As other hon. Members have already said, many practical concerns and suggestions were aired and shared by members of the four parties represented when we discussed the Bill in the Public Bill Committee. It is important that we use the Report stage to return to a number of those issues. I do not intend to rehearse all the arguments that were made in Committee. This is not the time for “Here are our best bits” or for simply making our pitches again. However, it is important to reflect on the fact that the Minister indicated that he was listening to some of the points that were made in Committee, even if he refuted many of the others. That is reflected in some of the Government amendments that he will no doubt speak to later. I welcome the fact that further progress has been made, just as I welcome the fact that, in Committee, the Minister tabled an amendment to clause 2 as a direct response to an issue that I had raised on Second Reading. I appreciate his doing that.
There is still a basic problem with the Bill. The original Budget promise made by the Chancellor of the Exchequer was widely welcomed across the House, and certainly in the charity sector. People expected something along the lines of what they thought had been promised—that the equivalent of gift aid would be available, with certain conditions, to charities, without them having to fulfil all the gift aid criteria and the necessary processes attached to them.
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As I said, that was widely welcomed, but the Government then produced a scheme that was absolutely dependent on gift aid; gift aid was the qualifying prerequisite. Even with the Government amendments so far and the further Government amendments tabled for debate today, the provisions are still locked into the requirement that gift aid is the prerequisite for qualifying for these top-up payments.
In the Public Bill Committee, the Opposition Front-Bench team tabled various amendments aimed at trying to ensure that the scheme was not based on gift aid and not run by Her Majesty’s Revenue and Customs. I did not necessarily sympathise with those amendments. I could see the point of saying that if a scheme operates in the spirit of gift aid, the payments would be made by HMRC. However, I do not accept that the practice or use of gift aid by a charity should be the only way in which it should benefit from the sort of measure that I believe all hon. Members would want to see. That is why I have tabled new clause 3, a variant on provisions I proposed in Committee.
The point of the new clause is to provide a route 2 option to allow smaller charities or newer charities to benefit from the same capacity that the Bill confers on larger and more established charities. It is about creating a second scheme whereby HMRC would be able to support charities and top up their donations to exactly the same limits and levels as would be available to the other charities; there would be no differentiation. However, these charities would not be caught by the obligation to have claimed gift aid in the previous three years—or the previous two years as proposed now, or eventually only one year if a review amendment is passed, and the review amendment locks in the fact that there has to be at least a previous tax year in which gift aid was claimed.
New clause 3 is aimed at saying, “Let’s have a second scheme.” If the scheme provided is one of complementary gift aid where HMRC will complement all the gift aid payments with the other top-up payment, there should also be a supplementary top-up payment scheme for the smaller charities that do not use gift aid—and they might have their own reasons for not using it. Small local charities may depend on cash donations and may rely on school students to carry out a lot of their collections. In those situations, people are not going to register gift aid details. Many charities say that people avoid giving gift aid details nowadays, simply because they are afraid that it will generate an awful lot of demands through the post for all sorts of other donations if their details are passed on. It is not necessarily that people do not want to give gift aid; they sometimes do not think the amount involved is worth giving out their details for, or they are not sure what else that could lead to. Let us understand why many charities do not use gift aid nowadays and may not want to rely on or use it much in the future. When we are legislating for a scheme such as this, we need to realise that we are legislating as far as possible for all charities.
Other hon. Members have made the point that many charities are created in response to particular events in a community. Those events could be a tragedy; they could have had a serious criminal impact on a community or the families within it; they could involve the impact of a natural disaster. Only this weekend, we saw the serious impact of flooding in many places. Are we really saying that we want to make sure that bona fide charities set up in response to such circumstances are the bodies that we specifically want to exclude from the scheme? Are we deliberately and specifically as legislators saying that they should not benefit from this sort of scheme? I think that as MPs we should be trying to ensure that such charities do benefit. In future, many of us may well write to Treasury and other Ministers on behalf of
those charities, asking for some extra statutory basis to be found to allow a particular charity to benefit. That is why I commend new clause 3 as one way of meeting Members’ concerns.
If the Government fear extending the scheme to all charities because they will not be able properly to oversee, regulate, manage or verify it, we have to find a way of allowing the Government to cater for the other charities while ensuring that the scheme remains proofed against fraud. That is why new clause 3 provides that it is for HMRC to specify what other validation and verification it would need from these smaller and newer charities. It also allows HMRC to indicate which agencies can be involved, whether it be registered members of a particular professional body such as accountants or local authority figures. When charities are set up in response to particular events, it is often a mayor or a council chief executive who gets involved. The new clause also provides that in specifying who can be used to verify the charity’s details, HMRC will liaise with the relevant devolved authorities, charity regulators and charity commissioners. It might even rely on the police, because many of the small local charities that gather money in bucket collections do so on the basis of having secured a police licence or police approval, so why not join the dots and allow the police to be involved? Perhaps this is something for the police and crime commissioners to do, as nobody is quite sure what else they are going to do. They could be made part of the chain of communication and verification.
New clause 3 is an attempt to help the Government extend the benefits of the Bill to even more charities than will qualify for and receive benefits under the current provisions. It is intended to reflect some of the issues raised by hon. Members on Second Reading and again in Committee.
Will the Minister explain why there should not be two different routes of provision for charities, according to their scale, their size and their circumstances? He seemed to suggest in Committee that this would be a dangerous and difficult thing to do, but we often see the Treasury legislating and regulating differently in other areas according to size and scale. In the Financial Services Bill, for example, which is still stuck in the other place, the Government provide for different panels in respect of the whole matter of financial conduct. There is a markets practitioner panel and a small business panel, taking account of the fact that different people involved in financial services are operating on a different scale of business. There will also be the consumer panel. So there is differentiation, as there also is in respect of prudential regulation, financial conduct and so forth. If all those differences could be taken into account in the financial services industry, it seems strange that the Government say it is impossible for them to take account of working, practical, natural differences relating to the scale and circumstances of charities.
Similarly, credit unions also come under financial regulation, and the Treasury is quite happy to base its regulation of credit unions on version 1 and version 2 credit unions. Versions 1 and 2 have different criteria and they quality for different benefits according to different capacities. I see no reason why there should not be a version 1 and a version 2 scheme for small charitable donations top-up payments. That is essentially what new clause 3 offers.