Small Charitable Donations Bill

Lord Bishop of Exeter Excerpts

Tuesday 18th December 2012 Lords Chamber

[The Lord Bishop of Exeter]

My Lords, I declare an interest as chairman of the Churches’ Legislation Advisory Service, which represents all the main Christian and Jewish communities in the UK. On behalf of them and these Benches I welcome this Bill.

It was clear from the start that the Bill, first published in the Commons, was going to be helpful to the voluntary sector and to the churches in particular. However, there were fears then that some of its requirements were going to be too restrictive, particularly for small charities. I am glad to note, though, that before the Bill was published—and while it was going through the Commons—there were several informal and very productive discussions with officials. We are very pleased that Ministers have been so willing to listen to our concerns.

The reduction of the gift aid matching criteria from 1:1 in the original Bill to 1:10 in the Bill before your Lordships’ House will be very welcome to small congregations. Equally, the reduction in the time that a charity needs to have a successful gift aid claims history to participate in the scheme will make life a little easier for new charities, although I still question whether both this requirement and the matching one are really necessary.

As we have heard, churches vary enormously in the way they are structured as charities. For example, each Church of England parish—all 16,500 of them—is a separate charity, but the Salvation Army is a national charity with one registration number.

As the Minister has pointed out, the community buildings element in the scheme was introduced to create some degree of equitable treatment for charities such as the Salvation Army and the Roman Catholic Church that are not organised and registered at local level. The community buildings provisions in the Bill are still fairly complex, but I acknowledge that the Government have gone a long way towards meeting our initial criticisms and we welcome that.

Similarly, we felt that the initial proposals on connected charities ran the risk of connecting entirely different charities just because they had trustees in common—for example, where a trustee of a local music society is also a trustee of a local church charity. We are pleased that Ministers have clarified the position on that. However, I hope that this is an area where developing practice will be monitored, as there is still considered to be some risk that HMRC may try to suggest that local churches, or groupings within intermediate church bodies, are connected even though it would seem that the definition of connection in the Bill would not support this interpretation. For Church of England parishes there may be some additional protection in that parochial church councils are not trusts but bodies corporate. However, for other denominations and faith groups the situation may not be as clear cut.

The Church of England estimates that the scheme will be worth about £15 million to our parishes. On that basis, it will probably be worth at least that amount to other faith groups, if not more. That is extremely valuable but I will make a couple of suggestions that would make it more valuable still.

The first concerns simplicity. I am grateful to the noble Baroness, Lady Hayter, for her observations and I will not repeat them. Everyone in the voluntary sector is very much aware that a scheme of this nature is open to abuse and fraudulent claims, but I hope that HMRC will take a proportionate approach to regulation. We all know that no charity is immune from the occasional rogue trustee or treasurer, but the overwhelming majority of charities are honest and careful in their dealings with HMRC.

The second concerns payment methods. The scheme is about payments in cash only. One of the accompanying documents released with the Autumn Statement said that the Treasury wants to look at gift aid in light of the fact that people now give online and by text. It said:

“The Government will examine whether the administration of Gift Aid can be improved to reflect new ways of giving money to charity, in particular digital giving”.

While the Government are doing that, can they also look at how the small donations scheme is working? I can understand why Ministers want to keep the scheme simple at the outset but the world is moving inexorably in the direction of non-cash donations and perhaps at some point the scheme is going to have to take account of that. I should also say that for one religious group—the Orthodox Jewish community—a cash donation in the collection plate at the Sabbath service is simply not an option because Orthodox Jews are forbidden to carry money on the Sabbath.

This Bill is, inevitably, a complex one, but larger churches, including the Church of England, are reasonably confident of being able to produce full guidance notes in a simple format. It will be important though to ensure that the complexity of the Bill is accompanied by appropriate and accessible guidance across the whole sector.

In this context it needs to be remembered that gift aid is processed for the most part locally by volunteers. As we have heard, in the Church of England alone it has been estimated that it takes around 200,000 hours of volunteer time to do this, and we would not wish this to be increased by additional complexity. Finding further ways of refining operational simplicity would not come amiss, particularly for the benefit of smaller charities and churches,

It may be a matter of some small tweaks to the Bill’s provisions, but also for guidance to be given to HMRC. I echo the questions already asked by the noble Lord, Lord Hodgson, and I look forward to the Minister’s response. With those very slight reservations, I warmly welcome the Bill.