Small Charitable Donations and Childcare Payments Bill

Baroness Barker Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Monday 12th December 2016 Lords Chamber

[Baroness Barker (LD)]

My Lords, I declare a non-pecuniary interest, in that I am an unpaid adviser to a company called Charity Checkout, which exists to assist small charities in particular to increase their ability to accept digital donations.

It is a great pleasure to follow the noble Lord, Lord Hodgson. He was indeed here almost four years ago exactly when we discussed this measure in the original Bill. I also echo some of the points made by the noble Lord, Lord Shinkwin. Back in 2012, noble Lords welcomed that Bill—as we do with this Bill today—and the Government’s intention to assist small charities.

However, as we did then, we have to regret that when HMRC comes into contact with the charitable sector things seem to go horrible wrong. Tomorrow we are going to talk about the digital economy and all sorts of ways in which the country will move to a new, bright digital economic future. As a user of HMRC services, I am constantly being told that everything will move online, but somehow when the charitable sector and HMRC come together, we are back to something that is maybe not quite “The Flintstones” but is Heath Robinson-like in its complexity. And so it has proved to be. The projections for this scheme were that it would raise in excess of £100 million and that it would involve all the charities, as the noble Lord, Lord Shinkwin, said. But it has not, and that is principally because of the complexity of doing so. I just do not ever get the impression that people within HMRC understand how difficult it is for small charities to deal with some of the forms and so on that they put out.

That said, there is much in the Bill to welcome. There are a quite a number of important improvements. The change in the upper limit to £8,000 will definitely make a great difference to those charities that can handle the complexity of this. I am very glad that we have got rid of the bizarre rules about where activities take place and which buildings would be considered to be within the scheme and which would not.

I share the warm greetings of the noble Lord, Lord Hodgson, for the fact that organisations will no longer have to have claimed gift aid in the preceding two years. I know that the Government consulted on whether a charity should have to wait two years until it could register for the scheme. The Government listened to the sector and agreed that the charity did not need to wait at all. Actually, I would have made a different decision. I would have insisted that charities had to have existed for a year, because they should be able to provide an annual report and an annual account that proves that they are a bona fide organisation. I would have done that rather than some of the other things, and I would have perhaps taken a different view particularly on things like the linking scheme. Nevertheless, the Government have made that decision—wrongly in my view, as I think charities should be more accountable.

The main point I want to follow up on, as did the noble Lord, Lord Hodgson, is the extent to which this linking mechanism is really working. The Minister in another place, Rob Wilson, cited the main reason for keeping it as deterring fraud by creating an audit trail. He went on to cite examples of frauds perpetrated by charities over the past year. From the totals that he prayed in aid in evidence to the House of Commons, that must have been gift aid frauds—they seem to have been big and systematic frauds. They do not seem to be fraudulent use of the small donations scheme. I would like to hear what evidence there is that the linking of the two schemes has managed to limit fraud.

I end with two points. I asked the Minister some Written Questions about the cost of administering gift aid and the gift aid small donations scheme. They are not separated out, so it is impossible to give a breakdown. When we talk about a review—as we inevitably will; this machine breaks down and needs to be repaired every couple of years—could we have a full analysis of the cost and cost-effectiveness of doing it this way? We are the only country in the world that runs a scheme like this, and I rather suspect that it is not the most cost-effective way for the Treasury to support charities. I suspect that we may move to a system whereby the initial registration for gift aid changes, has to be digitised and can be one where a donor can give permission for multiple donations to be made, particularly if it is done via an intermediary.

We also need to look at whether we should have a standard rate for gift aid and some kind of cap. That could be much more simply administered and might well end up being a lot more beneficial for the charitable sector than this clunky, although well-meaning, scheme.