Small Charitable Donations and Childcare Payments Bill

Mark Durkan Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 11th October 2016 Commons Chamber

[Jane Ellison]

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.

[Mark Durkan (Foyle) (SDLP)]

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?

[Jane Ellison]

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.

--- Later in debate ---

[Mark Durkan (Foyle) (SDLP)]

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.

[Susan Elan Jones]

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.

[Mark Durkan]

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.