into a fair amount of detail about different payment methods later, but at this juncture, suffice it to say that SMS messages are absolutely right for this purpose. As many people have pointed out, people do not necessarily want to give all their details. There is also a demographic issue. My mother-in-law would be very happy to text a £5 donation, but if you ask her to use a smart phone or contactless payments, she thinks you are speaking a different language. It is discriminatory not to enable her to donate by text.
As for the point about the scouting movement—my eldest is going up to the scouts, and they collect—I understand that it will be included, but I hope that the specialists on the Front Bench will clarify the position. Earlier in the debate the changes involving buildings were welcomed. It will still be possible to collect money outside a building rather than inside.
Contrary to what has been suggested, Mr Deputy Speaker, this is not a bob-a-job contribution. Does my hon. Friend agree that this could also be incredibly helpful to armed forces cadets and other charities? I am thinking particularly of those who help people to pack items that they have bought in shops. Small amounts of money will often be collected in buckets to go to small causes, and the Minister has just confirmed that that will be covered.
Another point is that charitable giving then begins to be inculcated in young people in particular. Their small donations, to both small and big charities, bring them into the system. Certainly, when I see someone under the age of 16 collecting for poppies or Help for Heroes, I feel that the future of the country is in safe hands.
I intervened on the Minister to ask about deeming all donations tax-free. I am sympathetic to Her Majesty’s Opposition’s points about complexity. The points have been made well today, just as they were three years ago, as Opposition Front-Bench Members pointed out. The sooner we can get through all this complexity and decide that the basic rate of tax should come back from all moneys en bloc that are given to charities in small amounts, the better. I will say more about how we define “small amounts” later.
I shall turn now to the specifics of the Bill. Clause 2 deals with the meaning of the term “small donation”, and subsection (3) refers to the United Kingdom. However, clause 6, which deals with the extent of the Bill, refers to England and Wales, Scotland and Northern Ireland. Forgive me if I am being stupid, Mr Deputy Speaker, but I think that they amount to the same thing. I would be grateful if that provision could be amended, if only as a tidying-up exercise, or if the difference could be explained.
Before my hon. Friend moves on from the question of cash amounts, does he agree that £20 is a sensible figure? Opting for a larger amount could involve a risk of fraud or misuse, but £20 is still a substantial enough amount to make a significant difference.
I do not know how to say this gently—no, I do not think that that is a sensible amount. I understand what my hon. Friend is saying, but I think that that is an arbitrary amount. Why not choose £10 or £25? Is it because we have £20 notes but not £25 notes? I worry when I see legislation that cites numbers but makes no provision whatever to take account of inflation. Would such an amount be uprated annually? If that is the case, we would end up with odd numbers in subsequent years. Alternatively, should we let things drift and conduct a review every five years, and then put the amount up by 25%? I would like the figure to be set an awful lot higher.
I am grateful to my hon. Friend for being patient about this point. Can he not see that the amount could be reviewed over a number of years? In fact, it has been reviewed in that way in the past, and there will doubtless be opportunities for it to be reviewed again in the future, if not by this place, perhaps through an order to be dealt with by the Minister. Would that not be a sensible approach?
To review is sensible, but I think that the process should be carried out periodically to take account of inflation, instead of wasting a Minister’s time every three years. I would not want to have to come back here to review this Bill in another three years. We should be much more permissive about what we allow Ministers to do. On my hon. Friend’s underlying point, yes there could be fraud, but there can be fraud in any system. Do I think that the good people who are involved in charities would commit fraud for such a small sum of money? I do not.
I have a large number of points that I would like to make. I hope that I will be able to make them in the Public Bill Committee, if I am selected to serve on it in the coming days and weeks.
It is a great pleasure to follow the hon. Member for Rochford and Southend East (James Duddridge). I think it was four years ago that we served on the Committee considering the original Bill, which later put in place the gift aid small donations scheme. I think that the hon. Members for Foyle (Mark Durkan) and for Amber Valley (Nigel Mills) were also members of the Committee. At the time, we were all quite enthused about the programme; indeed, we still are. We recognise the importance of giving gift aid-style relief on small donations, especially in a way that will help small charities.
Some real improvements to the Bill have been suggested today. The introduction of contactless payments is good, although I fully agreed with what the right hon. Member for Meriden (Dame Caroline Spelman) said about the lack of provision for cheques. I want to dangle a little carrot in front of Government Members by saying that when the original Bill was discussed in Committee, it was discovered that—shock, horror—it was not only £5, £10 and £20 notes that would be eligible for gift aid-style relief, and that even if someone dropped in a few euro notes, they would be eligible as well. If one can have relief for euros and other currencies, there is no reason why it is not possible with cheques. That would be a welcome improvement along with contactless payments and a look at text donations as well. The increase in the upper limit is very welcome, and it shows how this scheme has developed and how it has the potential to help small charities. We need to realise that this Bill is all about helping small charities, because it is those charities and community groups for which this Bill was created.
In the Committee that considered the Charitable Donations Act 2012, we quibbled away at the long-forbearing Ministers about the ratio between gift aid eligibility and donations. At the time, in the original draft of the Bill, we were talking about a ratio of 3:1, 4:1 or 5:1. We asked persistently why it was one ratio and not another. The hon. Member for Rochford and Southend East just asked why there should be any link at all with gift aid. The survey from the National Council for Voluntary Organisations, the Charity Finance Group, the Institute of Fundraising and the Small Charities Coalition sets out much the same view. Even if it was felt that, for reasons of fraud, we needed that link with gift aid, why is the 10:1 ratio on a tablet of stone?
We discovered in that earlier Bill Committee that ratios of 3:1, 4:1 and 5:1 were pretty expendable. Why, if a charity is registered and has about £10 in gift aid, is that not enough in terms of fraud detection? Furthermore, I am not 100% convinced of the link with fraud. When we had that previous debate, I remember someone raising the issue of the Cup Trust, which was—I will try to put this diplomatically—involved with various fraudulent practices. We innocently asked whether it was registered for gift aid. Well of course it was, which does not suggest that there is much link between fraud and gift aid. If that is something that the Government genuinely believe is a problem, I really cannot see for the life of me why the ratio has to be 10:1; it just does not make sense.
On balance, this is a good Bill. We welcome it, but I urge the Minister, the Government and all members of the Committee to look again at the whole matching requirement, how it is constituted, and why oh why the ratio has to be 10:1.
I am very pleased to follow the hon. Member for Clwyd South (Susan Elan Jones) who made some very sensible points about euros. I also welcome her positivity about the Bill in general. We have had some fascinating insights into the charities in our constituencies. It is very heartening to hear how interesting and fascinating they are and also what a charitable lot people are on the whole. That must be welcomed.
Like many Members, I have been at the end of the supermarket check-out shaking my bucket. I have helped to pack people’s groceries into bags in the hope that they will put some money into my box. I usually put on my environmental hat as well and check that they have a recycled bag. I have often been there supporting charities with my children, my friends and my family, and I know that so many other people in my constituency do that on a regular basis for so many deserving causes. For example, there is the Young Farmers Club, the West Hatch scouts, and village school fundraisers.
The SURE cancer charity in my constituency earns most of its money from small collections such as the bucket collections I have referred to. They are essential. Many of our amateur sports clubs have to collect money in that way. I have collected money with the Blackbrook tennis club, Taunton Vale hockey club and many more besides. Usually small sums of money are collected, but they are so useful. The charities really do rely on such collections.
I applaud the people who go out day in, day out collecting for small charities in my constituency, gathering money to do good work that really needs to be done—often to protect vulnerable people.
Does my hon. Friend agree that it is fantastic that the changes in the Bill also include community amateur sports clubs? I know that that will be particularly welcome to groups such as bowls clubs and various other clubs in Wiltshire and up and down the country, which will help us to tackle obesity and champion healthy lifestyles.
I welcome that intervention. I will come on to sports clubs. I know that my hon. Friend is sporty herself, as am I. Everything that we can do to help sporting charities is welcome. She raises an important point about the connection between health and wellbeing. Anything that we can do to help such clubs should be encouraged, and the Bill will definitely help.
I know that my hon. Friend was down at the county ground not very long ago, because I had so many comments about the fact that he had been there. I am sorry that I missed him, because I was down there every day of that championship. I am not sure that Somerset is allowed to collect on the streets with buckets, but smaller sporting charities would be very much helped by the new enabling measures in the Bill.
This is not just about fantastic sporting charities. I am sure that colleagues will be able to list the events going on in their constituencies, because this also concerns sporting activities. People put a great deal of effort and determination into training perhaps for a marathon, and that is a wonderful source of fundraising for local causes.
Would my hon. Friend mind if I ploughed on just for a minute? I will lose my train of thought. Would he intervene in a minute?
Whenever I visit charities in my constituency, which I do as often as I can, I ask what I can do in Westminster to help them. So often they say that they want access to gift aid. One of their biggest issues is raising funds and then being able to get the right benefits and aids. Another colleague said that often small charities do not even know what they can or cannot claim. So anything that can be done to ease that will help, and I think the Bill will do so.
Whatever we can do to help small charities retain the money that they have worked so hard to collect would be beneficial. If it could be increased with top-ups and things, that would be welcome. While the current system has many good points, it has been criticised for being complex and inaccessible especially for small and newer charities. That is why I am pleased that the Government are listening. I was pleased to hear the Minister speaking earlier, and I am sure that the Bill will help to make life simpler in terms of funds collected and the submissions that small charities are required to make for gift aid.
I welcome the proposed simplifications through this gift aid small donations scheme. I was also pleased that so many stakeholders took part in the consultation and so many charities fed in, and that the Government are listening and taking on board lots of their views. The scheme will definitely help those charities for which it is not practical to obtain an individual gift aid declaration for every small donation made. That is where we come back to bucket collections, the bob-a-job collections that my hon. Friend the Member for Gloucester (Richard Graham) referred to, and even sponsored events. I am sure that Mr Deputy Speaker has done some himself, such as a sponsored bike ride. I did a mini-triathlon to raise money for charity. People give their support, but only with small amounts, and gathering all the intimate details that charities are required to input is often too much for them, so they do not go to the effort of claiming back what they could claim and get the benefit. We would definitely like to help all those charities, and the Bill will do so.
I welcome the reforms that will allow charities to benefit from the top-up system that has been worked into the Bill, so I will now come on to community amateur sports clubs. I am pleased that the Minister particularly addressed areas for them, especially the point that they had to be in one building to raise their money. I am pleased that that slightly ludicrous little piece of the legislation will be relaxed.
I am an ardent advocate of the benefit of sport in our communities, cricket included. We have marvellous cricket facilities in Somerset, many of which operate from the county town, Taunton, working from entry level at school right the way up to the county ground, where my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) often goes. I particularly work with a number of sporting charities. I have helped to bring forward a water sports centre, which is being completed on the river in Taunton, with the charity, COACH—the Centre for Outdoor Activity and Community Hub. My hon. Friend the Member for Chippenham (Michelle Donelan) mentioned bowling. I have helped to attract funds for the bowling club in Wellington, and it is now winning major trophies right across the region. It was in the Wellington Weekly News only this week. Amateur sporting charities, such as Taunton football club, all need to raise funds, and the small change that we will make in relation to the venues where money is raised will really help them to retain more of their own money and make more of it. I welcome all that.
I will make a small nod to the eminently sensible provisions on childcare payments. A simple extension of the timescale for parents to input their children’s details to claim the correct tax free childcare bonus will make life much easier for many families, particularly those families whose circumstances have changed. For example, when two families join together, which happens quite frequently now, and people end up with their own children and some stepchildren, opening and expanding the window for people to input all the data will help all the children under one roof. I very much welcome that and hope that it will all make progress.
All the things in the Bill are really helpful. They will help individual families with childcare payments, and very many charities, particularly smaller and newer ones, will be helped by the new provisions on donations. The Bill certainly shows that the Government are listening. They have listened to all those stakeholders and charities. That is what we should be doing in government—it is absolutely right—as well as working towards making life run much more smoothly, particularly for those who really need it.
It is a pleasure to follow the hon. Member for Taunton Deane (Rebecca Pow), who rightly says that there are practical and positive measures in the Bill that we should welcome. However, I believe that the Bill could have gone forward and been even more practical and positive and offered even more flexibility.
As the hon. Member for Clwyd South (Susan Elan Jones) said earlier, she and I served on the Committee that considered the Small Charitable Donations Bill back in 2012. Indeed, the point about euros emerged as a reassurance to me, as I represent a border constituency in Northern Ireland. I pointed out that when a number of charities in my constituency raise money, whether with bucket collections or other ways such as church events, they find euros in their collections, and I asked whether they would have to sift them out or whether they could honestly declare them. In fairness, the then Minister, now the Secretary of State for Communities and Local Government, came forward with the clarification that that money could certainly all be counted.
The hon. Member for Clwyd South is right to say in that context that, when the 2012 Bill was being considered, the refusal to allow donations in the form of cheques or contactless or various other foreseeable electronic payments was odd. I wonder whether even now the Minister will consider allowing, in Committee, an enabling clause giving Ministers the power to permit payment by cheques and so on in future, so that these measures would not have to come back before the House. As the hon. Member for Amber Valley (Nigel Mills) said, he made that point in the Committee on the 2012 Bill.
In the Small Charitable Donations Act 2012, the Treasury was given significant powers to change things by order; it was given the power to change the connected charities amount, the community buildings amount, the remaining amount, and the capped total. It could amend the gift aid matching rule, abolish it, and reinstate it, if previously abolished, with or without amendment; it could even, by order, amend the meaning of “eligible charity”, and the limit on the value of individual donations. Sensibly, the Treasury was given the power to make significant working changes to the scheme by order. It seems strange that in this further bit of primary legislation there is not similar flexibility around, say, the use of cheques. That flexibility could be introduced in Committee.
I had the unusual experience of arriving in the 2012 Bill Committee to find that the Government had tabled an amendment to take up a point that I made on Second Reading. The penalty provisions stipulated that a charity that had suffered a penalty from HMRC would be barred from the scheme for a period, but there was no provision for an appeal against or possible overturn of the penalty, and where the penalty had been imposed but subsequently reviewed and set aside there was no provision to say that the period of barring would no longer apply. Sensibly, the Government listened. That proved to me that sometimes, when it comes to small Bills, the Government have a flexible ear and will listen to points made on Second Reading; in the case of small Bills, they can handily concede points, and indeed take the initiative and leapfrog Committee Members in making sensible amendments.
The Minister was right to say that some sensible working adjustments are made in the Bill, but they are all ones that were advocated by members of the 2012 Public Bill Committee—not just by members of the Opposition, or by me, but in many cases by Conservative members of the Committee. Members were teasing out the implications with practical ideas. Many of us were concerned that the Small Charitable Donations Bill was in danger of tilting into becoming the petty conditions Bill, given the number of different traditions, trips and traps that people could get into. I still wonder whether the Government could be a bit more generous or expansive in how they take the Bill forward. After all, it is clear that the whole matching requirement issue still causes charities problems. We should listen to charities as we take the Bill forward.
Does my hon. Friend remember that among the examples of charities that the small charitable donations scheme could help were small ones such as talking newspapers? We were very aware that if their admin staff were overburdened, they might not be able to claim what they should rightly claim.
Yes, the hon. Lady is exactly right. Members in all parts of the Committee raised many pertinent, practical examples of charities that we would want to be ready beneficiaries of the scheme, but that would be prohibited from taking part in it.
At the time, perhaps because this was a first move in this direction, the Minister took a narrow and highly precautionary approach, but smaller charities have not claimed the amount of small donations relief under the 2012 Act that the then Chancellor said they would; when he announced the scheme, he said that it would be £100 million. The indications to date are £25 million a year with an uplift of perhaps £15 million, going by what the Minister has said about the Bill, but we are still talking about something well short of what was promised to the charitable sector when the concept was introduced. Our challenge is how to get closer to the £100 million. We have to look at the things that are standing in the way. I acknowledge that the Government, in the consultation and in the Bill, have moved to address some of the difficulties on community buildings, but there are still some issues on the question of connected charities. The matching requirement, however, is still there, and I wonder whether the Minister can tell us whether or not are examples of fraud in the gift aid small donations scheme in the past three years. Are there any indications of whether matching requirements would have prevented fraud, or simply prevented access to the scheme?
We want to know why the ministerial team are content with arriving at an amount that is only half the amount of support originally intended—in fact, it is less than half. I therefore hope that Ministers are prepared to continue to listen to hon. Members who serve on the Bill Committee and to the charitable sector so that we can improve the scheme and make it much more effective for all the causes and examples that hon. Members have discussed, including that and so on.
As well as amending the Small Charitable Donations Act 2012 the Bill amends the Childcare Payments Act 2014. In an intervention I said that the Minister rightly presented the childcare payments scheme under the Bill—with the original Act as the source—as applying to each child. However, the Government are inconsistent, because the childcare element of universal credit is restricted to two children. Working tax credit rules apply to two children, but childcare payments under the 2014 Act are not restricted to two children. What is the reason for the Government’s cognitive dissonance? Why are there different rules on support for different families? The Minister explained how the provisions in the Bill ensure that changes can be met more responsibly by the system, but will Ministers consider the difference in experience and bureaucratic contact for parents accessing childcare payments under the Bill and the original Act and for parents who apply for the childcare element of universal credit? Under the childcare payments scheme, it is a bankable allowance, but it is not a bankable allowance for people on universal credit. They have to spend the money first, then claim it back within a short time. There is an unfair difference in treatment. Some parents are treated more generously and supportively in the way in which the system relates to them and engages with them than others, which is wrong. As legislators, we should try to ensure a more consistent approach to the principle of childcare in all the important and positive forms that it takes.
That is not to say that the childcare payments provided for are not positive and practical; I just wish that the universal credit childcare element could be made more comparable and, similarly, that if the Government see fit not to visit a two-child rule on the childcare payments system, they will abandon the idea of having such a rule for working family tax credit as well.
It is a pleasure to follow the hon. Member for Foyle (Mark Durkan). He and I often have many common concerns at heart, and I echo a number of the points he has made today. I hope that Ministers will note that similar points are being made across the House today. Before saying anything more, I will follow the proper example set by my right hon. Friend the Member for Meriden (Dame Caroline Spelman) by declaring my interests. Not only am I patron of a number of charities, but I am still the senior partner in a law firm that for over 25 years has had charity law as one of its specialisms.
Like many other Members who have spoken, I served on the Committee that scrutinised the Small Charitable Donations Bill in 2012, so I welcome the amendments set out in this Bill to make the donations scheme more effective and flexible for small charities, particularly new charities, and also to make it simpler. One reason I particularly welcome anything that makes running a charity simpler is that over the years I have had many clients in my law firm who have a brilliant idea for setting up a small charity but find it increasingly difficult to recruit people as officers, and particularly for the role of treasurer. I very much welcome anything that makes being the treasurer of a small charity easier.
The term “small charities” is something of a misnomer, because often it is those charities that pack the biggest punches. For example, there are a number of charities in my constituency who work to improve the local environment, and the extent of their contribution to local people’s enjoyment of that environment is staggering. I think of the Sandbach Woodland and Wildlife Group and Dane Valley Woods. Those two groups alone have improved acres of local countryside, public footpaths and areas for local people to enjoy. I also think of the friends of a number of railway stations in my constituency, such as Alsager station, Congleton station, Sandbach station and Goostrey station. Those groups are often the unsung heroes of our communities, yet they add so much to the enjoyment of our environment.
I also welcome the inclusion of community amateur sports clubs in the Bill, because their contribution to our communities can be substantial. They of course contribute to health and wellbeing, but they also strengthen community ties and foster a sense of belonging, particularly for children. I want to pay tribute to three clubs in my constituency, Triton hockey club, AFC Alsager and Alsager cricket club. They have been at the forefront of a successful campaign over several years to ensure that the former site of Manchester Metropolitan University in Alsager is reopened for use as a community sports facility. It is their dedication over many years, combined with their understanding of the community’s sporting needs and their contribution to encouraging literally thousands of young people to take up sport that has ensured the recent success of that campaign. I pay particular tribute to those groups this evening.
I welcome the Bill because, according to the Government’s figures, the take-up of the scheme we debated and then brought forward under the Small Charitable Donations Act in 2012 has been regrettably low—far beneath hoped-for levels, as has been said. In 2014-15, the Government budgeted £84 million for the scheme, but the actual spend was £21 million, which was a clear shortfall. The number of charities accessing the scheme was just under 20,000, far fewer than the 65,000 we would have expected if the £84 million spend had been achieved. I therefore very much welcome the Bill’s intention to increase take-up by simplifying the eligibility criteria, but I ask the Government to ensure that there is some real and effective promotion of the scheme once the Bill is passed, as I hope it will be.
I echo other Members’ requests that the Government look again at simply dropping the matching criteria—again, a most effective method of increasing uptake. As has been said, the eligibility requirements could be simplified to make them the same as those for gift aid, so that if the charity knows it is eligible for gift aid, it will be eligible to gain access to funds from the scheme. I understand that there have been concerns about fraud, which the Minister has expressed, but, again, I concur with other Members and ask what evidence there is of that. I am told by charities that there is actually little, if any, evidence that fraud has been a problem with the scheme or that the matching criteria have been effective at highlighting those intent on making fraudulent claims. Will Ministers review the issue, and provide any evidence in Committee? Alternatively, will they look at whether fraud is in reality a barrier to consideration of dropping the matching criteria altogether?
I draw the attention of the House to a joint survey by a number of groups. The Association of Independent Museums, the Charity Finance Group, the Institute of Fundraising, the National Council for Voluntary Organisations and the Small Charities Coalition surveyed more than 340 charities across a range of sizes, from those with fewer than 10 employees to those with more than 500. They found that the take-up of the current scheme in percentage terms was, as we would expect, and as Members have indicated, far higher in very large organisations than in very small ones; in fact, it was 71% in large organisations, compared with 41% in smaller ones. While the sample was small, there is a clear indication that organisations at the smaller end of the spectrum use the scheme less frequently, so anything that can be done to assist them to access it is to be welcomed.
The charities were also polled on accessing information about the scheme. Some 22% of medium-sized organisations said they found it difficult to access information, and 26% of small organisations found it difficult or very difficult, but 41% of very small charities found it difficult or very difficult. That goes to show how important it is that the Government focus on the promotion of the scheme. Many survey respondents were still unaware of the scheme or that they could be eligible. It would be a far simpler message to charities if we simply said, “If you are registered for gift aid, you are eligible for the scheme.”
Let me touch on the issue of cheques. I concur with other Members and ask that the Government consider making small cheque donations, as well as contactless payments and cash donations, eligible for the scheme. I welcome the contactless payment proposal, but many donors—particularly elderly ones—still write cheques for £10 or £20. The logic behind allowing cheques to be included in the scheme is very similar to that for allowing contactless or small cash donations—namely, that it can be administratively burdensome to get declarations from cheque donors, particularly if those donations are irregular and small charities do not have the resources to chase up donors. Making such a change will arguably help small charities even more than allowing contactless payments to be included, because contactless technology is expensive. Small and local charities, perhaps set up by someone who has retired, may not possess the technical capability to process contactless payments, while they might very well receive a good number of cheques.
In conclusion, I suspect that most of my points are not novel—many have been raised this evening, or were raised with the Government during their consultation—but I hope it will be helpful for the House, and indeed for the thousands of charities in the country, if further reflection on such issues is conducted as the Bill travels through the House.
It is a pleasure to support a Bill that, although pretty straightforward and simple in outlook, as we have heard, is likely to have a significant impact on the small groups and charities that need it most.
In my constituency in Somerset, the uniquely spectacular levels of community spirit and the astonishing energy with which people are keen to help those around them mean that there is a huge number of such smaller charities, all inevitably fighting for survival. For them, not only every penny, but every second counts. Their time is also very precious. They do not have the capability or reach to spend hours sifting through accounts to satisfy various complex financial rules and regulations; they just want to get on with the job.
The simplification and easing of access to the benefits of the gift aid small donation scheme, as well as the more sensitive approach of the tax-free childcare scheme, are really to be welcomed—it sounds as though they are —on both sides of the House. I am pleased that the extensive consultation that, as I understand it, went into putting the Bill together has resulted in a broadly positive reaction to the proposed changes from charities.
Of course, any step in any direction is only one step, and there may well be subsequent steps to take—there may well be more to add to the process—but we are taking a firm leap in the right direction for innumerable small organisations, and certainly for those fabulous and uniquely special organisations in my constituency.
The scrapping of the two-year rule and of the two-in-four requirement will make the environment far simpler and fairer for those charities—and not just for them, but of course for their workers and volunteers. It is worth mentioning that charitable giving, especially at this level, is often a very spontaneous gesture, and such spontaneity ought to be reflected in the gift aid scheme. That is exactly what the Bill sets out to achieve.
HMRC’s financial assessment of the reform suggests that 71,000 charities will benefit, which is a huge number, and that its receipts will decrease by some £15 million a year. We all of course feel great sadness for HMRC’s loss, but it is very nice when a decrease in revenues is used as a measure of success. That is not perhaps a principle to be applied more widely.
We have a Bill that makes the original intentions of the gift aid small donation scheme—its first aspirations—far closer to being realised. It is the Government’s duty to narrow the gap between what I have described as the astonishing and spectacular altruism up and down the country, but most particularly in Somerset, and the way in which that impulse is realised and felt by the charities and organisations in most need. The Bill will certainly go some way towards achieving that, and I therefore warmly welcome it.
It gives me great pleasure to follow my hon. Friend the Member for Somerton and Frome (David Warburton), who made important points on how charities will be supported by the Bill. I commend my right hon. Friend the Member for Meriden (Dame Caroline Spelman) for saying that it is not just charities but churches that need our support, because churches, like charities, support communities across this country. It is good to support those who support others, and that is why I rise in support of the Bill.
As my right hon. Friend the Member for Tatton (Mr Osborne) said to the British people in his Budget at the start of the last Parliament,
“Do the right thing for a charity, and the Government will do the right thing for you. It is a big help for the big society.”—[Official Report, 23 March 2011; Vol. 525, c. 962.]
I shall speak about how the Government could do even more to join up policy and deliver those objectives.
First, I should declare an interest as a member of the parochial church council in my village. I spoke to the gift aid administrator of the PCC, who said that the changes that the Government have introduced are most welcome and that things are working very well. That said, there is always more that can be done. These initiatives demonstrate that the Government are listening and that they want to help smaller organisations that often raise money through loose change. It is therefore important that the Bill makes progress and is implemented. The current rules do not always deliver the policy intention; the Bill will certainly help to redress the balance for those charities that get lower allowances than others.
I should declare another interest, given my former employment at Lloyds Bank, because small donations by contactless payment will qualify from April 2017. Such modern fundraising is most welcome. That said, I cannot quite see sidesmen going up the aisle in my local church with contactless card machines or presenting such machines at the altar.
It is therefore important that the Government support cheques and do not repeal or adversely amend the Bills of Exchange Act 1882, as amended by subsequent Acts such as the Cheques Act 1957. It is important that cheques are retained as a method of payment. The Payments Council—the institution set up by the banks—must be under no illusion about the Government’s intention to protect cheques as a way for people to give money. We should surely be in favour of people giving money to charities, churches and worthy organisations however they wish to do so. It is an honourable intention and something that the Government should support.
Turning to tax-free childcare, it is good that we are making childcare more affordable. Tax-free childcare was legislated for in the Childcare Payments Act 2014 in the last Parliament. It is good that we are enabling people who wish to work or to take up more work to do so. That said, I have two suggestions for the Government. The first relates to the marriage allowance, which the previous Government also introduced. Just as the Government top up £2 for every £8 in this initiative, I suggest that they should do more to support families where, out of choice or necessity, only one spouse wants to work or can work, or where one spouse is not in work for any other reason.
Quality childcare is important, but so is strengthening the family, whether a parent is working or not. A comprehensive review of academic research on the impact of divorce and separation shows that the children of separated parents are at increased risk of growing up in households with lower incomes, living in poorer housing, having behavioural problems, performing less well in schools, gaining fewer qualifications, needing more medical treatment—the list goes on. That is why it is important that quality childcare and the strengthening of families remain at the heart of what the Government are trying to achieve.
I believe that the marriage allowance that was introduced in the last Parliament, alongside tax-free childcare, exemplifies the principles of social justice, bringing families into the heart of Government and building a country that works for everyone.
As the former Prime Minister said:
“Families are the bedrock of our society. It’s families who raise our children, look after our old and keep our country going.”
I would therefore suggest that there is room to improve the marriage allowance. It should go further. After all, married couples do not share only 10% of their lives and responsibilities, but 100%. They share 100% of the work behind caring and providing for their children. They share 100% of their financial responsibilities, and those responsibilities can be strained if only one person can work. Tax-free childcare is most welcome, but we should make sure that we do not discriminate against those households where only one person is in work. I fully support more childcare through the tax system, but I urge the Government, either in this Bill or in future legislation, to consider extending the marriage allowance so that families can better look after themselves and their children.
As families need to pay for childcare, I urge the Government to look at an area of childcare policy allied to this one—the 30 hours of free nursery care. Whether paid or free, nursery care must be of the highest quality. My concern is that, whether or not people take advantage of the tax-free childcare available, the national average cost intended for the 30 hours of free childcare is less than £5 an hour. That is not sufficient in rural areas with small nurseries, given the high cost of rent and so on.
I urge the Government to think about these policies in the round. The intentions are all admirable. Should the scheme progress as planned, perhaps the tax-free childcare provision could help to top up the 30 hours. That is not currently allowed. At present, if a nursery’s costs exceed the amount it will get from the taxpayer it has to bear those costs itself. Allowing people who have contributed, and have been supported through the tax system to pay for more childcare, to top up—whether because of a high-cost nursery, because they want more hours, or for some other reason—would be a very helpful initiative. I suggest that introducing further flexibility into the system is the way to go.
That said, I fully support the Bill’s intentions. I look forward to its progress through the House and hope that the Minister will deal with some of the points I have raised in due course.
It is a great pleasure to follow my hon. Friend the Member for North East Hampshire (Mr Jayawardena), who made some excellent points with his customary eloquence. I agree with what he said.
Today’s debate gives me an opportunity to showcase one or two examples of charitable works in Dorset that go particularly well. I will start by mentioning Wimborne rotary club and its yearly Great Santa fun run. Picture, Madam Deputy Speaker, 100 men, women and children running around the local point-to-point course dressed up as Father Christmas the week before Christmas. It sounds fun and of course it is. Gone are the heady days when we aimed to win the competition—merely completing the course is a prize in itself these days. Each year, the run raises several thousand pounds for charities and good causes.
Back in 2013, when the Small Charitable Donations Act came into force, my wife was the parish church treasurer and gift aid administrator, so I know how welcome were the changes that simplified and reduced bureaucracy, as people no longer had to fill out complicated forms to secure gift aid on gifts of £20 or less.
My hon. Friend is giving an excellent speech. Does he agree that the key point to remember is that churches are not just places of worship on a Sunday but living, breathing parts of the community? For example, the Living Room initiative at St Mary Magdalene church in my constituency provides tea, coffee and bacon sandwiches for many people who have nowhere else to go.
I could not agree more with my hon. Friend, who makes an excellent point. The Bill will help all groups—not just church groups, but many others—in reclaiming gift aid and slimming down bureaucracy. I warmly welcome the Bill’s aim of further reducing bureaucracy by, for example, getting rid of the two-year rule. That will help new charities enormously and will encourage those thinking of setting up charities to do so.
My hon. Friend makes an important point about cutting bureaucracy and time. Often, small charities rely on volunteers, whose time is far better spent out there promoting the charity rather than dealing with paperwork and red tape. The Bill will be very welcome in his constituency, as I am sure he will explain.
I am grateful for my hon. Friend’s timely intervention and will come to exactly that point in one or two moments.
My hon. Friend the Member for Taunton Deane (Rebecca Pow) mentioned sport. As a keen sportsman, I warmly welcome the fact that the policy will be open and available for amateur sports clubs. That is very much a step in the right direction.
I want to mention one charity in my constituency, Waggy Tails Rescue. It does not rival the Minister’s Battersea Dogs and Cats Home, but it does play an important part in the constituency of Mid Dorset and North Poole as a dog rescue charity that re-homes dogs in east Dorset and west Hampshire. I had the pleasure of visiting it in the recent past and it explained the difficulties of being a small charity and facing the bureaucracy that can be involved. As my hon. Friend the Member for Erewash (Maggie Throup) mentioned, such charities have few if any professional staff, and therefore the more time they can spend undertaking charitable works rather than carrying out bureaucratic office functions, the better.
One concern or criticism is whether enough awareness has been raised. I suspect that each of us as Members of Parliament can play our own part in raising the profile and awareness of the scheme.
I warmly welcome the childcare payments measure. This has not been mentioned during the debate, but the Bill will open the scheme up to parents who are self-employed. As someone who was self-employed, I often felt left out of tax schemes in the past. The measure will be warmly welcomed by those in the community who are self-employed, but perhaps I could invite the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), to say how he will raise awareness so that all families who are eligible can take up that excellent scheme.
It is a pleasure to follow so many fantastic contributions from Members on both sides of the House, especially my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson), who relayed his personal experience.
I am pleased that the Bill seeks to simplify and increase access to the gift aid small donations scheme, which has been criticised by some charity bodies for being too difficult for small charities to access. By scrapping the 2012 requirement that charities must have made successful gift aid claims in at least two of the previous four years, the Bill will enable newly formed charities to access the gift aid scheme. That will be especially helpful for volunteers working for charities when they have less administrative experience and smaller charitable organisations.
I am pleased that broadening the scheme will allow charities to make an additional claim in respect of donations raised as part of charitable activities in community buildings.
Does my hon. Friend agree that the scrapping of the two-year rule will prove invaluable for new charities, because it is in their first few years that they either succeed or fall? I am the trustee of a charity in Chippenham called Helping Victims of Domestic Violence. It is flourishing but overcame a number of problems in its first few years and would have benefited invaluably from the measure.
I agree entirely with my hon. Friend. In that sense, charities are a little bit like small businesses. The most challenging time for both is at the beginning.
The Bill gives freedom of movement for charities such as churches, meaning that donations do not necessarily have to be made on the site of the church for the gift aid scheme to apply.
Like many constituencies, mine boasts many charitable organisations that do fantastic work for the community. I should take this opportunity to thank them all for their work. I have always appreciated the various different charities in and around my constituency but it was only when I became a Member of Parliament did I appreciate how much work is done. The Horwich Community Working Together event, which involved 50 different charitable organisations coming together to share ideas and best practice, was such an eye-opener. Westhoughton Community Network is another fantastic organisation that works to bring together different charitable organisations to share that experience and knowledge, and to stand in solidarity with one another.
When my hon. Friend goes to different events across his constituency, does he find that the same people represent a number of different charities? The Bill will make it easier for them to give even more back to their communities. I come across constituents who are members of the Canal & River Trust as well as the Rotary—it goes on and on. Does he agree that groups of charities in his constituency will benefit in the same way?
Absolutely; I agree entirely. I was just thinking about the fantastic work done, often in hazardous conditions, by the Bolton Mountain Rescue Team. It is not just the team itself that raises money. Rotary clubs and other organisations raise a lot money for them, too. Civic society is so important. We ought not always rely on central or local government to do everything for us. We ought to look to civic society for many important things in our daily lives. By celebrating, recognising and communicating that as widely as possible, we provide the opportunity for more people to hear about such work and get involved in these organisations. Recently, I worked a shift in the local Bolton Hospice Macmillan Cancer Support shop. Little did I realise how much time and effort goes into running the small charity shops on our high streets. A fantastic amount of effort and organisation goes into them. The relationship between the volunteers and professionals is also fantastic. Professionals in charities are able to provide continuity and a political edge.
My hon. Friend talks about how charities are supported by volunteers and professionals working together. The Torbay Community Development Trust supports a number of small charities by providing an administration hub. The Bill will reduce administration, but there will still be a need for this kind of support so that volunteers can get on with the job that they want to do.
I agree entirely. That support network is often vital and it really sustains people. People who run charities can think they are in a uniquely difficult place, so it makes it so much easier if they can share ideas and overcome problems. Colleagues have talked about the importance of communication and awareness. Local media have a key role in communicating these changes. I am looking forward to a “Wearing it Pink” event for breast cancer awareness, which will take place on a week on Friday. I have been assured that there will be a pink buffet with pink marshmallows and pink drinks. I just haven’t decided what to wear. If hon. Members have any ideas, please let me know. I am sure the whole House would like to wish them well.
The Bill will allow charities to claim gift aid from contactless payments of £20 or less. This respects the modern way in which people now pay and donate to charities. The scheme is not a replacement for gift aid itself. It is important that gifts are made in person to retain the local link, as required by the scheme. It is important, too, to recognise that £20 is a reasonable amount of money. It is not excessive. I think that for most people £20 will be seen as a reasonable small donation. Keeping in mind the sense of a country that works for everyone, I am more than happy to support the Bill.
May I begin by thanking all hon. Members who have made such valuable contributions to today’s debate? There were 11, alongside interventions, starting with the right hon. Member for Meriden (Dame Caroline Spelman), who talked about her involvement in the setting up of charities and the challenge she had in worshipping at the same time as filling out an envelope. She also talked about the demographic discrimination in relation to cheques and the need for them to be included in these proposals.
The hon. Member for Aberdeen North (Kirsty Blackman) welcomed the measures, but again raised the plurality of methods of giving and the challenges faced by smaller charities, which these proposals do not assist with. The hon. Member for Rochford and Southend East (James Duddridge) managed to get his wife, his mother-in-law and a shovel into his speech, which was an achievement, but importantly he also raised the issues of cheques, SMS messages and people’s ability to get their money into the charitable system through a plurality of methods of giving.
My hon. Friend the Member for Clwyd South (Susan Elan Jones) talked about the importance of supporting charities and the improvements that the Bill may bring and, again, raised the question of cheques as a way forward. The hon. Member for Taunton Deane (Rebecca Pow), who is not in the Chamber, referred to the bucket shaking that she does regularly and applauded those who go out collecting for various charities. She also welcomed the simplification introduced by these proposals.
The hon. Member for Foyle (Mark Durkan) also talked about the flexibility of methods of giving that are not in the Bill. He, too, pushed that issue. The hon. Member for Congleton (Fiona Bruce) also talked about the need for cheques and the ability of older people to participate by giving cheques. The hon. Member for Somerton and Frome (David Warburton), worshiping in his church, welcomed the simplification and the spontaneity in giving, as did the hon. Member for North East Hampshire (Mr Jayawardena), who again had a challenge: could the church get a contactless machine up the aisle at the same time as worshiping? That seems to have been a theme today. The hon. Member for Mid Dorset and North Poole (Michael Tomlinson) talked about the Great Santa fun run raising thousands of pounds and, touching everyone’s heart, the Waggy Tails Rescue dog re-homing charity.
We on the Labour Benches want to thank the charitable sector for all the remarkable work it does for all the communities we represent. Without its valuable role, many services in our communities would simply not exist, so the Opposition are broadly supportive of the content of the Bill. As such, I will keep my closing comments fairly brief. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) has already made reference to our concern that loosening the eligibility criteria could increase the risk of fraud. That is important. The fact that a charity would not need to be registered for two years raises the question of whether just about anyone could set up a charity and relatively easily receive £2,000 of taxpayers’ money. That is an important point, so does the Minister have any figures on the amount of fraud that has taken place in the gift aid small donations scheme thus far?
The question of the risk of fraud is extremely important, given the inadequacy of the regulation of charity taxation. We hear about Government funds being mismanaged in elements of the charity sector or about charities being set up merely for the purpose of tax avoidance.
Does the shadow Minister agree that the call should be to ensure that the appropriate due diligence must be undertaken in new charity registrations, in particular by the Charity Commission, before a charity registration number is issued? I take on board his point about potential fraud via this scheme, but of course any charity being registered can start collecting and we need the public to have that confidence.
I completely understand that. At the end of the day, the process has to be sufficiently robust to ensure that fraud does not exist.
In that regard, the Charity Commission has identified the estimated levels of abuse, mismanagement, fraud and money laundering in charities today, in a succession of reports entitled “Tackling abuse and mismanagement”. It has identified an increase in the incidence of fraud in relation to charities, and a range of cases in which the commission gave evidence in criminal prosecutions, including against trustees who stole £350,000 from a charity for the relief of the people of Afghanistan, which is shocking. The number of compliance cases brought by the commission almost quadrupled between 2012 and 2013, demonstrating both that the commission needs our support and that we ought not be complacent. In that light, when proposed legislative changes come before the House, it is incumbent on us all to be vigilant. I do not want to rain on the party, but we need to be vigilant.
The problem is not just straightforward crime. There is something worrying in our corporate and tax-avoidance cultures that see charities as a means of making money. In recent years, a prime example is the Cup Trust, about which the Public Accounts Committee produced a damning report in 2013, while there was a judgment in the High Court earlier this year about the same issue. The report summarised:
“Despite its declared charitable aims, it is clear that the Trust was set up as a tax avoidance scheme by people known to be in the business of tax avoidance.”
In the meantime, the Cup Trust has claimed gift aid of £46 million. Regrettably, such tax-avoidance schemes are not isolated. As Professor Alastair Hudson, an expert on these matters, put it:
“There is something about the ‘goodness’ associated with charities, which made people reluctant to investigate or to criticise them.”
It is worth noting that when Northern Rock collapsed in 2007, it came to light for the first time that the bank had created a corporate structure known as “Granite”. This included what has been explained by academic commentators as a discretionary trust involving a small charity in South Shields among its beneficiaries. It appears that the charity was named without its knowledge. Moreover, it appears that the only purpose of this structure was to be “tax-efficient”. The presence of the charity in the structure appears to have been unconnected to working “for the public benefit”. We cannot be complacent about the law on charities, while that sort of activity is considered to be an ordinary part of corporate life. While tax avoidance is legal, it is, as Lord Denning said, “not yet a virtue.”
Of the 164,000 charities in the UK, a large number still do not lodge accounts with the regulators. It is difficult to know whether they are moribund, carrying on work “for the public benefit”, or being used for other less charitable purposes, so to speak. That does charities no good at all—and we need to protect them. Even the highest-profile charities such as Kids Company can be sources of mismanagement and bad financial practice.
Notwithstanding the best intentions of these proposals —namely, the loosening of eligibility criteria—it is vital that sufficient safeguards are in place to prevent fraud when Government funding or tax breaks are provided, as in this case, to the charity sector. I think that sentiment would get cross-party support.
That said, and as I indicated earlier, we are broadly supportive of the measures contained in the Small Charitable Donations and Childcare Payments Bill and we will not oppose it on Second Reading. We will, however, seek to improve the Bill in Committee next week, and I hope that the Government will support us in that.
I think you will agree, Mr Speaker, that this has been an entertaining and enlightening debate. Speaking as the Minister with responsibility for civil society, it is always encouraging to hear right hon. and hon. Members share examples of the excellent work they see being done by charities throughout the country.
I would like to thank those who spoke in the debate: my hon. Friends the Members for Bolton West (Chris Green), for North East Hampshire (Mr Jayawardena), for Somerton and Frome (David Warburton) and for Mid Dorset and North Poole (Michael Tomlinson); the hon. Member for Clwyd South (Susan Elan Jones); my hon. Friends the Members for Rochford and Southend East (James Duddridge) and for Congleton (Fiona Bruce); the hon. Member for Foyle (Mark Durkan); my right hon. Friend the Member for Meriden (Dame Caroline Spelman) and my hon. Friend the Member for Taunton Deane (Rebecca Pow). I am also grateful for the Front-Bench contributions. We can be extraordinarily proud of our strong and diverse charity sector. That is why building an environment in which a modern and resilient charity sector can thrive remains a priority for this Government.
The Government already provide significant support to our charity sector. They do so through generous tax reliefs and grants to support good causes, but also through contracts and payments for services. Indeed, the National Council for Voluntary Organisations reports that in 2013-14 the charity sector received £15 billion from Government bodies, with 81% coming from contracts and fees.
The Government have developed the world’s leading social investment market to support charities and social enterprises. We have established Big Society Capital, and are in the process of providing it with £600 million of start-up capital in partnership with the UK’s banks. We have set up the Access Foundation with more than £50 million to allow access to the social investment market, and we have introduced social investment tax relief, which is set to unlock nearly half a billion pounds’ worth of investment over the next five years.
As my hon. Friend the Financial Secretary said in her opening speech, the Government support charities and donors through a substantial package of tax reliefs, worth more than £5 billion last year. Almost £1.8 billion of that comes in the form of business rate relief on charities’ premises. A further £300 million is provided in VAT relief, and £280 million is received from relief on stamp duty land tax. In addition, donors are encouraged to give more to good causes through tax relief on gifts and bequests, and that is worth nearly £1.5 billion every year.
The Minister mentions the benefit to charities of what are effectively business rate exemptions. Has he had a chance to look into the possible impact on the figure he mentions of the revaluation that has just been announced, which will take effect on 1 April next year?
I have not had a chance to look into it myself, but I am sure that the Financial Secretary will be happy to speak to my hon. Friend after the debate.
After business rates relief, gift aid is the most highly valued tax relief available to the sector. Since its introduction in 1990, it has grown substantially. It is now worth £1.3 billion a year to the sector, and robust and well-used processes have been developed to facilitate gift aid claims on most forms of donation. That includes text message, online and direct debit donations, and even the donation of goods to charity shops. The gift aid small donations scheme is a natural complement to gift aid, covering circumstances in which it is not feasible to obtain a gift aid declaration. I am particularly proud that the importance of the scheme to the charity sector has been acknowledged, and that the principles of the Bill have been welcomed throughout the House.
The changes in the Bill will make the gift aid small donations scheme significantly more flexible and generous. HMRC’s provisional estimates suggest that the reforms could benefit charities by up to £15 million a year, given that the 9,000 new charities that apply for recognition by HMRC each year are now entitled to claim top-up payments much sooner. Those figures will be certified by the Office for Budget Responsibility as part of the autumn statement.
Questions have been asked today about poor take-up and a lack of awareness of the small donations scheme. I can tell the House that 21,300 charities took advantage of the scheme last year, claiming a total of £26 million of Government support. We recognise that that is less than was forecast, but we want as many charities as possible to benefit from the scheme. That is why we are removing a number of the eligibility requirements and relaxing the community building rules, which will make it much simpler and easier for smaller charities to claim.
The changes in the eligibility criteria will make things easier for the charities that already claim, but I think that things will become more difficult for the established charities that have no staff support and must rely on volunteers. I do not think that they will benefit from the changes.
I think that the proof of the pudding will be in the eating. We constantly keep these matters under review.
As my hon. Friend the Financial Secretary said earlier, an outreach team in the Treasury is working on face-to-face presentations. So far, 650 charities have taken up that opportunity, and it has increased take-up. The feedback from the sector has been extremely positive, but we will continue to work on awareness and take-up with representative bodies in the charity sector. We are also launching a local charities day, which we hope will take place in December. That will provide a good opportunity to profile what local charities are contributing, and to ensure that awareness of the small donations scheme is at the forefront of their minds.
The Bill is a culmination of months of consultation and constructive discussion with the charity sector, and I would like to take this opportunity to pay tribute to the hundreds of charities, umbrella bodies and others that took the time to engage with the Government during the development of the Bill. Our engagement with the sector will not end with the conclusion of this review, however. A number of charities told us that a lack of understanding can contribute to unclaimed gift aid. We will therefore continue to work closely with charities and sector representatives to raise awareness of both gift aid and the small donations scheme, to maximise the relief claimed on eligible donations.
A number of hon. Members raised the matching rule, and I would like to take the time to go through that in a little more detail. I know that the hon. Member for Salford and Eccles (Rebecca Long Bailey) was particularly exercised by the proposed changes. This tax relief rightly benefits charities established and run by honest, committed people who are motivated to do good and who work hard for their beneficiaries. Unfortunately, the generous nature of these tax reliefs also attracts a dishonest minority who seek to exploit charitable status for criminal purposes. HMRC works closely with the Charity Commission for England and Wales, the Charity Commission for Northern Ireland and the Office of the Scottish Charity Regulator to protect our charity sector from those unscrupulous individuals. In 2015, more than 275 suspicious activity referrals were passed between HMRC and the charity regulators for further investigation.
Unlike gift aid, the gift aid small donations scheme does not provide a full audit trail to allow HMRC to link donations back to a specific named donor. The gift aid small donations scheme is therefore much more vulnerable than gift aid to fraud. That is why it is necessary to operate gift aid alongside the small donations scheme, so that we can best protect the scheme against fraud and exploitation by ensuring that funds are used only to support the important work done by bona fide charities. Public trust in charities has already declined due to poor fundraising practices. We really must ensure that, with the small donations scheme, we do not leave the door open to any future scandal and its consequent impact on public trust and confidence. I am sure that all hon. Members across the House will agree with me on that.
On the point about charities acting fraudulently, does the Minister not see that the charities that could benefit the most from the change to the matching rule are those that earn very small amounts of money, such as £500 or £1,000 a year? That is not going to cost the Treasury a massive amount of money, and there would not be a risk of massive financial fraud.
I want to stay on the subject of fraud, because we must guard carefully against it in the legislation. It might sound as though we are opening up quite small pockets of money, but when we put them all together, they add up to a much bigger total. The figures relating to the gift aid small donation scheme are not available in isolation. However, it is an unfortunate fact that unscrupulous individuals seek to exploit charitable status for criminal purposes. In May this year, three individuals were jailed for a total of 22 years for defrauding HMRC of £5 million in fictitious gift aid claims. In April this year, three individuals were jailed for a total of 11 years for submitting fraudulent gift aid claims totalling £340,000. In January this year, two individuals were jailed for a total of five years for attempting fraudulently to claim £500,000 in gift aid from HMRC. That is a really important point to make. We must make sure that this small donations scheme is not open to fraudulent activities.
The Bill removes two of the existing eligibility criteria that help HMRC to assess compliance with the wider gift aid scheme—the two-year registration requirement and the gift aid history requirement. The Government initially consulted on relaxing the gift aid history requirement to only one year rather than two. However, after listening to the views of the sector we have taken the decision to remove that requirement entirely, which is a significant simplification for charities. It is therefore necessary to retain the match-funding rule as a means of protecting the integrity of the scheme. As the Financial Secretary said in her opening comments, the scheme was always intended to be linked with the wider gift aid scheme, and the Government made that clear in 2012 and that remains the case today.
It is important to be clear that the gift aid matching requirement is not intended to disadvantage smaller charities. That is why the rule is progressive and is set at a modest ratio of 10:1. This means that a charity needs only to claim gift aid on donations of £10 to gain a small donations scheme allowance of £100. To benefit from the maximum small donations allowance, a charity must collect gift aid donations of just £800. Most would see that as a reasonable position to take. Requiring charities to match a proportion of their small donations with a small amount of gift aid donations incentivises charities to maximise their gift aid claims.
Unlike the small donations scheme, gift aid relief is not capped, relief can be claimed on donations of any size and it is not limited to small cash donations. Furthermore, the process of obtaining a gift aid declaration allows charities to develop ongoing relationships with their donors and can lead to a more resilient funding stream in the longer term. In terms of awareness for charities as well, the Government have funded the small charities fundraising training programme, which is worth more than £100,000. The Government appointed the Foundation for Social Improvement in partnership with the Small Charities Coalition and GlobalGiving UK as training providers to help charities with an annual income of up to £1 million to fundraise much more effectively than they have done in the past.
The hon. Member for Clwyd South asked why the matching ratio was set at 10:1. During the passage of the Bill in 2012, the matching rule was originally set at 1:1, but that was reduced to 10:1 after listening to representatives from the sector.
My right hon. Friend the Member for Meriden asked about gift aid and SMS donations. SMS text giving is a really easy way for donors to give to charity. Donors simply send a short code to a six-digit number to donate a set amount via their phone bill. There is an established process for donors’ gift aid SMS donations. Following the initial message, a reply is sent to the donor thanking them for their donations and asking for their name, house number, postcode and confirmation that they are a UK taxpayer. If the donor replies with that information, gift aid is added to the donation.
We also had a question about why cheques were not allowed. The aim of the gift aid small donations scheme is to allow charities and community amateur sports clubs to claim a gift aid style payment on cash donations received in circumstances where it is difficult or impractical to collect donors’ details. Giving by cheque means that the donor is giving their details to the charity and the extra amount of information needed to make a gift aid declaration is therefore relatively small. If it is practical for a donor to write a cheque, it seems reasonable to assume that it is practical for a donor to make a gift aid declaration.
I will briefly cover contactless debit and credit cards, because those donations face the same fundamental problem—a lack of opportunity for charities to stop and engage with their donors. Anyone who has passed through a tube station ticket barrier at rush hour will be able to attest to the speed of contactless technology, allowing individuals to tap their card to pay and walk through without breaking their stride.
I am very grateful to representatives of Cancer Research UK who took the time during the Government’s recent consultation to demonstrate a prototype contactless donation terminal currently being piloted by a number of large UK charities. These terminals, which are set to fixed donation amounts, allow individuals to donate quickly and easily in a similar way to donating cash. Extending the small donations scheme to include these types of donation will future-proof the scheme, allowing more charities to benefit as the technology becomes widely available.
We had a fairly lively discussion about the cost of child care and the importance of Government support for hard-working families. I hope that we can all agree that the amendments within the Bill are positive, making it easy for parents to access help with the cost of child care. I also hope that my right hon. and hon. Friends from all parties in the House can join me in welcoming the imminent introduction of tax-free child care. This new scheme will provide much-needed support with child care costs for the first time to working parents who are self-employed as well as those who are employed.
The Bill will make the gift aid small donations scheme more flexible and generous so that it can benefit a greater number of charities and donations. It will also make it easier for parents to access tax free child care. It is good news for civil society and good news for working parents, and I hope that all hon. Members will join me in supporting it. It is a Bill to make life simpler and easier for charities and working parents, and I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Small Charitable Donations and Childcare Payments Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Small Charitable Donations and Childcare Payments Bill:
The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 18 October 2016.
The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Proceedings on Consideration and up to and including Third Reading
Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.
Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.
Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Jane Ellison.)
Question agreed to.
Small Charitable Donations and Childcare Payments Bill (Money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Small Charitable Donations and Childcare Payments Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Jane Ellison.)
Question agreed to.