7 pm

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.

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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

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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.

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Sheila Gilmore (Edinburgh East) (Lab): Being a member of a Public Bill Committee, particularly a Back-Bench member, can be a soul-destroying experience. It often seems to Opposition Members—under all Governments, I am sure; I do not intend to suggest otherwise—that what happens is this: the Committee debates the amendments that we have tabled, the Government generally oppose them, in some instances there is a vote, the Opposition generally lose the vote unless the Government have been uncommonly careless in losing some of their members somewhere in the building, and we move on to the next debate. However, that is probably not what the public think is involved in the scrutiny of a Bill in Committee.

When I became a member of the Committee, I wrote in my local newsletter that I was quite excited about it. Because the Bill did not appear to me to have created huge party political dividing lines, I believed that we would have the sort of opportunity for scrutiny that does not always arise. Unfortunately, however, there came a time when I began to feel that that was not the case, and that, for all my hopes that we would be open with one another about what was right and wrong with the Bill, we were merely engaging in those traditional Committee procedures. I was therefore extremely pleased to observe that the Minister, who had given little away in Committee, had tabled Government amendments on Report. That, I think, shows that he listened to what was said in Committee, and subsequently thought about difficulties that had been created during the drafting of the Bill but had not really been intended by legislators.

We must surely acknowledge that returning the time for which a charity must have existed before it can even claim under the scheme to two years, as the Government amendment proposes, would be an improvement, although our new clause takes a rather different approach. At least the amendment recognises that charities, particularly new charities, need a great deal of help. However, part of the problem with the Bill has been the fact that it is so strongly hitched to the gift aid mechanism.

It was assumed that small charities that could not obtain money through gift aid should be helped by means of the mechanism that already existed. That created a huge extra obstacle race. In fact, there will still be an obstacle race even if the Government amendments are accepted. The charity must be registered, it must have existed for a certain number of years—for the three years originally proposed, or for two—and it must be registered for gift aid. For all the reasons that have already been given, that can be quite a cumbersome process, particularly for small organisations that are entirely run by volunteers.

The whole apparatus of gift aid is quite complex, and the original mechanism involved a fairly lengthy process. It seemed to us in Committee that very small charities in particular were being expected to jump through a huge number of hoops to make their claims. Ironically, it appeared that they would be faced with far more obstacles than larger organisations which were claiming substantial amounts of gift aid, and that a scheme that had been intended to benefit small organisations was unduly elaborate.

7.15 pm

It appears that the Government intend to retain the link with the gift aid arrangements, but I hope that there is still space for our proposals. New clause 3, for example, suggests a way of removing some of the

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complexity from the system to allow start-ups of small and sometimes fairly short-term charities. It is a good idea to enable people to set up charities for a particular purpose and perhaps to close them down once they have had a dab at what they need to do. Perhaps we are rather too inclined to keep organisations going just for the sake of keeping them going, rather than saying, “It has done its job, and we can wind it up.” Sometimes that is the appropriate thing to do.

I am pleased that the Government have tabled their important amendments, but I hope that, even at this stage, the Minister will be prepared to look kindly on the proposals presented from various parts of the Opposition Benches, including the new clauses proposing a review. It is often said of reviews, particularly by Governments, that it is unnecessary to demand them because they will take place in any event: because part of a Government’s activity is constantly to review what they are doing. That should indeed be the case, and one hopes that it is, but in reality there are many competing pressures. Many things have to be done, and time moves on.

When a Bill such as this goes on to the statute book, at one level it is done and dusted, and it is pushed aside. Civil servants, and indeed Ministers—even Ministers in the same Government, although not necessarily—may not return to it regularly unless required to do so. Rather than waiting for a problem to arise, and for organisations to campaign for a review because the present system is not working, we should create a clear mechanism that cannot just survive the Government who produced the legislation, but survive future Governments.

Various concerns have been expressed, particularly by those who need to make the legislation work, namely the charities themselves. They are doubtful about whether the Bill will deliver what has been promised. The Government have suggested that some of those concerns may be exaggerated, that many charities that apply for gift aid will find the process easier than they had thought, and that we should not be so depressing as to put off charities in our constituencies. Indeed, the Minister has encouraged us all to organise our own publicity, and to arrange events encouraging charities to apply. That is all very worthy, but if the concerns that have been expressed have some foundation, the best way of establishing the facts will be a process of regular review and report. I do not think that it is enough for Ministers to say, “It will be all right, because somewhere in the system reviews will be taking place anyway.” We could all come up with examples of circumstances in which reviews do not happen until something goes wrong, or a big campaign has to be organised to put pressure on a future Government.

I hope that, now that the Minister has shown his willingness to move on the Bill, we shall see some further movement tonight.

The Economic Secretary to the Treasury (Sajid Javid): I will start by reflecting on the Bill’s constructive Committee stage, and I thank the Opposition for their continuing support. I also thank the hon. Members for Edinburgh East (Sheila Gilmore), for Clwyd South (Susan Elan Jones), for Banff and Buchan (Dr Whiteford), for West Dunbartonshire (Gemma Doyle) and for Foyle (Mark Durkan) for their contributions to today’s debate. I will try to answer as many of the issues raised as I can.

Proceedings in Committee, and now on Report, have provided an excellent challenge to and scrutiny of the Bill—as they should have done—and I hope it is clear

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from the amendments that they have tabled that the Government have listened to hon. Members from across the House. The amendments in this group cover mainly the eligibility conditions for charities that wish to claim under the small donations scheme. New clauses 1 and 2 would have a wider effect, as they require HMRC to publish certain details about the scheme as a whole. Amendment 21 would require HMRC to publish details of the connected charities and community buildings rules. Government amendments 28 and 29 are minor and technical and simply change the Government Department to which powers in clauses 7 and 8 are given.

In Committee we debated a variant of new clause 1 and the same text of new clause 2. I opposed the measures then, and I am afraid I shall oppose them again today, as I will amendment 21. As I explained in Committee, we need neither the new clauses nor amendment 21. We are already doing much of what they ask and it would not be a good use of civil servants’ time to duplicate that work.

Let me start with the annual report. As I said in Committee, HMRC publishes national statistics on the cost of various charitable tax reliefs three times each year. Once the gift aid small donations scheme is up and running, HMRC will include details of that in those national statistics. HMRC does not separately identify gift aid claims by types of organisation, regions of the UK, or their regulators. Those details are not published for gift aid claims and it would not be a good use of HMRC’s time to produce such information for this scheme.

HMRC does not collect information on whether a charity is exempt or excepted. Charities would have to provide that extra information, and HMRC would need to change its IT system to cater for that. Again, that cannot be a good use of resources for either charities or HMRC. HMRC does not publish details of fraud rates in particular schemes or tax reliefs, as that would be tantamount to advertising them to fraudsters. I therefore cannot commit to publishing such information. All information that HMRC can reasonably publish will be published, and interested Members will be able to find all relevant information on its website.

New clause 2 would require a review of the scheme two years after the Act comes into force. As I said in Committee, the Government are committed to a review of the scheme three years after it has started. That will allow enough time for the scheme to get up and running, and for charities to learn about it and get used to claiming. Any less time than that, and the review would not be representative of the scheme. A two-year review would be premature, but it would be wrong to think that no one will look at the scheme for three years. HMRC engages with charities every day through its helpline, outreach and audit teams. It will listen to what charities are saying and look for ways to improve the scheme.

HMRC’s charity tax forum has been discussing this scheme since it was announced in March 2011. The forum will share experiences of the scheme as it beds down, and identify areas for improvement. HMRC keeps all guidance under review and makes changes as necessary so that any issues raised can be responded to without having to wait for three years to pass.

Amendment 21 would require the Treasury to carry out a separate review of the scheme in relation to the community buildings and connected charities rules. As

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they currently stand, the community buildings and connected charities rules will affect only a few charities. For the vast majority who take advantage of the scheme, such rules will be irrelevant and can be ignored. Most charities are not connected with other charities, and do not operate within community buildings or collect more than £5,000 in small cash donations.

We will debate later more Opposition amendments on the community buildings and connected charities rules. The amendments would extend those rules—and their complexities—to a far larger number of charities. Whatever the outcome of that debate, I do not believe that amendment 21 is necessary. I have already said that we will review the scheme after three years, and that review will be wide ranging and look at all aspects of the scheme. It seems unnecessary and wasteful to hold another review 12 months earlier to look at just a small part of the scheme; it would be better to review everything at the same time.

The hon. Member for Harrow West (Mr Thomas) spent two Committee sittings setting out his concerns about HMRC, which he doubted would have enough resources to administer the scheme—if we go ahead with all these reviews and reports, he may well be right. I do not feel that the new clauses or amendment 21 are a necessary or effective use of public resources, and I therefore ask the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) not to press them.

New clause 3 was tabled by the hon. Member for Foyle, and amendments 32 and 33 by the hon. Member for Banff and Buchan. They are designed to support new and smaller charities and to mitigate the effects of a three-year eligibility period. I hope that hon. Members have noted the amendments that I tabled on eligibility requirements, and that my proposal to drop the eligibility period to two years goes some way to allaying their concerns.

We debated new clause 3 at length in Committee, but I am afraid the concerns that I raised still apply. HMRC would be expected to gather information from other agencies to check the credibility of small charities. That would place a significant administrative burden on it to verify each and every charity that applied through that route. HMRC would be required to make subjective judgments about whether a charity was in or out, and would be constantly at risk of a legal challenge to its decisions. The scheme would be impractical in operational terms and I ask the hon. Member for Foyle to consider not pursuing the new clause.

Mark Durkan: The Minister suggests that under the new clause, HMRC would have to check with all sorts of other agencies, but the measure clearly states that HMRC can provide for a scheme to which charities may apply. It would be up to the charities to produce and submit the verifying information. It would not be HMRC’s duty to verify information with other charity regulators or anybody else; it would be up to the charity making the claim to produce the necessary evidence as laid down in the scheme.

Sajid Javid: I thank the hon. Gentleman for that point. He sat on the Public Bill Committee and will understand from those debates—probably more than most Members in the Chamber today—the eligibility requirements. I know that he welcomes some of the

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Government amendments, but the remaining eligibility requirements provide a degree of protection for the public purse, so that charities that make claims and use the benefits introduced by this Bill are those that HMRC has good reason to believe are using the measure in the right way, and there is protection against fraud. I have looked closely at his new clause, which he has tabled with the best of intentions, but it is not a change that we can afford to make at the moment.

I turn to amendments 32 and 33, tabled by the hon. Member for Banff and Buchan. Again, I am afraid I cannot support them. They would allow certain charities— those with an annual income below £25,000 and those set up for specific projects and events, such as she described—to claim top-up payments from the time when they were established without meeting any other eligibility requirements. I sympathise with the intention behind the amendments, but they would cost a lot of money—tens of millions of pounds.

Most small charities starting up have an annual income well below £25,000, and those set up in reaction to events such as disasters would also qualify for payments under the amendments, so nearly every new charity would qualify immediately. As I said, I sympathise with the intentions behind the amendments, but it is essential to have some eligibility requirements, otherwise the scheme will be wide open to fraudsters and the cost to the public purse will rocket.

7.30 pm

Dr Whiteford: The charities in question would be registered with charity regulators on both sides of the border, and those are surely the bodies that decide whether their purposes are charitable. What benefit will the Bill bring to people raising money for a one-off or fixed-term good cause?

Sajid Javid: The Bill is intended to complement gift aid, because the Government received many representations from charities that when they received cash donations, such as in bucket collections, they were unable to take the information necessary for gift aid, such as whether the individual was a taxpayer and their name, address and other information. The scheme is intended to address that. One-off charities, including those set up in response to a disaster, are worthy causes but do not fit into how we intend the scheme to complement gift aid.

To answer the last part of the hon. Lady’s question, if a charity is created in response to a particular event or disaster, there is nothing to prevent it from registering for gift aid immediately and taking advantage of the gift aid provisions that already exist. If it stayed in existence for a number of years and therefore met the new eligibility criteria, it could also take advantage of what is available under the Bill. For the reasons that I have given, although she introduced her amendments with the best of intentions, I ask her kindly to consider not pressing them.

Amendments 8 to 16 would abolish the three-year start-up period and allow charities that have made a gift aid claim in the previous year to claim under the scheme. The maximum donations that could be claimed on would be £2,000, instead of £5,000. Proposals for a reduced rate for new charities have been put forward several times, and I am afraid that I cannot support

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them. Reducing the eligibility period to a year or less would increase costs, which would include a lot of costs caused by fraud. Requiring just one gift aid claim would leave the scheme open to unacceptable abuse.

The amendments would also make the scheme very complicated for some charities. Charities would need to know which other charities connected with them had claimed, and at which rate, because the rules would be different depending on those factors. The Government have listened to all the concerns that have been expressed about the eligibility rules, and we have put forward our own proposals. Our amendments are safe and affordable, and they will minimise complexity. I therefore ask Opposition Members not to press amendments 8 to 16.

I turn to the amendments that I have tabled on eligibility. Amendments 24 to 27 will reduce the eligibility period for the scheme to two years, and amendment 31 will introduce a power to enable us to amend the criteria in future if necessary. The eligibility criteria have been a key issue raised by the charity sector throughout the development of the scheme, and by Members in our earlier debates. The sector has welcomed the amendments since I tabled them last week, and I hope that hon. Members will support them, too.

Nigel Mills (Amber Valley) (Con): Can my hon. Friend explain the logic of why amendment 31 will take away the Government’s power to amend the provision requiring a gift aid payment in a previous year, yet amendment 30, which we will come to later, will give them the power not to require any matching gift aid amount in the next year? The impact will be that a charity can make a claim without having any gift aid claims in the current year, but will have to have claimed at least a pound in the previous year. Is it not slightly perverse to table amendments with those two opposite intentions?

Sajid Javid: I believe that they fit together, and I hope that the purpose of the Government amendments will become clear.

Concerns were raised that the eligibility criteria in the Bill were too restrictive, that too many charities that did not already claim gift aid would be put off the scheme because it would take too long to become eligible, and that some short-lived charities would never reach eligibility. Balanced against those concerns is the fact that the Government have always been concerned to protect the scheme against fraud. I have looked again at where the balance lies between accessing the scheme and protecting it from people who would try to exploit and abuse it, and I have concluded that we can reduce the eligibility period to two years without undermining the integrity of the scheme. Eligibility for the scheme is defined by reference to successful gift aid claims made by a charity in the past, and I now propose that the minimum period should be set at two years.

I shall explain in more detail what our amendments will do. Four factors will determine the eligibility of a charity or community amateur sports club for the scheme, as set out in clause 2. The first is the start-up period—the number of complete tax years for which a charity must have been established before it becomes eligible for the scheme. We are reducing that period from three years to

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two years, so a charity or CASC will now be able to access the scheme a year earlier than was originally set out. The second and third elements are that a charity has to have made claims in two of the previous four years, and that there is a gap of no more than two complete tax years between the claims. The amendments will ensure that HMRC is guaranteed to see a minimum level of claiming activity by the charity or CASC in question, so that it can get to know that organisation and understand its ability to claim gift aid correctly.

The fourth element is the impact of a penalty on eligibility. If a charity receives a penalty, it will be excluded from the scheme for the tax year in which it makes the claim and the following tax year. Originally, the charity would have been excluded for the following two years, but amendment 26 means that the exclusion will be for only one year following the year of the claim.

That all adds up to a significantly more accessible scheme for new charities that have not claimed gift aid before, but we do not know exactly how the scheme will operate in practice. As I have said, we will review it after three years, when we might find that fraud rates are much higher or much lower than expected, so it is sensible to build flexibility into the Bill to amend the eligibility criteria in future. Many charities have asked the Government to do that. That power will enable us to vary the elements of the eligibility criteria up or down, depending on the evidence that we see on how the scheme operates and its susceptibility to fraud.

Those four elements interact with each other, and with the matching criteria, to provide safeguards for the scheme. We want to build the maximum flexibility into the Bill by allowing each of those periods to be reduced, increased, removed or reinstated. Any use of that power would be through the affirmative procedure, so it would be consulted on and subject to debate in the House. However, we do not want flexibility to undermine the integrity of the scheme or its important link with gift aid, so the requirement for a charity to make a minimum number of gift aid claims over a set number of years will always remain.

I now turn to the last set of amendments in this group. Since the Public Bill Committee, we have reassessed the distribution of powers to make secondary legislation in the Bill, some of which are conferred on the Treasury and some on HMRC. Broadly speaking, a power that changes the nature of the scheme in some way should be exercised by the Treasury. A power given to HMRC should be to allow the collection and management functions to be carried out correctly. The powers in the Bill are currently inconsistent with that approach, so we are introducing amendments 28 and 29 to change the powers in clauses 7 and 8. Those relate to running charitable activities in a community building and the definition of a community building. The powers are currently assigned to HMRC, but we now think it would be more appropriate to assign them to the Treasury. That is because they could be used to make significant changes to what is in or outside the scope of the rules. I hope that that helps explain why we have tabled those amendments.

I come now to my conclusion, Mr Deputy Speaker. [Hon. Members: “Hear, hear.”] The conclusion is very popular. I do not consider that there is any need for statutory reviews of the scheme at 24 months, and neither is there a need to require HMRC to publish

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certain data. There will be a full review of the scheme after three years, and HMRC will be publishing what data it has three times a year. New clauses 1 and 2, and amendment 21, would be wasteful and would require duplication of resource for no good reason. I therefore ask the hon. Member for Kilmarnock and Loudoun not to press those to a Division, just as I ask other hon. Members not to press new clause 3, amendments 32 and 33, and amendments 8 to 16.

I hope that hon. Members are comforted by the Government amendments that will reduce the three-year eligibility rules to two years. I am introducing a set of amendments that do what many charities and hon. Members have asked us to do, which is reduce the barriers to entry for this scheme and cut the eligibility period. I accept that some hon. Members wanted me to go further, but that would leave the scheme too exposed to fraud. These amendments represent an important concession by the Government, and I call on hon. Members from both sides of the House to support them. I am also introducing two technical amendments, Nos. 28 and 29. I commend the Government amendments to the House.

Cathy Jamieson: I will not take up much time. [Hon. Members: “Hear, hear.”] It is always great to be popular. The Minister has gone some way towards addressing the concerns we raised in the Public Bill Committee, but I feel it is important that we press new clause 1 to a Division.

Question put, That the clause be read a Second time.

The House divided:

Ayes 175, Noes 268.

Division No. 104]


7.42 pm


Abbott, Ms Diane

Ainsworth, rh Mr Bob

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Banks, Gordon

Barron, rh Mr Kevin

Bayley, Hugh

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blears, rh Hazel

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, rh Mr Gordon

Brown, rh Mr Nicholas

Brown, Mr Russell

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Campbell, Mr Ronnie

Caton, Martin

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, rh Yvette

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Mr Jim

Cunningham, Sir Tony

Curran, Margaret

Dakin, Nic

Danczuk, Simon

Darling, rh Mr Alistair

Davidson, Mr Ian

Davies, Geraint

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Donohoe, Mr Brian H.

Doran, Mr Frank

Doughty, Stephen

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Flello, Robert

Flint, rh Caroline

Francis, Dr Hywel

Gapes, Mike

Gilmore, Sheila

Glindon, Mrs Mary

Goggins, rh Paul

Goodman, Helen

Greatrex, Tom

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hamilton, Mr David

Hanson, rh Mr David

Harris, Mr Tom

Hendrick, Mark

Hepburn, Mr Stephen

Hilling, Julie

Hodgson, Mrs Sharon

Hopkins, Kelvin

Howarth, rh Mr George

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Mr Kevan

Jones, Susan Elan

Keeley, Barbara

Kendall, Liz

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Long, Naomi

Love, Mr Andrew

Lucas, Ian

MacNeil, Mr Angus Brendan

Mactaggart, Fiona

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McDonagh, Siobhain

McDonnell, John

McFadden, rh Mr Pat

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Miliband, rh David

Miller, Andrew

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Munn, Meg

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Onwurah, Chi

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Powell, Lucy

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reeves, Rachel

Robertson, Angus

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Lindsay

Ruane, Chris

Sawford, Andrew

Seabeck, Alison

Sharma, Mr Virendra

Sheerman, Mr Barry

Shuker, Gavin

Skinner, Mr Dennis

Smith, rh Mr Andrew

Smith, Nick

Smith, Owen

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Walley, Joan

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Williamson, Chris

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Wood, Mike

Wright, Mr Iain

Tellers for the Ayes:

Yvonne Fovargue


Jonathan Ashworth


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Alexander, rh Danny

Amess, Mr David

Baker, Norman

Baker, Steve

Baldwin, Harriett

Barker, rh Gregory

Baron, Mr John

Bebb, Guto

Beith, rh Sir Alan

Benyon, Richard

Beresford, Sir Paul

Bingham, Andrew

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Boles, Nick

Bone, Mr Peter

Bottomley, Sir Peter

Bradley, Karen

Brake, rh Tom

Bray, Angie

Bridgen, Andrew

Brine, Steve

Brooke, Annette

Bruce, Fiona

Bruce, rh Sir Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burt, Lorely

Cable, rh Vince

Cairns, Alun

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carmichael, Neil

Cash, Mr William

Chishti, Rehman

Clappison, Mr James

Clark, rh Greg

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, David T. C.


Davies, Glyn

Davies, Philip

Davis, rh Mr David

Djanogly, Mr Jonathan

Donaldson, rh Mr Jeffrey M.

Dorrell, rh Mr Stephen

Doyle-Price, Jackie

Duddridge, James

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Ellis, Michael

Ellison, Jane

Eustice, George

Evans, Graham

Evans, Jonathan

Fabricant, Michael

Fallon, rh Michael

Foster, rh Mr Don

Fox, rh Dr Liam

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Sir Edward

Garnier, Mark

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goodwill, Mr Robert

Graham, Richard

Gray, Mr James

Green, rh Damian

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Hague, rh Mr William

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hammond, Stephen

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Hayes, Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Howell, John

Huhne, rh Chris

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, Mr Marcus

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Latham, Pauline

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lidington, rh Mr David

Lilley, rh Mr Peter

Lloyd, Stephen

Lopresti, Jack

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McPartland, Stephen

McVey, Esther

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Mills, Nigel

Milton, Anne

Moore, rh Michael

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Paice, rh Sir James

Parish, Neil

Patel, Priti

Pawsey, Mark

Penning, Mike

Penrose, John

Perry, Claire

Phillips, Stephen

Pincher, Christopher

Poulter, Dr Daniel

Raab, Mr Dominic

Randall, rh Mr John

Reckless, Mark

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Robathan, rh Mr Andrew

Robertson, rh Hugh

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Sharma, Alok

Shelbrooke, Alec

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stride, Mel

Stunell, rh Andrew

Sturdy, Julian

Swayne, rh Mr Desmond

Swinson, Jo

Swire, rh Mr Hugo

Syms, Mr Robert

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Tyrie, Mr Andrew

Uppal, Paul

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Robin

Wallace, Mr Ben

Ward, Mr David

Watkinson, Angela

Weatherley, Mike

Webb, Steve

Wharton, James

White, Chris

Whittaker, Craig

Wiggin, Bill

Williams, Mr Mark

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Mr David Evennett


Mark Hunter

Question accordingly negatived.

26 Nov 2012 : Column 94

26 Nov 2012 : Column 95

26 Nov 2012 : Column 96

Clause 1

Top-up payments in respect of small donations made to eligible charities

Cathy Jamieson: I beg to move amendment 4, page 1, line 17, leave out ‘maximum donations limit’ and insert ‘the specified amount.’.

This amendment is consequential on amendment 3.

Mr Deputy Speaker (Mr Lindsay Hoyle): With this it will be convenient to discuss the following:

26 Nov 2012 : Column 97

Amendment 3, page 1, line 19, leave out subsections (4) and (5).

This amendment removes the matching principle from the bill.

Government amendment 23.

Amendment 1, page 2, line 1, leave out ‘double’ and insert ‘triple’.

To increase the maximum claim to triple the amount of gift aid claimed each year. Cathy Jamieson

Amendment 5, in clause 4, page 3, line 13, leave out ‘for the purposes of section 1(4)’.

This amendment is consequential on amendment 3.

Amendment 6, in clause 6, page 4, line 27, leave out ‘for the purposes of section 1(4)’.

This amendment is consequential on amendment 3.

Amendment 17, page 4, line 38, leave out paragraph (a) and insert—

‘(a) the sum of the small donations that are made to the charity in the community building in the tax year, or’.

This amendment seeks to remove the requirement that donations under the community buildings amount can only be made by group members while the charity is running its charitable activities.

Amendment 18, page 5, line 3, leave out ‘by group members while it is running charitable activities in the buildings’.

This is consequential on amendment 17.

Amendment 19, page 5, line 5, leave out subsection (6).

This is consequential on amendment 17.

Amendment 20, in clause 7, page 5, leave out lines 20 and 21.

This is consequential on amendment 17.

Amendment 7, in clause 9, page 6, line 29, leave out ‘for the purposes of section 1(4)’.

This amendment is consequential on amendment 3.

Government amendment 30.

Cathy Jamieson: Again, I hope not to detain the House to any great extent. As the Minister will recall, we consistently pushed the Government to reconsider the matching principle in the Bill as we believed that it was too onerous for many small charities and would mean that many of them could not benefit from a scheme that was supposedly set up to help them.

The Government amendments show that the Minister has bowed to the pressure not just from members of the Committee but from people in the charitable sector who had serious concerns about the impact of the measures from the very start. I will not repeat all the comments made by the different organisations over the course of our discussions about the Bill.

We could of course continue to argue for the matching principle to be dropped completely and could make a case for that. However, given that the Government have seen fit to introduce changes that will take the ratio from 2:1 to 10:1, I think we should recognise that they have moved a significant amount, which has been welcomed by the sector. I look forward to hearing what the Minister has to say about his amendments and I want to make it clear that I do not think our amendments are required at this point as they have been superseded by his.

Nigel Mills: I wholeheartedly agree with the hon. Lady. In Committee, the Minister promised to make the situation more generous, but last week I saw that no

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amendments had been tabled to that effect. I thought that I would just try to help him be a little more generous by reflecting the wishes of a local church in my constituency that had asked me to try to make the figure three times, not twice. I have no desire to be only a third as generous as the Treasury and so welcome this move by the Minister. I think that it is a sign that he has listened to the argument. I genuinely hope that this new-found generosity in the Treasury will extend into next week.

8 pm

Sajid Javid: We have had a constructive and lively debate so far. I welcome the comments of the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) and, in particular, her decision not to press her amendments. I also welcome the comments of my hon. Friend the Member for Amber Valley (Nigel Mills) and his decision not to press his amendment. He has recognised that Government amendment 23 will reduce the matching rate by 10%, which is even more generous than the reduction proposed in his amendment. I cannot promise him that this generosity will continue into next week—we will have to wait and see what happens then—but he does tempt me.

I will say a few words about why the Government have brought forward these amendments. Although some hon. Members wanted to remove the matching rate altogether in Committee, I understand that they accept that the Government have listened and that a 10% rate is much more generous than what was offered when the Bill was first introduced.

Let me say explain why we have this matching provision. HMRC sees even the 10% rate as an act against gift aid fraud. Unfortunately, there are unscrupulous individuals who want to misuse charitable tax reliefs. They defraud the taxpayer and undermine the good name of the charitable sector, so we must be in a position to protect the taxpayer and the charitable sector. The lack of records also means that HMRC would have less evidence when a charity is claiming correctly under the scheme if there was no kind of matching principle. Gift aid is the closest proxy we can use to help ensure compliance under the new scheme, and the matching requirements will significantly increase protection against fraud and abuse.

Government amendment 30 introduces a wide-ranging power that will allow us to reduce or increase the matching rate. It will allow us to remove the matching provision entirely or reinstate it at a later date if it is removed. Removing the matching provisions altogether would remove the need for charities to claim a set proportion of their small donations claim in gift aid in that year. Even so, charities would always need to claim some gift aid in each year to ensure that they can claim under the scheme. That is because of the provision in clause 1(1)(b). That helps to retain the important link between this scheme and gift aid.

Any use of that power would be through the draft affirmative procedure, so it would be consulted on and subject to a debate in this House. That power means that the matching rule is fully flexible. We have no intention of using the power in the near future, but it will be there if we need it. It is something that many charities have asked us to introduce, so I am pleased that we have been able to do so. I believe that the

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Government’s approach is better than some of the other amendments that have been tabled, as has been recognised in the comments we have heard.

We debated the community buildings rules in some detail in Committee so, unless hon. Members have questions, I do not propose to go into much detail now, but I would like to remind Members that the purpose of those rules is to recognise that not all charities are structured in the same way. There are charities that, because of the way they were set up or for other reasons, effectively operate as branches of a master charity. We want to ensure that the proposals are as fair as possible and that branches of a bigger charity are effectively treated as individual charities and have their own £5,000 limit. The purpose of the community buildings rules was not to give more than £5,000 by allowing charities to have multiple claims, and I believe that the changes we are making to the Bill will achieve that effectively.

I again warmly welcome the support the House has shown for the Government amendments and thank the hon. Member for Kilmarnock and Loudoun for looking at them carefully and not pressing her amendments. I commend amendments 23 and 30 to the House.

Cathy Jamieson: I beg to ask leave to withdraw the amendment.

Amendment 4, by leave, withdrawn.

Amendment made: 23, page 2, line 1, leave out ‘double’ and insert ‘10 times’—(Sajid Javid.).

This amendment changes the gift aid “matching” rate from 2:1 to 10:1. In other words, to make a claim in respect of £5,000 of small donations, a charity would need to make successful gift aid claims in respect of £500 of donations, rather than £2,500.

Clause 2

Meaning of “eligible charity”

Amendments made: 24, page 2, line 12, leave out ‘3 of the previous 7’ and insert ‘2 of the previous 4’.

This amendment, and amendments 25 to 27, change the criteria for determining a charity’s eligibility for the small donations scheme. Under this amendment, the charity must have made successful gift aid claims in 2 out of the previous 4 tax years, rather than 3 out of the previous 7.

Amendment 25, page 2, line 16, leave out ‘3’ and insert ‘2’.

Under clause 2(2), earlier gift aid claims are ignored for the purpose of the eligibility rules where a charity doesn’t claim for 3 consecutive tax years. This amendment reduces that period to 2 consecutive tax years.

Amendment 26, page 2, line 22, leave out ‘2 tax years’ and insert ‘tax year’.

This amendment reduces the period for which a charity is not eligible where a penalty is imposed on the charity. Under the amendment, the period will be the tax year the claim was made and the next tax year (rather than that year and the next 2 tax years).

Amendment 27, page 2, line 26, leave out ‘3’ and insert ‘2’.—(Sajid Javid.)

This amendment reduces the “start-up period” for a charity to the first period of 2 (rather than 3) consecutive tax years during which it is at all times a charity.

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Clause 7

Meaning of “running charitable activities in a community building” etc

Amendment made: 28, page 5, line 24, leave out ‘HMRC’ and insert ‘The Treasury’.—(Sajid Javid.)

This amendment makes the Treasury, rather than HMRC, responsible for making orders under clause 7(3).

Clause 8

Meaning of “community building”

Amendment made: 29, page 6, line 4, leave out ‘HMRC’ and insert ‘The Treasury’.—(Sajid Javid.)

This amendment makes the Treasury, rather than HMRC, responsible for making orders under clause 8(5).

Clause 14

Power to alter specified amount etc

Amendments made: 30, page 11, line 5, at end insert—

‘(1A) The Treasury may by order amend this Act for the purpose of—

(a) amending the gift aid matching rule;

(b) abolishing that rule;

(c) reinstating that rule (if previously abolished), with or without amendment.

(1B) In subsection (1A) “the gift aid matching rule” means the rule that limits the amount of top-up payments to which a charity is entitled by reference to the amount of gifts made to the charity in respect of which it has made successful gift aid exemption claims.’.

This amendment gives the Treasury power by order to amend the gift aid matching rule (see clause 1(3), (4)(a) and (5)), to abolish the rule or to reinstate it. The order would be made by statutory instrument subject to draft affirmative procedure in this House (clause 17).

Amendment 31, page 11, line 5, at end insert—

‘(1C) The Treasury may by order amend section 2 (meaning of “eligible charity”).

(1D) Section 2, as amended by an order under subsection (1C), must as a minimum include a condition requiring the making of a successful gift aid exemption claim in a previous tax year.’.—(Sajid Javid.)

This amendment gives the Treasury power by order to alter the eligibility rules in clause 2. But the altered rules must include a condition requiring the making of previous gift aid claims. The order would be made by statutory instrument subject to draft affirmative procedure in this House (clause 17).

Schedule 1

Meaning of “small donation”: conditions

Dr Whiteford: I beg to move amendment 34, page 14, line 4, leave out ‘in cash’.

This amendment allows for gifts made by contactless cash card and mobile telephone transactions where it is impractical to obtain a gift aid declaration.

Madam Deputy Speaker (Dawn Primarolo): With this it will be convenient to discuss the following:

Amendment 35, page 14, line 5, leave out ‘of cash’.

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Consequential on amendment 34.

Amendment 36, page 14, line 9, leave out ‘“cash” means coins and notes in any currency’.

Consequential on amendment 34.

Amendment 22, page 14, leave out line 9 and insert—

‘“cash” means coins, notes, cheques and money donated electronically in any currency.’.

This amendment seeks to include non-cash donations within the Gift Aid Small Donations Scheme.

Amendment 2, page 14, line 9, after ‘currency’, insert ‘and any equivalent electronic payment as may from time to time be prescribed by the Treasury by order.’.

To future proof the Bill by enabling the Treasury to allow electronic payments to be treated as allowable donations.

Amendment 37, page 14, line 16, leave out ‘cash’ and insert ‘gift’.

Consequential on amendment 34.

Dr Whiteford: The last time the House debated the Bill, I raised the challenge of new ways of donating to charity. The purpose of the amendment is to take account of changes in the way people donate to charities, recognising the sea change that has occurred over the past 10 years or so in how they donate and the fact that people increasingly donate small amounts through text message giving. The technology driving us in that direction is developing rapidly. Conversely, and perhaps somewhat paradoxically, the amendment would also allow charities to benefit more from small donations made by cheque.

The thinking behind the amendment is derived from work done by the Institute of Fundraising. In a previous life, when I worked in the charity sector, I worked closely with the institute and so pay tribute to the immensely valuable research it undertakes to understand how and why people support charities in order to promote good charity governance and support large and small voluntary sector organisations alike.

The reality is that technological developments, especially with smartphones and tablets, mean that the number of electronic cashless donation options is growing. For instance, I am sure that many of us watched and donated to the BBC’s “Children in Need” appeal a couple of weeks ago, many of us doing so through text message donations. The use of mobile phones as cashless wallets is growing, and I think that the Bill would benefit by reflecting that. UK high street banks are already working on a mobile payments scheme to create a common infrastructure to link bank accounts to mobile phone numbers. That will help keep account details more secure, but it also heralds further changes in how we conduct transactions, including charitable donations.

There are now more than 30 million contactless cash cards in circulation, contactless functionality is now available on an increasing number of mobile phones, and 68 national retailers are already live with contactless payments, including the Post Office, Marks and Spencer and W.H. Smith. There are 135,000 terminals across the UK where donations can be made. I have to confess that I personally have not yet caught up with this technology beyond automatic top-ups for my Oyster card. However, I am aware that the Cabinet Office is working with the National Endowment for Science, Technology and the Arts to explore the possibility of using Oyster cards for spontaneous charitable giving through the “Chip In” project. We should encourage

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this kind of small electronic donation, as it has significant advantages over bucket-rattling. These donations are a lot more secure, they are significantly more auditable, and they are substantially less susceptible to fraud, particularly the small-scale fraud that has always been a risk associated with spontaneous cash donations. The upper limit of payments by contactless cash cards is currently £20, which could provide a nice compliance with the Bill.

Another aspect is online transactions, which continue to grow. Between 2007 and 2012, the number of adults buying goods online increased by 9 million to 37.6 million —74% of the UK population. It would be valuable for the Bill more overtly to keep pace with these significant changes in behaviour. The Government’s impact assessment for the Bill suggests that current text giving systems make it easy to comply with the gift aid scheme, but I am not convinced that this is borne out by the evidence. Fundraisers say that only 20% to 25% of donors properly complete gift aid declarations for text donations, but some charities report that the figure is as low as 5%. That compares with 85% of sign-ups for online donations.

The Institute of Fundraising points out that when a text donation has been made the provider usually sends a bounce-back text message with a link to a website page that the donor needs to visit to make a declaration. This is because the donor needs to complete their full name and address and to provide a declaration statement, which is a rather long thing to include in a text message. We do not have typical texting rates across the sector because providers do not give that information, but we do know that charities that have spoken out on the issue are concerned about the amount that they lose through people not completing this rather cumbersome bureaucratic process. Nevertheless, those forms of giving are auditable and would fit quite closely with the spirit of the Bill with regard to cash donations in recognising that, as time moves on, more and more of us are using different forms of contactless payments to make donations.

JustTextGiving does not give people’s phone numbers to charities, so if someone does not respond to the initial text bounce-back there is no other way for the charity to get the donation, and declaration rates therefore remain very low. Where charities get the details, they will typically call the donor back if they have not had a response to the bounce-back. However, we have to bear in mind that if it is a mobile number, it might be a fairly expensive phone call, and if the donation has been only the £1 that the donor would otherwise have thrown in the bucket, we have to measure the cost-effectiveness of that relative to the amount of gift aid that might come back. This only really works for higher value donations.

In its evidence to the Committee, Camphill Scotland said that as a charitable organisation it frequently uses the newer methods of collection, and that it was keen that the Bill should start to explore the possibility of new ways of enabling donations by text messages. It went so far as to say that

“the Bill as drafted would either discriminate against those choosing to use this technology, or discourage charities from making use of this technology.”

My amendment—this is somewhat ironic—would also cover small donations made by cheque. Very often, cheque donations are made by donors who are already known to a charity, but cheques handed over at one-off fundraising events or plate collections at funerals, for

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example, might not be so easy to identify, and it might not be worth the administrative costs of chasing up the donor. In some circumstances, filling in the gift aid declaration is a time-consuming process, and therefore not something that everyone will be able to do.

Another reason why the amendment would strengthen the Bill is that younger people have different giving habits from other parts of the population. The Charities Aid Foundation, with Bristol university, commissioned a report entitled, “Mind the Gap—The growing generational divide in charitable giving”, published in September 2012, which identified a widening gap in giving between the over-60s and under-30s. Of course, many young people do give very generously to charity and are very involved in charitable activities, but a lower proportion of younger people are giving than older people. Making electronic giving more relevant and attractive could be one way to help to reverse this decline.

Reputational risk is one of the greatest threats to charitable giving. A failure by one charity is felt by other charities in the same sector. While collection cans still have a valuable part to play and are a very effective means of raising money quickly, they carry an inherent susceptibility to fraud. Electronic giving diminishes the opportunity for money to go astray. It is a win-win situation. The amendment would strengthen the Bill, increase the benefits to charities, and help legislation to keep pace with the accelerating changes in technologies. I therefore commend it to the House.

8.15 pm

Nigel Mills: I support many of the points made by the hon. Member for Banff and Buchan (Dr Whiteford). I am trying to achieve a similar end result with amendment 2. Having recognised that the Government have some problems, I tried to find a way of future-proofing the Bill so that in a couple of years’ time, when they saw the trend for cashless donation going beyond even what the hon. Lady set out, they could introduce an order to allow electronic donations to count for these purposes.

We have to be careful. The world is moving on. Only a few weeks ago, my credit card company sent me a strange thing that I can stick on the back of my mobile phone. Apparently, I can make payments with it. I have to say that I was not quite ready to go that far. I thought, “What happens if I lose my mobile phone? I will not only have lost all my contact details but my credit card as well.” However, we can see that this direction of travel is with us. I suspect that in many ways the Treasury is quite keen for us all to become even more cashless. Tax avoidance is made much harder if everyone starts to make payments by an electronic traceable means rather than through cash. The UK is the EU nation with the highest propensity to use cashless technologies, and I think that that trend will continue.

In its evidence to the Committee, the Royal National Lifeboat Institution said that it was not yet ready to replace its cash collecting tins with electronic swiping points. I accept that. However, I suspect that in a few years’ time that system will become rather more common and people will be out there with a placard saying, “Swipe your card here and donate a fiver to this charity.” We heard ideas about how people could swipe their Oyster cards to make small donations and how that

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might help Transport for London to get fundraisers off its stations. I gave the example of how an Oyster card that someone had finished using and that had some cash left on it could be used to donate to the Railway Children charity. At the moment, there is no way in which such a donation could be traced to see whether the donor was willing to give gift aid.

The Minister argued in Committee that there is no need to take account of that type of giving because it is not that widely used and, where it is, it is still easier to get a gift aid declaration. I am not sure that that argument will stand firm in the next couple of years. We will start to move towards that type of giving and people will see it as an alternative to the quick cash donation. They will think, “I’ll swipe my card and give you £1, £2 or £5, and I don’t fancy stopping to fill out a gift aid form any more than I do with cash. I don’t fancy having some e-mail come from my card provider saying, ‘If you click here you can have gift aid on that.’” We need to try to future-proof the Bill so that in two or three years’ time we are not faced with charities moaning and saying, “Look, we’re getting more and more donations by some electronic means that we can’t use to claim gift aid. Can’t you change the Act?”

I have tried to find an easy compromise for the Minister and to assuage his concerns that this is perhaps too risky, not popular enough, or not needed. I suspect that it is quite unusual for a Back Bencher to offer a Minister the power to make a change in law by order. Usually Back Benchers—I am one of them—say, “I’m a bit concerned that the Government are taking too much power to change this, and we don’t want them to have that power.” Today, I am offering the Minister a power. He does not have to use it now, this year or next year, but at some point, if this became something that would help charities and fit with the aims of the scheme, he would have a nice simplified method of making the change without needing to come back to the House with primary legislation. He has already tabled amendments to give the Treasury powers to change things by order, and none of us had a problem with that. My amendment is a gentle, helpful one, and I commend it to the House.

Cathy Jamieson: Many of us who served on the Bill Committee or listened to the Second Reading debate and have heard the representations made by the charitable sector have a degree of sympathy with the comments made by the hon. Members for Banff and Buchan (Dr Whiteford) and the for Amber Valley (Nigel Mills), particularly in relation to ensuring that the Bill does not become out of date before it gets under way.

The hon. Lady made some powerful arguments. Indeed, her case is reflected in our amendment 22, which relates to some of the difficulties involved in getting information from those who have made donations by means other than cheques, such as JustTextGiving, or—this issue was raised a number of times in Committee—if they have placed a cheque on a plate or in a collection box at an event such as a funeral.

We had hoped that the Minister would give an indication—he may well do so—that he would at least be minded to consider this proposal at some point in the future. I understand that there may be technical reasons against that at present and that the Cabinet Office is engaged in ongoing work on the different methods of making donations and on following up on

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gift aid. Although I support the principles of amendment 34 and want action to be taken—that is why we have tabled our own amendment on the issue—I understand that there may be some difficulties. It would be odd, however, if the Minister said that at no point would he consider moving in the direction suggested, particularly when the Cabinet Office is engaged in those schemes.

I hope that the Minister will be able to comfort us by saying that he will consider the proposal at some stage. I also hope that the order-making powers that the Government will adopt under the Bill could, if necessary, be utilised at some stage to extend the way in which donations can be made. It seemed odd during Committee that, while someone can donate using whatever currency they choose, donations by electronic means do not count.

I look forward to hearing what the Minister has to say. I hope that he will take account of the persuasive case that has been made and that he will take a further look at the proposals in the amendments tabled by the hon. Lady and in my amendment 22.

Sajid Javid: I thank the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) for her comments, and I also thank the hon. Member for Banff and Buchan (Dr Whiteford) and my hon. Friend the Member for Amber Valley (Nigel Mills) for their contributions. I will try to respond to their points, which they made very well.

The amendments would do slightly different things, but, in general, they all seek to broaden the gift aid small donations scheme to include not only cash donations but donations in the form of electronic payments. Amendment 2 seeks to do that by introducing a power to allow the Treasury, by order, to broaden the scheme, whereas amendment 22 and the group of amendments 34 to 37 seek to expand the scope of the scheme immediately. I thank my hon. Friend for his original amendment on the issue and for all his contributions on this particular topic in Committee.

It might be worth reminding Members of the scheme’s primary objective, which is to provide a gift aid-style top-up payment when it is difficult or unduly burdensome to collect a gift aid declaration from the donor. The most obvious examples are when a charity is making a street collection or when a religious group is passing around a collection plate during a service. In such situations it would be difficult to ask everybody who makes a contribution to fill out a gift aid declaration form. They would have to stop, confirm they were a UK taxpayer and then fill in a form with their name, address and other details. I think we would all agree that that would be unrealistic for a donation of just a few pounds. As a result, charities are missing out on potential gift aid on such donations. That is exactly why the gift aid small donations scheme is being introduced—that is what it is designed to tackle. It will fill the gap in gift aid for donations for which it is difficult or unduly burdensome to collect the necessary paperwork.

Giving by using digital technology means that the donor is already providing some or all of their details to the charity. If any extra information is needed to make a gift aid declaration, it will be relatively small. When a charity has an ongoing relationship with a donor, they should use gift aid, if at all possible. Compared with a bucket collection on a busy street, it is considerably less

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burdensome to ask someone to provide their details if they are donating through a website or a text message. It is easy to use gift aid when making a donation through a website and it is also possible to attach gift aid donations to a text message.

I want to sound a note of caution about complexity. Text messages and internet donations can be made from anywhere in the world, but I hope Members will agree that the UK Government should not make a top-up payment on donations made from outside the UK unless there is firm evidence that the donor is a UK taxpayer or resident. Introducing other forms of giving to the small donations scheme would make it more complicated. In order to make a top-up payment on UK donations only, charities would need to keep records of the donation’s origin. That is comparatively straightforward when rattling a tin on a UK high street, but it would become much more burdensome, if not impossible, for some charities if donations were made through texts and website visits from around the world.

Hon. Members mentioned the possibility of making the gift aid system easier via text giving. The hon. Member for Kilmarnock and Loudoun will be aware that the Government are in discussions with a number of charities and their representative organisations about how we can do just that. The discussions are going very well and have been constructive. The Government are open to the possibility that, eventually, we might have to pass legislation to make the gift aid system easier and we are working with charities to try to achieve that.

It is possible that new forms of electronic giving will be developed in the future that are completely anonymous. Indeed, my hon. Friend mentioned the possibility of using Oyster cards, which are anonymous. It is very early at this stage, however, to understand what technology might come along in a few years’ time, so it would be difficult to set out the circumstances in which the power he proposed could be used. Without complete knowledge of Oyster cards or other developing technologies for giving, it is difficult to know whether they would fall under the scheme’s scope and rationale. It is, therefore, possible that the power could never be used.

I understand my hon. Friend’s concerns and he has made some important points, so I want a review of the forms of giving to be undertaken when we review the scheme after its first three years. If people are able to make completely anonymous electronic donations, we shall look again at whether the scope of the scheme should be extended. That is the Government’s commitment.

It is harder for charities to collect gift aid declarations in the street or at a religious meeting than through other channels. That is why the focus of the scheme is on cash donations. I accept that things may change, so I am committing the Government to review the situation after three years. I therefore ask hon. Members not to press their amendments to a Division.

Dr Whiteford: Madam Deputy Speaker, I am sure that you will be as pleased as other Members to hear that I do not intend to detain the House for long.

We have heard a few contributions on this group of amendments. The hon. Member for Amber Valley (Nigel Mills) was on the same page as me in looking to the future and in considering ways of giving that are already developing in the charitable sector. The hon. Member

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for Kilmarnock and Loudoun (Cathy Jamieson) alluded to some of the technical challenges that the proposals might meet and pressed the Minister on amendment 22, which she tabled.

I have listened carefully to the Minister and heard his commitment to review the forms of giving after three years. I am sorry that he did not go further, but I do not intend to press the amendment on the basis that there will be an opportunity for the “Chip-in” pilot scheme to be evaluated. I suspect that the technology will have moved far beyond that by the time of the review. I urge him to recognise the technological advances in giving that have already taken place.

Making a £1 text donation is like throwing a pound in a bucket. That is how we will give in the future. It will provide a better way for charities to create an audit trail. We do not know whether the people who give to someone who is shaking a bucket are taxpayers. Many of them may not be for one reason or another, whether they be pensioners or overseas students. In the same way, people making text donations may or may not be taxpayers, but I am sure that it is not beyond the wit of humanity to work out where the phones are or where the numbers are registered. Just as we are allowing this scheme to work in a proportionate way for cash donations that are collected in a bucket, we should respect the spirit of the Bill for contactless payments.

I look forward to the review in three years and hope that the Minister will take those points on board. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Third Reading

8.31 pm

Sajid Javid: I beg to move, That the Bill be now read the Third time.

It is a pleasure to move the Third Reading of the Bill. It has been many months in development through consultation, drafting and a fair amount of discussion in Parliament. In a way, I am sad to say goodbye as it heads off to another place, subject of course to Members’ support for its Third Reading.

I am sure that everyone will agree that the Bill leaves the Commons in good shape. We have considered a lot of amendments and the Government have introduced amendments where we have agreed that there was room for improvement. Not only have we introduced the amendments that Members have accepted today on reducing the eligibility period to two years and lowering the matching rate to 10%, but we were active in Committee as well. We have listened to the concerns of charities and Members, and have brought forward a number of amendments to reflect them.

I am pleased that the Bill has reached this stage and that we are able to move towards the introduction of the gift aid small donations scheme, for which the Bill provides the legislative framework. The scheme was announced as part of a significant package of measures in Budget 2011 to encourage charitable giving and philanthropy by donors from all walks of life, from the largest donors to those who give small amounts to charity bucket collections.

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The gift aid small donations scheme is at the heart of that package. Its purpose is to enable charities and community amateur sports clubs to claim a gift aid-style payment on small donations of up to £20, for which it is often difficult to obtain a gift aid declaration. Eligible charities and CASCs will be able to claim top-up payments on up to £5,000 of small donations each year. The scheme does not require individual donors to complete a gift aid declaration, nor does it require the charity or CASC to collect and provide the donor’s details with their repayment claim, as under gift aid. The aim of the scheme is to complement gift aid, not to replace it. It is for donations for which a gift aid declaration is too difficult to collect.

Tax reliefs for charities and charitable giving are an important source of income for charities, totalling more than £3 billion a year. Gift aid is the single largest relief and is worth more than £1 billion a year to charities. We estimate that the gift aid small donations scheme could result in additional Government funding of about £100 million a year for charities and CASCs. That represents a significant boost in income for the sector and will be especially valuable to smaller charities.

We have worked closely with the charitable sector to try to get the scheme right. Concerns have been raised on the details of the Bill, and we have debated those points throughout the Bill’s different parliamentary stages. In developing the scheme, we have had to ensure that it operates as fairly as possible, but we have also had to ensure that it remains affordable and protected against fraud. We want the money to go to real charities that do good work, and not to fraudsters and others who would try to abuse the scheme.

That is why we have introduced safeguards—the community buildings rule is one such feature of the Bill. We want to ensure that charities that do similar work at a local level but have different historical structures get allowances under the scheme that are not hundreds or even thousands of times different from one another. That is why we have introduced the community buildings rule. The charity sector has raised concerns about the complexity of the rule. It is true that, to obtain a simple result, we have needed to introduce detailed rules, but I am sure hon. Members will agree that that is preferable to disadvantaging some charities just because of how they have been set up.

In conclusion, the Bill represents a potentially significant new opportunity for charities and CASCs. When it is up and running, it will give them a new stream of income and provide £100 million of new funding to the sector. It therefore represents an important part of our strategy to support charitable giving across the board.

I thank the Opposition and Members on both sides of the House for their support of the Bill, and for the constructive way in which they have scrutinised it. Together, we have improved the Bill. I hope hon. Members join in me in supporting this important new scheme and I commend the Bill to the House.

8.36 pm

Cathy Jamieson: As the Minister has indicated, this is an important Bill. I hope the Opposition have delivered on what we undertook to do on Second Reading, in Committee and on Report. At the outset, we said that we would attempt to ensure that the Bill came out of the

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process in better shape, doing more to support charities than the original Bill. I do not say that to be critical of the Bill as it was introduced. The Minister came into things at that stage. He has since listened to a number of the points we have raised and introduced appropriate amendments.

The Minister said that he was sad to say goodbye to the Bill. Perhaps all members of the Bill Committee were sad when the Bill moved on. There was much agreement across the different political parties in our debates. We did not always agree—we sometimes split on party lines and we were disappointed that some of our amendments were not accepted in Committee—but we can safely say that the Bill is in better shape as it leaves the Commons. More charities will benefit more from the Bill as a result of the scrutiny. The fact that charities will benefit from an additional £100 million per annum is positive. The Minister and his team have a responsibility to ensure that the uptake is such that every penny of that money ends up in the coffers of charities and CASCs, which is where he intends it to end up—it is worth emphasising that CASCs will benefit, because we have not spoken about that in great detail and it is none the less important. The Opposition were concerned at different stages that the Minister was focused more on the potential for fraud than on the potential for take-up. We are therefore pleased about the amendments that have been made tonight. They enhance the opportunity for charities to use the Bill.

I noted that the Minister gave the hon. Member for Banff and Buchan (Dr Whiteford) a strong assurance on a review. It would be churlish of me to say that I wish that some other areas would be reviewed, and I will do my best to remain positive at this stage. I welcome that commitment and I am sure that the Minister will be as good as his word when he says that all aspects of the Bill will be reviewed in order to ensure that any changes that can be made to assist charities will be undertaken.

The Bill also saw the trying of new ways to deal with legislation as it goes through Parliament. For example, explanatory statements on all the amendments were included, which was helpful to the Opposition in unlocking some of the language with which the parliamentary draftsmen deal daily. It certainly put the onus on the Opposition to ensure that we were clear about the purpose of the amendments that we tabled, so that we could summarise it in 50 words—no bad thing. We also had the public reading stage and the consultation. It took a little time to get that consultation going, and the website was perhaps not as clear or accessible as it might have been, but I am sure the Minister will want to look at that and provide feedback for colleagues in the Cabinet Office. We eventually got a lot of very good information from organisations through that process.

Several bodies engaged with us on the Bill and helped us to scrutinise it effectively and properly. They also supplied the information that we needed to table various amendments. They included the Institute of Fundraising, the Charity Finance Group, the National Council for Voluntary Organisations and the Law Society of Scotland. They all gave us information and campaigned tirelessly on behalf of the constituent organisations that they represent and of the charity sector. The Charities Aid Foundation, the National Association for Voluntary and Community Action and the Foundation for Social Improvement also provided invaluable help, support

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and advice at various stages. Notwithstanding the efforts that the Opposition have made, the Bill is undoubtedly a better one as it leaves this place because of the input of those organisations and their commitment to do the best they can for the charitable sector.

This is a very important Bill. It may have seemed a small Bill, but we gave it thorough scrutiny in Committee—perhaps more scrutiny than the Minister would have liked on some points of detail. As the Bill leaves this place, we can be assured that we have done our best in making representations. The Bill will make a difference to charities and perhaps changes will be made after the three-year review. I certainly hope that we will continue to look at what additional support we can give.

I thank people for their work in Committee, including the Chairs, the officials and everyone else who gave us inspiration and comments at various stages. All of the organisations in the charity sector and those who will benefit in the future will be glad of the amount of effort that has been put into the Bill. I am happy to support Third Reading and to join the Minister in commending it to the House.

8.43 pm

Sheila Gilmore: The process of the Bill from start to finish, including the pre-legislative stage—as my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) mentioned—was very important. It is good to see that things can change. We sometimes become very rigid in this place—people take up positions and then cannot dig themselves out very easily without feeling a loss of face. A lot of improvements have been made, although some issues remain. The following may or may not prove to be the case; we will see how it works out in practice. During the pre-legislative scrutiny we attempted to grapple with the imbalance between organisations, whether national or regional in scope, which operate in such a way that each of their branches is a separate charity, and those which do not operate as a separate charity. Clearly, the Government listened to the concerns expressed, particularly by some churches, and made important changes. The by-product is a remaining complexity and an obstacle for organisations that cannot quite fit themselves into the model that has been adopted.

I hope that the ongoing review that the Minister at various times assured us will take place—regardless of whether there is a formal review built in for certain parts of the Bill—will look carefully at whether that model can be modified. It is genuinely difficult for some organisations to meet the requirements on where the money has to be collected and the reference to community buildings—linking not only where the collection takes place, but where the charitable activity takes place. There are numerous examples of organisations that do not fit into the model that has been adopted. It clearly fits the church model, where the charitable purpose takes place at precisely the same time as the donations—the collection—but constituent elements or branches of other charities that cannot fit that model may still be unable to take advantage of the provisions, even though they are collecting money and making exactly the kind of efforts that the Bill is designed to encourage.

Even though Opposition amendments and our suggestion of a clear review process have not been accepted by the Government—of course, it depends on what happens to the Bill in the other place; further

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amendments and suggestions may be made about how some obstacles could be smoothed further and ironed out—I hope that some of these issues will be looked at in coming years to ensure that the Bill does what we all say we want it to do and allows small charities, which take fairly low levels of collections that are critical to their operation, to be able to take advantage of it.

8.47 pm

Ben Gummer (Ipswich) (Con): I have been following the Bill with great interest, as have my constituents. It is a pleasure to be here for the Third Reading of one of Her Majesty’s Government’s most progressive measures. I look forward to its being passed from this House imminently.

The most generous people are often those with the least means. If we look at the income distribution of people who give charitable donations, we see that those who give the largest proportion of their income are the poorest. It is unfair that those who are the richest should get the biggest tax break, as it were, in the Government top-up on their donation through gift aid and by the myriad other schemes that we have discussed in this Chamber in the past year, and that people who might give £20 or £15, which would be much more than £50,000 to a rich person, should receive less of an advantage. The Bill, therefore, is a progressive and forward-looking reform of tax legislation, which will help give the same benefit to people who give little amounts of money, which for them is a great deal, as to those who might give a lot and not think so greatly about it.

The Bill is not just good for small donors; it is also good for small charities. In all our constituencies, the people who really pull our communities together are those in the small charities, whether they be churches or charitable groups looking after the disabled, the sick or children. The Bill will make a real difference to those charities, not only because they will get more money from the Government but because it will help bind them to their donors and, importantly, facilitate the sense of community that arises when people give what they can both in time and small amounts of money. It will help to build communities and make them better places. For that reason, I support the Third Reading of this fantastic Bill put forward by Her Majesty’s Government.

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Question put and agreed to.

Bill accordingly read the Third time and passed.

Business without Debate

Delegated Legislation

Madam Deputy Speaker (Dawn Primarolo): With the leave of the House, we shall take motions 2 and 3 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Legal Services

That the draft Legal Services Act 2007 (The Law Society) (Modification of Functions) (Amendment) Order 2012, which was laid before this House on 15 October, be approved.


That the draft Housing Act 1996 (Additional Preference for Armed Forces) (England) Regulations 2012, which were laid before this House on 18 October, be approved.—(Mr Swayne.)

Question agreed to.


Madam Deputy Speaker: With the leave of the House, I shall take motions 4 to 7 together.


Communities and Local government

That Heidi Alexander be discharged from the Communities and Local Government Committee and Andy Sawford be added.

Home Affairs

That Karl Turner be added to the Home Affairs Committee.


That Tom Harris be discharged from the Transport Committee and Lucy Powell be added.

Welsh Affairs

That Susan Elan Jones be discharged from the Welsh Affairs Committee and Stephen Doughty be added.—(Mr Randall, on behalf of the Committee of Selection.)

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Access to Sanitation

Motion made, and Question proposed, That this House do now adjourn.—(Mr Swayne.)

8.50 pm

Naomi Long (Belfast East) (Alliance): Each year, 19 November marks world toilet day. While that might, at first hearing, sound rather comical, the issue it seeks to highlight is extremely serious—that of the continued lack of access to basic sanitation for about one third of the world’s population—and it was to mark that event and highlight again this important issue in Parliament that I sought this debate.

I acknowledge the work that the Government have been doing as part of the UK’s overall international development agenda, and I will refer to that further later, but water and sanitation still suffers from a lack of overall priority in political and investment terms, both nationally and internationally, compared with other aid portfolios, such as health and education, despite the fact that it impacts heavily on the achievement of other development objectives. The former Secretary-General of the United Nations, Kofi Annan, has noted that

“no other issue suffers such disparity between its human importance and its political priority.”

Clearly, without access to water, sanitation and hygiene, the progress that can be achieved in other areas is significantly constrained. The importance of access to clean water and sanitation cannot be understated. In the UK, the biggest step change in public health and mortality rates came as a result not of medical advances but of widened access to clean drinking water and adequate sanitation. During the late 19th century, as both water and sewerage infrastructure expanded dramatically, the life expectancy of an average member of the population in this country rose by 15 years—a remarkable increase delivered over a relatively short period. Indeed, the British Medical Association has recognised the commissioning of the sewerage system in London as the most important breakthrough in public health—of more significance even than the discovery of penicillin or the development of vaccines.

As a direct result of poor or non-existent sanitation infrastructure, people—the majority of them children—are dying of diseases that, with the provision of potable water and sustainable sanitation, are preventable. In fact, they could be almost entirely eliminated. By way of illustration, I point to the fact that the biggest killer of children under five in sub-Saharan Africa, and the second-biggest killer globally, are diarrhoeal diseases, the vast majority of which are entirely preventable conditions caused by inadequate sanitation and hygiene. More children under five die annually as a result of these diseases than from HIV/AIDS, malaria and measles combined. Indeed, the disease burden of malaria itself is also impacted on by the availability of open drainage channels and sewers, providing environments conducive to the breeding of mosquitoes that spread the disease.

Every day 2,000 mothers lose a child due to an illness caused solely by poor sanitation and dirty water. Even vaccines that hold out the hope of progress are less effective in the absence of water, sanitation and hygiene—WASH. But the impact of inadequate sanitation infrastructure is not limited to disease; it extends to the one in three women worldwide who risk shame, harassment and even physical attack simply seeking somewhere to defecate. This debate is timely, then, not only in the

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context of world toilet day but because yesterday marked the international day for the elimination of violence against women.

I want to draw on the everyday ordeal that the lack of access to sanitation is for people, especially women, who are the most acutely affected. Globally, 2.6 billion people lack access to basic sanitation, 1.25 billion of them women—one in three women in the world lack access to safe sanitation. Put simply, privacy, modesty, cleanliness and safety are almost impossible for those who have no access to sanitation facilities. Their experience often involves trading those factors against each other simply to survive. The reality is often shame, indignity, disease and even violence.

Some 526 million girls and women are without access to any form of sanitation. They are forced to defecate in bushes or ditches, or even in the open, their choice being between doing so in broad daylight, compromising their modesty and risking shame, or waiting until dark to cling to their dignity but risk their personal safety. A 2005 UN development programme report confirmed that the need to travel further from home to secure the family’s water can expose women and girls to sexual harassment and rape, which can also happen when women who lack safe nearby sanitation move about at night in search of privacy. It is estimated that women and girls in developing countries spend 97 billion hours each year searching for a place to go to the toilet—more than double the total hours worked every year by the entire UK labour force. An 18-year-old mother from Mozambique has described her arduous journey each day to defecate in the bush. Her ordeal involves crossing a dangerous bridge that has claimed the lives of many people who have fallen through it. Sometimes she feels so ashamed that she returns home without being able to reach the point she needs to reach, or she waits until dark to go, so that no one will see her. However, at night the journey is even more dangerous. A woman and a boy have been stabbed to death on that bridge, and one woman she knows of has been raped on the journey.

Even where public latrines are available, provision is rarely adequate. In the Kifumbira slum in Kampala, there are only four toilets for every 2,000 people, these consisting merely of holes into a cesspit, covered in faeces and maggots. Women worldwide have reported incidents of men hiding in public latrines at night, waiting to rob or assault those who enter them. In two slum districts in India, women reported incidents of girls under 10 being raped while on their way to use public toilets. In work carried out by WaterAid in Bhopal in India, 94% of the women interviewed said they had faced violence or harassment when going in search of a toilet, and more than a third had been physically assaulted. Amnesty International has also reported that women and girls in the slums of Nairobi were staying away from communal toilet facilities at night because of their fear of physical violence and rape. A WaterAid poll of women in Lagos in Nigeria revealed that 67% of women interviewed said they did not feel safe using a shared or community toilet in a public place.

The only alternative for those women—if it could be called that—is to defecate at home. However, that too carries huge health risks and social consequences. One woman living in Kampala in Uganda has said that

“when someone knows you defecate in your house, your household is hated and people”

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will not visit. In addition to the stigma attached to this choice, resorting to so-called “flying toilets”—plastic bags or buckets used at home—carries significant health risks, not only for the woman but for her family, as storing and disposing of waste and maintaining even basic hygiene is almost impossible. Women are more susceptible to urinary tract infections and dehydration by trying to limit going to the bathroom for long periods and drinking less water over the course of the day, and as a result are more likely to become seriously ill.

Further, as women are generally responsible for the disposal of human waste when provision is inadequate and for caring for others in the family who are affected by communicable hygiene-related diseases, they are more exposed to diseases such as dysentery and cholera than their male counterparts. This caring role and enhanced risk of contracting disease significantly restricts the degree to which women can be economically active and financially independent, and provide for the most basic needs of their family. That compounds the effect that a lack of provision of proper and private sanitation facilities has on girls’ ability to access education, particularly as they reach puberty.

Having outlined the problem, I want to turn my attention in the time remaining to the progress being made towards achieving millennium development goal 7, target 10—halving the proportion of people without sustainable access to safe drinking water and improved sanitation by 2015. Although we have met the target of halving the proportion of people without access to improved sources of water, the sanitation target is significantly off track. At the current rate of progress, it will be over 25 years before south Asia meets its sanitation MDG target and 70 years to achieve universal access. Even more starkly, it will be the 23rd century before sub-Saharan Africa meets its sanitation MDG target and 350 years before universal access is achieved. The failure to meet the water and sanitation target threatens the progress of many other millennium development goals and undermines wider development efforts. Without water and sanitation, nothing else really works.

I welcomed the UK Government’s commitment in April 2012 to double, to 60 million, the number of people whom they plan to reach with water, sanitation and hygiene promotion by 2015. I remain concerned, however, at the lack of clarity as to how the Government intend to ensure that that commitment will effectively target the areas and the people in the greatest need and as to how DFID will effect delivery on this scale through DFID’s current WASH budget.

Good governance and stewardship of international assistance by foreign Governments also remains a challenge to the effective implementation of the Government’s plans—a matter to which I am sensitive. For example, the freezing of international assistance to Uganda due to the risk of corruption will mean that people living in the slums of Kampala who have benefited from DFID projects will see no further improvement in their circumstances in the short term. Urgent consideration must therefore be given to how the most needy can be targeted on the ground, even in the most volatile and unstable regions, and to how this increased commitment can be accompanied by an increased number of advisers

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dedicated to WASH, in order to maximise the impact and value for money of WASH sector support. I believe that the UK should take the lead on this issue, encouraging multilateral partners—particularly the World Bank, the European Community and the African Development Bank—to increase investment and better to target WASH investments.

I believe that this is the time to give consideration to how the current trends will be addressed after the millennium development goals have expired in 2015. If present trends continue, 2.4 billion people will still lack access to safe sanitation facilities in 2015, so it is imperative to construct a post-2015 goal framework to include a commitment to universal access to basic water and sanitation services, including a specific target date of 2030. I also believe that post-2015 goals should better reflect the central importance of WASH to human health, education, welfare, economic productivity and gender equality, as well as reflecting the interdependence of those goals. Water, sanitation and hygiene targets and indicators must focus explicitly on reducing inequalities by targeting resources at poor and disadvantaged groups as a top priority.

The United Nations human development report estimates that for every £1 invested in this sector, £8 is returned in saved time, increased productivity and reduced health costs. It is therefore a wise investment as well as a necessary one, and its impact can be multiplied if the Government also collaborate with non-governmental organisations and charities, as well as with Governments, who can assist in providing education to local communities through church and community networks and supporting increased capacity among state and non-state players.

I therefore urge the Department for International Development to outline how it will achieve its commitment to improve WASH for 60 million people in its budget, how it will ensure that the neediest can be prioritised, even in volatile and difficult countries, and how it will take the lead in framing the goals for the post-2015 agenda and ensure that a goal for universal access to basic water and sanitation services remains a key priority.

9.3 pm

Jim Dobbin (Heywood and Middleton) (Lab/Co-op): I congratulate the hon. Member for Belfast East (Naomi Long) on choosing this subject for the debate. I should also like to thank the Minister, who I am sure has okayed my contribution this evening.

The Minister of State, Department for International Development (Mr Alan Duncan): Of course.

Jim Dobbin: I speak as the co-chair of the all-party parliamentary group on child health and vaccine preventable diseases. The other co-chair is Lord Avebury. I tabled an early-day motion recently on this subject, and it now has quite a number of signatures. I am also vice-chairman of the Council of Europe public health committee.

Diarrhoea is the most common cause of childhood illness and kills about 760,000 children each year. Around 90% of those deaths are caused by a lack of access to safe water, adequate sanitation and hygiene. Those deaths are preventable. Vaccines against rotavirus, the most common and severe diarrhoea in children, are critical, and their availability is a major development in public

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health. However, those vaccines should not be seen as a silver bullet for tackling diarrhoea; nor can they address the other health impacts of a lack of sanitation.

Reducing deaths from the top killers of children requires the prioritisation of interventions across different sectors, including health, nutrition, hygiene, water and sanitation. We must apply the package of prevention and treatment solutions that we know to be effective, and this must be built on solid collaboration between health systems and the water and sanitation sector.

This was reinforced last year when I visited health care facilities in Bangladesh and Kenya, where we were launching a programme of vaccination. I witnessed extremely successful vaccination programmes in both countries, which were helping to protect children against terrible diseases such as pneumonia. During my visit, however, I was struck by the poor levels of basic sanitation and access to clean water at many of the health care facilities we visited. This emphasised to me how important it is to ensure that preventive measures such as vaccines are coupled with improvements in sanitation and access to clean water.

I also saw on these visits small wards packed with up to 25 children, with the mothers in the same ward. I saw three babies in one incubator, and I saw a single oxygen cylinder with five or six lines coming out of it. It is all the basic stuff that is missing there. The vaccination was great—it is absolutely superb—and the efforts of the medics and nursing staff in each of these hospitals was just brilliant. The common basic hygiene and sanitation, however, are just not there.

It so happens that I will be in Geneva tomorrow with the Earl of Dundee, who is the chairman of my Council of Europe committee. We are going to be in discussions with the World Health Organisation, UNESCO and the Global Alliance for Vaccines and Immunisation. The issue of sanitation is one that we want to raise, because this is a global problem that needs to be tackled globally. I wanted to make only a short contribution; I will be interested to hear the Minister’s response.

9.6 pm

The Minister of State, Department for International Development (Mr Alan Duncan): I thank the hon. Member for Belfast East (Naomi Long)for calling what I think is the second debate this year on this important issue. Making progress on the appalling world statistics on access to sanitation is vital to the health and well-being of poor people. I commend the hon. Lady for her efforts on this topic. If I may put it this way, I think she has become one of Parliaments supreme champions—if not Parliament’s main champion—on this issue.

It is truly shocking that in 2010, 2.5 billion people—nearly 40% of the global population—remained without access to the improved sanitation that would have protected their health. Even more shocking is the fact that 1.1 billion people have no form of toilet at all. This is why the UK Government have given sanitation such a high priority. The previous Secretary of State announced in April this year that the UK would increase its ambition and reach 60 million people with sustainable access to water, sanitation and hygiene. As I said in my speech in March, providing these services is the bread and butter of development. I have seen for myself in my visits to countries such as Yemen and Bangladesh, which the hon. Member for

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Heywood and Middleton (Jim Dobbin) has mentioned, how effective DFID sanitation programmes are on the ground.

Mr Russell Brown (Dumfries and Galloway) (Lab): On the commitment given back in April, I appreciate that we are just six or seven months on, but is the Minister in any position at all to tell us what progress has been made towards that 60 million target in 2015? Is progress really being made?

Mr Duncan: Since the announcement was made only recently, it is probably a little premature to report on progress because results come after the investment has been made in the area, but I undertake to keep the hon. Gentleman and the House fully informed of our progress. Through debates such as this, we will continue to treat this as a highly important topic.

We know the enormous impact that the lack of a basic toilet has on people’s health and livelihoods. People who do not have adequate sanitation are far more likely to get sick than those who do, and it is often young children who suffer the most. The World Health Organisation estimates that up to 2.4 million deaths could be avoided each and every year simply by providing good sanitation, safe water and good basic hygiene.

Poor sanitation does not only cause sickness. As the hon. Lady pointed out, women who lack toilets are at a much higher risk of sexual and other violence as they try to find secluded and private places. Without a decent toilet, women and girls cannot manage their menstrual periods privately and with dignity. Having nowhere to safely clean and dry their rags can lead to reproductive tract infections, which can be the most horrid things.

We know from the United Kingdom’s own history the importance of sanitation to the economy and health of our people. This very Chamber was closed during the “great stink” of 1858. Not long afterwards, improvement in the treatment of London’s sewage led to a great improvement in the health of our capital city. We also know from the World Bank that providing sanitation in poor countries will deliver broader economic benefits, and will mean that such countries do not suffer unnecessary economic losses. It has been estimated that countries lacking widespread access to sanitation lose between 1% and as much as 9% of their GDP every year.

The world is frequently faced with natural disasters. Last month, we saw Hurricane Sandy wreak havoc in the Caribbean before hitting the eastern seaboard of the United States. Floods, in particular, lead to disease because people have to live with dirty flood waters containing pathogens from waste that has not been disposed of. That is what leads to devastating epidemics of cholera and other diseases. Good sanitation is essential to reducing the unacceptable human cost of such disasters. It can be critical in helping communities to rebuild themselves more quickly after floods. Work supported by the Department for International Development during the 2010 floods in Pakistan showed that sanitation could really help a community to recover.

How can we start to tackle the huge unmet needs for sanitation? Well, we can start by listening to women. Sanitation is important to them, often much more important than it is to men. One study in Indonesia found that, in urban communities, women listed sanitation

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as their second priority for improving their communities—after improved job opportunities—while men ranked it seventh.

We need to foster and respond to demand. A latrine that is wanted is one that will be used and maintained. Approaches based on demand, such as a programme called Community-Led Total Sanitation, are proving very effective in ensuring the uptake of sanitation. We also need to keep sanitation simple. Expensive and water-hungry sewerage systems are not the answer if we want to improve sanitation for poor people. Simple technologies, such as pit latrines, are affordable and effective ways of providing the safe sanitation that we want to see.

As was mentioned by the hon. Member for Dumfries and Galloway (Mr Brown), the United Kingdom’s ambition is for 60 million people to have sustainable access to water, sanitation and hygiene in the countries that are furthest from meeting the millennium development goal. We have a strong track record of supporting those basic services. A portfolio review of water, sanitation and hygiene projects supported by DFID showed that UK aid in the sector was well targeted at the poorest.

The principal means by which the UK will meet our target of 60 million people is through programmes developed and managed by our offices in African and Asian countries. We currently have sanitation and water programmes in 15 countries. We are looking into how we can expand our existing programmes, and have already identified additional results that could be achieved in Ethiopia, Liberia, Sierra Leone, Tanzania and Zimbabwe. That builds on the successful experience of our country programmes. For example, our support in Bangladesh through UNICEF has reached more than 30 million of the poorest people in that country. We are continuing our support in Bangladesh by working through BRAC, a major national non-governmental organisation with a good record of helping the poorest. The Department also funds programmes to deliver improved sanitation through other interventions. For instance, in Yemen we are funding a nutrition programme, implemented by UNICEF, which will provide sanitation in 300 schools and benefit nearly 250,000 children.

We will achieve those results through a number of partnerships with organisations such as the Water and Sanitation Program, Water and Sanitation for the Urban Poor, and WaterAid. To complement those activities, we have been exploring the potential of new programmes

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to reach more people who currently lack access to sanitation, in more countries, through partnerships with the UN, civil society and the private sector.

In response to the hon. Member for Heywood and Middleton, the UK Government are the leading donor of the Global Alliance for Vaccines and Immunisation, which delivers new and underused vaccines to the world’s poorest countries. UK support alone will vaccinate 80 million children and save 1.4 million lives by 2015. GAVI will roll out the rotavirus vaccine as part of its programme, protecting against diarrhoea which, as the hon. Gentleman said, is one of the leading child killers in the world, accounting for 450,000 deaths each year. With UK support, GAVI plans to help the vaccination against rotavirus of up to 50 million children in at least 40 of the world’s poorest countries by 2015.

We need solid evidence to underpin our investments, and to that end the Department for International Development is funding key research programmes to improve our evidence base. The sanitation and hygiene applied research for equity programme is developing new and robust evidence on the benefits of sanitation, and on how sanitation and hygiene behaviours can be improved most effectively. The Department has started a new programme of operational research to improve value for money and efficiency in our programmes. As part of that, we will test and evaluate innovative ways of providing sanitation services to poor people in urban areas, in partnership with the Bill and Melinda Gates Foundation.

Support for sanitation is also about creating the right incentives for Governments to mobilise their own resources. In June this year, the UK Government sent a strong message of our political commitment with the recognition of the right to sanitation. The Government will place an emphasis on the delivery of basic sanitation services to poor people in the long term. We will continue to invest in programmes to provide sanitation, and use the Sanitation and Water for All partnership to encourage other donors, Governments in developing countries, and civil society to do the same.

I say to you, Madam Deputy Speaker, all hon. Members, and in particular the hon. Member for Belfast East who initiated this debate, that the Government will do their utmost in this area. I hope that Members of the House will continue to support us in that essential work.

Question put and agreed to.

9.17 pm

House adjourned.