To ask Her Majesty’s Government whether they propose to introduce further measures to simplify the Gift Aid system in order to encourage wider take-up by potential donors before the end of the transitional regime in 2011.
My Lords, the Government continue to look for ways to simplify gift aid. Following the 2007 gift aid consultation exercise, we introduced a wide-ranging package of simplification measures, and at Budget 2009, we announced new research into the effect of charitable tax relief on donors to inform thinking on gift aid. The research will be published in the autumn.
My Lords, I am grateful to the Minister for that reply. Is he aware that the latest HMRC figures for repayments of tax under the gift aid scheme indicate that were it not for the transitional relief, the amount of money charities would have earned under the gift aid scheme would have fallen in the previous financial year? The figures seem to indicate a fall of something of the order of £53 million. Transitional relief is running only until 2011. The sector is very worried and keen to ensure that income under gift aid is protected. Will the Government look again at the sector’s proposal for an accounts-based system, which would help smaller charities access gift aid and those charities already running a gift aid scheme?
My Lords, the right reverend Prelate takes a particular interest in this area, including through his work as chair of the Churches’ Legislation Advisory Service. The value of gift aid to charities has increased from £135 million in 1996-97 to £891 million in 2008-09. The Government introduced transitional relief to ensure that charities were not affected as a consequence of the reduction we announced in the basic rate of taxation. We have also announced a number of other measures to support charities, in particular in the area of gift aid, including simplified forms and technology to facilitate use of gift aid by smaller charities. I will not anticipate at this stage the thinking of the Chancellor of the Exchequer, which will clearly be informed by the research to be published in the autumn. No doubt the Chancellor will have more to say on this subject in either the Pre-Budget Report or the Budget next spring.
My Lords, that is not always where research finishes up. As the research is only coming to hand in September, then 2011 is getting uncomfortably close for planning purposes. Will the Minister bear to the Chancellor the great importance of him coming to an early conclusion as well as a favourable one?
My Lords, I am sure the research will be coming from heaven if the right reverend Prelate has anything to do with it. Of course the Chancellor is very seized by this issue and no doubt will be looking, at an early stage, to review the outcome of the research, which is being quite correctly carried out to better understand the motives behind giving and, in particular, any consequences of possible changes on those who are currently subject to higher rate as opposed to standard rate taxation. An informed decision will be taken in support of a sector that the Government support through more than £3 billion per annum of various tax reliefs and other kinds of support. As I said earlier, the Chancellor no doubt will have more to say on this in either the Pre-Budget Report or his next Budget.
My Lords, notwithstanding what my noble friend said in answer to the previous question, given that the prospects for lavish increases in grants in aid in the cultural sector are not perhaps as brilliant as I know he would personally hope, will he do his best to persuade the Chancellor to extend the gift aid scheme to include gifts of cultural objects to museums, galleries, libraries and archives; and also to extend the acceptance-in-lieu scheme to enable donors to receive tax benefits during their lifetime? Does he agree that unless we continue during the recession to build on recent achievements in fostering public/private partnerships, the public will not have the opportunities that they ought to have and which could be afforded to them?
My Lords, my noble friend’s interest in this area has been evident for many years. The Government have implemented the vast majority of the recommendations made in the Goodison review and keep under review those that have not yet been implemented. However, at this time we have to be very clear as to our priorities. It is also evident that gifts of a non-monetary nature can create serious problems and issues, as experience in the United States and Canada has recently shown. I can assure my noble friend that the Chancellor and the Secretary of State for the Department of Culture, Media and Sport regularly keep the issues under review.
My Lords, we have not heard from the Liberal Democrats yet.
My Lords, does the Minister accept that the contribution which the corporate sector makes is very important in the financial and general health of many charities? Will the Government support the work of bodies such as Heart of the City, which works with companies in the City of London to improve their community investment programmes, to ensure that charities can benefit from the activities of companies in the communities in which they are based?
My Lords, there are many in the City of London who could evidence more commitment to charitable giving and community support as a way of assuaging some unease that they may feel as a result of the past grotesque rewards that some have earned. More importantly, we encourage all companies not to take the easy option of reducing charitable giving and community support as the first cut they make in difficult economic times. I have made that clear to the chief executives and the chairmen of our major banks when I have met with them. We will not accept kindly a cut back in community support giving and engagement by our major banks at this time.