Digital Markets, Competition and Consumers Bill

Lord Mendoza Excerpts

Committee stage
Monday 5th February 2024 Grand Committee

Moved by

[Lord Mendoza]

149: Schedule 20, page 369, line 38, at end insert—
“14 Membership subscriptions which qualify as gifts to charity in accordance with the provisions of the Income Tax Act 2007, Part 8, Chapter 2 (gift aid).”Member's explanatory statement
This amendment would list charity membership subscriptions which qualify for Gift Aid as an excluded contract pursuant to Clause 253 and Schedule 20 (Excluded Contracts) of the Bill.

[Lord Mendoza (Con)]

My Lords, in moving Amendment 149, I declare my interest as the chairman of Historic England, which also has oversight of English Heritage, which looks after our national heritage collection.

The subject of this amendment was raised by many noble Lords—probably at least a dozen—at Second Reading: the treatment of automatically-renewing membership subscriptions for charities. These subscriptions are vital and a brilliant example of how commercial many of our charities, both large and small, have become in the way they augment their operating models with a regular membership subscription, which can be paid by direct debit monthly or annually. I know that we have all received all sorts of advice from large charities such as the National Trust, Kew, Tate, English Heritage, the Royal Horticultural Society, the RSPB, the Royal British Legion and so on. We can tell how important it is to them.

These membership subscriptions are treated as donations, but they come with membership benefits such as magazines, newsletters and free parking. I have just looked at the Natural History Museum, where you get free or discounted entry into its silent discos. All sorts of things are provided but, as noble Lords know, under the Income Tax Act the subscriptions are treated by HMRC as donations. They are eligible for gift aid—this is the key thing—provided that the payment is not subject to any condition as to repayment. That is what you would expect; if you give £100 to a charity, you do not expect to be able to ask for it back again next month. If it is a donation it is clearly not refundable, but noble Lords can see that there is a lack of clarity here.

I mentioned some of the numbers at Second Reading because they are significant. The National Trust is getting on for somewhere between 5.5 million and 6 million members—I cannot get a precise number. That is not that far short of the membership of the TUC, to give noble Lords some idea of the scale and extraordinary success of that organisation. Its membership subscription income is nearly £230 million, of which £47 million relates to the gift aid rebate. Similarly, English Heritage, the organisation that looks after the national heritage collection, as I said, has an income of £130 million, and membership subscription is its largest source of revenue at £48 million. Other organisations are similar. Tate, which I have just looked up, has £16 million in membership subscription income. The RSPB has £46 million in subscription income.

This amendment tries to place this kind of specific membership subscription income, which is narrowly defined as

“gifts to charity in accordance with … the Income Tax Act”,

to try to get them included in Schedule 20, on page 369 of the Bill ,as a category of excluded contract. I know that my noble friend’s department has done a lot of work on this with Treasury and HMRC officials, so I look forward to hearing whether there is any further update on how they might deal with this situation. The Minister has also expressed his assurance that there is certainly no desire in the Bill to somehow limit the application of gift aid to these charitable subscriptions, so it will be important to do this. The proposed amendment is simple and clear, but I will wait to hear what he says.

We must remember that these charities operate mostly on a break-even budget and their budgets are very hard to balance. They try to balance it across their operating model, looking at not just these membership subscriptions but admissions, fundraising and commercial ventures. They would find it very hard to withstand a sudden withdrawal of the ability to claim back these significant amounts of contribution through the gift aid process, so I look forward to some reassurance from my noble friend.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

I thank noble Lords for their contributions. I can confirm that we will come back before Report. The objective is to get a solution for this issue and to have a satisfactory outcome, so that we avoid carnage in the other place.

[Lord Mendoza (Con)]

My Lords, I am so grateful for the support of noble Lords. The range of experience and advice we have had in this Room is admirable. It is incredible and so helpful that we have the chairman of the Fundraising Regulator right here. I am grateful for the comments of the noble Lord, Lord Harris, and the interjection of my noble friend Lord Vaizey. I had the same thought.

[Lord Vaizey of Didcot (Con)]

On a point of information, every time I make a speech where I am sycophantic about noble Lords, I end up in Private Eye. I hope my noble friend is aware of that.

[Lord Mendoza (Con)]

I hope that results. I am grateful to the noble Baroness, Lady Young, for her intervention. Of course, she is right: people contribute to charities because they care deeply about the charity’s mission. Although, as she said, there is no transactional element, if you go on the website of the Natural History Museum or the Tate and to “Buy a membership”, they will clearly list all the benefits that you get, so there is an element of transaction to it. I wanted to bring that out, so that it is clear to the Treasury and HMRC when they concoct whatever regulations they are concocting that we make sure that gift aid is still claimable and that these membership subscriptions still count as a donation to support the charity’s mission. It may be that some charities describe their membership differently from others. I have not checked the Woodland Trust’s website; it may well be completely different from that of a museum or the National Trust.

I am grateful for the support of my noble friend Lady Harding, who could not have been clearer in her request to my noble friend the Minister. I am also grateful to the noble Lord, Lord Clement-Jones, for supporting this amendment and contributing his remarks.

To add to the last point that was made about the simplicity of our amendment, we are trying to exclude charities not completely but just from this narrow point of gift aid, which was carefully defined at great length in the Income Tax Act 2007. We are trying to exclude just this one thing. Perhaps my noble friend the Minister will be able to go back to HMRC or the Treasury to see whether they can find some way of supporting this amendment. It seems clear and simple, without introducing a whole set of other complexities.

I am grateful to my noble friend the Minister for giving me the opportunity to talk with the Secretary of State today. I certainly received reassurances from her and, as I say, that should bring some comfort to the Room. I am grateful to noble Lords for this debate. I beg leave to withdraw the amendment.

Amendment 149 withdrawn.