§ 'Within 12 months of the passing of this Act the Chancellor of the Exchequer shall publish a report setting out the cost to all organisations of and for disabled people of the increase in value-added tax from eight to 15 per cent. and his proposals for alleviating the burden on those organisations.' .—[Mr. Alfred Morris.]
§ Brought up, and read the First time.
§ Mr. Alfred Morris (Manchester, Wythenshawe)
I beg to move, That the clause be read a Second time.
The right hon. Member for Wanstead and Woodford (Mr. Jenkin), since he became Secretary of State for Social Services two years ago, has missed no opportunity to stress how important charities are in helping the needy. In speeches galore, he has told one captive audience after another how much he looks to voluntary help to fill the gaps in the Welfare State.
Not to be outdone, the Prime Minister has gone much further than her right hon. Friend. Indeed, heaping praise on the volunteer in a speech to the Women's Royal Voluntary Service earlier this year, she gave it as her view that the State's welfare role should simply be to fill the gaps in charitable provision. She said:The statutory services are supportive, underpinning where necessary, filling the gaps, helping the helpers".For the spotlight thus to shine on the importance of charities and the voluntary help they provide is, of course, very cosy for a Government who are busy shooting holes in the Welfare State. The Prime Minister said she recognised thatit is right for the Government to help independent voluntary bodies financially".For even better measure, she enthusiastically told the WRVS that thevoluntary movement is at the heart of all our social welfare provision".The clear implication of that speech, with all its high-minded talk of the "privilege" of giving voluntary help to those in special need, is that the Government's policy of cutting State provision for the poor and the vulnerable is not only justified but even desirable and long overdue.
With a Prime Minister so strongly in their favour, how, then, have the charities been getting along under the present Government? The answer has to be that most of them have never had it so bad. In fact, many are in grave financial difficulties and some, even among the best known, have had to cut services to the people they exist to help as the only alternative to going broke.
Listen briefly to the words of Maureen Rose writing in Community Care after the Prime Minister's speech to the WRVS:Voluntary and charitable organisations might be expected to be full of optimism about their future, with the recent deluge of ministerial statements apparently emphasising their importance.She went on:The true picture, however, is one of depression, uncertainty and cutback, with financial crisis looming closer for many. When their actual position is contrasted with the current Government theme of enthusiasm for the voluntary movement, the mood sharpens to anger and bitterness.To make sure that the Government knew of their plight, major charities for the care of disabled people joined others in writing to the Chancellor of the Exchequer to give 1099 him facts and figures. At the same time they urged him to give them some relief from the intolerable burdens he had imposed on them by doubling VAT.
The charities that approached the Chancellor included the Spastics Society, the National Society for Mentally Handicapped Children and Adults, the Royal National Institute for the Blind, and the Royal National Institute for the Deaf. But the Secretary of State not only rejected their plea; he refused even to see a deputation. His rebuff was to organisations of and for disabled people which, by common consent, make a most valuable contribution to the well-being of many of the most needy people in Britain today. Between them they are being made to carry an entirely unacceptable burden of VAT. The Spastics Society alone paid £250,000 last year, and every penny of it was intended not for the Chancellor but for charity.
In consequence of the ravages of inflation, of the doubling of VAT and of other increased burdens—for example, the Spastics Society is worse off by £30,000 per annum in consequence of the Chancellor's further increase in petrol duty—the charities are closing down homes and day centres, meals-on-wheels facilities, advisory and other important facilities and services for disabled people.
Mr. Tim Yeo, the director of the Spastics Society, in commenting on the Chancellor's priorities, reacted bitterly for the charities as a whole when he said thatthe Government does not care that charities are struggling to maintain their services in the face of crippling burdens that they should not have to bear.Nevertheless, he and his colleagues were not prepared to give up the fight. Writing in protest to the Prime Minister, they told her that the doubling of VAT had compelled them to reduce their services and of the hardship that had been caused to the people they exist to help. They went on to tell the right hon. Lady that unless the burden of VAT was reduced, further cuts in their services would be unavoidable. This in turn, they said, would make more people dependent on local authority services at a time of cuts in the help that local councils could offer.
Tim Yeo, explaining now the particular difficulties of the Spastics Society, told the Prime Minister:The Government must realise that we are in a very serious financial position with our highest deficit ever of £823,000. Big cuts in our services to some of the nation's most severely handicapped men, women and children have had to be made. Yet as local authorities cut back, we are needed more and more.The Prime Minister's reply was as negative as that of the Chancellor and totally inconsistent with her statement to the WRVS thatit is right for the Government to help independent voluntary bodies financially.After all, in the approach they made to her the charities were asking not for financial help from the Government but simply that the Treasury should take its hand out of their till.
Roger Hadley, of the Voluntary Services Unit, has commented that the Government are strong on rhetoric and weak on practical help for charities, while Brian Rix of the National Society for Mentally Handicapped Children and Adults has said:We are running a service for charity and we are being clobbered.The Prime Minister's much-vaunted "support" for charities is seen as humbug by some of their most distinguished administrators. Much apart from helping him who sacrifices to help others, the Government's policies are mugging the Good Samaritan himself.
1100 It is not too late, even now, for the Government to think again about the new and extremely onerous burdens they have placed on charities, not least on those of and for disabled people. In urging them to do so, I am asking no more than that they should match precept with practice. At the very least, they should accept the modest terms of the new clause, which I have pleasure in commending to the House.
§ Mr. Lewis Carter-Jones (Eccles)
I am sure that the Minister will accept the new clause, because it will not cost the Government a penny. It will allow all right hon. and hon. Members to realise what is being done.
When we contribute to a charity, we are not contributing to the Exchequer. It is intended to be given to the charity for its sole use. We do not expect to find 50 per cent. deducted for various expenditures. It is very interesting that charitable organisations which are household names are protesting very hard. I hope that the Minister will be honest and fair enough to say that he has made a hollow sham of the statement by the Secretary of State for Social Services in the 1979 election campaign, when he said:A Conservative Government will ensure that greater opportunities exist for more charitable giving through our policy of tax cuts.The Government have made a sham of that election promise, because they are now using the charities as tax gatherers, and money intended for charitable purposes is being put into the Exchequer's coffers. That is disgraceful and unacceptable.
The new clause is not asking the Treasury to give any money back. It is saying "Please tell us how much money you are taking from well-deserving charities. How much money are you taking from the pockets of the disabled?" That is all that we are asking for in the new clause. I hope that the Treasury Ministers have the courage to accept it, so that all hon. Members will know precisely what the Treasury is up to.
Labour-intensive types of charity—caring for children within schools, within training and in residential homes—are services which the Prime Minister said were to be encouraged. One can only say that the Treasury's actions show that the Government are discouraging them They are discouraging activities by voluntary organisations at a time when local authority expenditure is being cut.
My right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) has mentioned some of the organisations concerned. Dr. Barnardo's, MENCAP, the Spastics Society and the Royal National Institute for the Blind are making a plea and saying that as a result of the Treasury's action some of their projects have had to be cut. But these are not extravagant projects. They are essential: projects for disabled people.
I ask the Treasury spokesman to promise tonight, first, that he will accept the new clause in the interests of open government and, secondly, that he will go one stage further and say "We are here to help the charities and not to take money from them." Our evidence is that the Treasury is now taking £12 million per annum from charities designed to serve and help the least able in our society.
§ Mr. Tom McNally (Stockport, South)
It is important to have on record the attitude of the Government—not the 1101 attitude that is often given at Question Time by the Prime Minister or the Secretary of State for Social Services but the real, hard nitty-gritty of Government, the Treasury decision. There is a clash. Hon. Members want to know the Government's philosophy. Is the philosophy to encourage charities and local organisations, or is it, as my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) remarked, that the Treasury hand will be for ever in the till?
I do not think that I have ever known such local pressure and indignation across the board to compare with that expressed against the imposition of VAT on local charities. This must be the experience of hon. Members on both sides of the House. People who go out to work and to collect for charities do not imagine that they are tax gatherers. They imagine that they are working for the charity to which they give their time and commitment. Is the Government's philosophy that they will cut back on DHSS spending but that they will give local initiative and independent charities their head? If so, how does this match with the fact that the Government, in practice, tax charities? This is the essence of the new clause, the eloquence of my right hon. Friend and the statistics that my right hon. Friend gave, together with the remarks of my hon. Friend the Member for Eccles (Mr. Carter-Jones), with his expertise in welfare matters.
The Government have to square the circle. Otherwise, local and national charities will believe that just as the Government's commitment to welfare in terms of the DHSS is bogus, so is their request to independent charities to take up some of the slack equally bogus. That is the challenge facing the Minister.
§ Mr. John Home Robertson (Berwick and East Lothian)
I wish to support the initiative taken by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) in tabling the new clause. Value added tax is a dreadful imposition on charities concerned with disabled people and on many individuals who are disabled or who have disabled children in the family.
The addition of 15 per cent. VAT to the general costs and charges involved in work for the disabled is bad enough. Its addition to the cost of aids and specialised equipment such as wheelchairs, which are essential for the disabled, is downright scandalous. I recognise that aids and wheelchairs specifically approved by the Department of Health and Social Security are exempt from VAT. However, a constituent with a severely disabled daughter has brought forcefully to my attention the fact that VAT has had to be paid on a specially adapted wheelchair that the girl needs to get in and out of a car because it has not yet satisfied the stringent requirement or the time scale for testing of the DHSS.
Aids for the disabled used by the charities are expensive. They involve specialised research work, specialised material and specialised labour in manufacturing small quantities of items for the disabled. If the Treasury then adds 15 per cent. VAT, the situation becomes inexcusable. It is outrageous that such a situation should be tolerated in the International Year of Disabled People. I hope that the House will give careful consideration to the new clause.
§ Mr. David Crouch (Canterbury)
The hour is late, and I know that we are continuing this debate into the early 1102 hours of the morning. We are all kept up to consider this important Bill. Therefore, I make no apology for keeping the House on a matter that concerns the disabled in this International Year of Disabled People.
For some 16 years, I have been a vice-president of the Disabled Drivers Association. For 25 years, that association has held an annual service in Canterbury cathedral, in my constituency, which I have attended for the past 15 years. That service was recently taken over, because the disabled drivers decided to relinquish to the Spastics Society their responsibility for a service of about 1,000 people in the cathedral once a year. I attended the service this year a few weeks ago and listened to the national director of the Spastics Society make the address about disabled people.
I may not be wise about the Treasury's requirement at this stage, in this International Year of Disabled People, to tax the disabled. I may not be wise, but I am severely disturbed as a Member of Parliament who attends his cathedral and prays for the disabled and then visits the spastics, talks to them about their problems and sympathises with them. I go away chastened by that experience.
I should be less than honest if I did not say something in response to the speeches that I have heard from the Opposition Benches drawing to the Government's attention the concern that all hon. Members must feel about disabled people who hold a position in society so different from our own. However, the clause does not go very far. It does not go as far as I should wish. I should like to take a burden off disabled people and to make a demonstration in this year.
I remember speaking to an amendment from these Benches when my right hon. and noble Friend Lord Barber was Chancellor of the Exchequer. The Chancellor knew that he would not carry the day, and he lost the day. Without having to go to a vote, he graciously acceded to the will of Parliament and agreed to a concession to disabled people. I respected him for making that concession. If Parliament cannot exercise some influence on its Front Bench at any hour of the day or night, it is not much of a Parliament.
Things may happen on our streets which may dismay and distress us and which we passionately condemn. It is in this place that we should show passion—not noise—on behalf of people who deserve our support, no matter what party we belong to.
I do not know whether the hon. Members who are present in the Chamber—and there are quite a few—understand the full details of the difficult situation facing the Government, with all their responsibilities in financing the progress of the nation, but it has been drawn to our attention tonight that there are some at least who should not have to bear such a harsh burden. I have listened to only this part of the debate, and I am moved that the requirements asked of the Government tonight are not very strong on the Government. They should be stronger. The disabled deserve something more than a report. They deserve a concession in this year of all years—the International Year of Disabled People.
My hon. and learned Friend the Minister of State is a compassionate person. My right hon. Friend the Financial Secretary is also a compassionate man. They are not looking at me critically. They are as concerned as we all 1103 are. Perhaps we should look again at the question of taxing the disabled and make some concession to them, even at the eleventh hour of nearly half-past 12 o'clock.
§ Mr. Peter Rees
I am sure that the whole House is moved by the intervention by my hon. Friend the Member for Canterbury (Mr. Crouch). He and I are neighbours in Kent. I know of his deep sincerity and sensitivity in these matters. I am grateful to him for his acknowledgment of my interest in these matters. I am sure that the whole House is concerned with the disabled, not only because this is the International Year of Disabled People.
I pay tribute to the right hon. Member for Manchester, Wythenshawe (Mr. Morris). He has had a deep concern for the disabled for a long time. I admired his contributions when he was a distinguished member of the last Administration. I am bound to say with utter candour that I think that he has led the debate into a blind alley. He has asked us to test the Government's sincerity. I do not feel any embarrassment about our fiscal measures in this respect.
The right hon. Gentleman constructed a speech by cobbling together a series of selective quotations from letters which many hon. Members received from various charities. He said that the Government should take their hands out of the charities' pockets and that we have been strong in rhetoric but weak on action. Let us test the right hon. Gentleman's rhetoric by the fiscal actions of this Administration.
I shall remind the House of the fiscal measures that the Government have taken on behalf of charities, particularly those charities involving the disabled, since they came to power in May 1979. The right hon. Gentleman is a person of candour and integrity and he will immediately concede what I am about to say because we exchanged words across the Dispatch Boxes in the summer of 1979 about a special provision which we introduced to allow Motability—an organisation which received warm support from this side but, so far as I recall, lukewarm to frigid support from his Administration—to recover VAT on cars bought for leasing to the disabled. I chalk that up as one measure for which we can claim credit.
Let us move to the Finance Bill 1980. The right hon. Gentleman is a person of candour and integrity and he will concede my next point. We reversed a rather mean measure introduced by a Labour Chancellor. I know that—de mortuis nil nisi bonum—it was introduced by Dr. Dalton. It limited the relief for deeds of covenant to tax at the basic rate. We extended that so that it covered higher rates to encourage generosity in donors by deeds of covenant. That was acceding to a specific request by a range of charitable organisations.
We also reduced the time for which deeds of covenant could operate, if they were to qualify for tax relief, from six to three years. I chalk that up as something to the credit of this Government. It is a small measure but covenants for variable or unstated amounts were exempted from stamp duty. That also makes it easier for people to be more generous to charities.
§ Mr. Carter-Jones
Can I, then, go to MENCAP, the Spastics Society, Dr. Barnardo's and the Royal National Institute for the Blind tomorrow and say that they are financially better off than they were before? That is the nub of the argument. Can I honestly go to them tomorrow and say "Don't worry, boys. Just go and see the Financial 1104 Secretary and he will give you the money?" That is the vital question. Will the Minister please give that assurance?
§ Mr. Rees
I shall not give way to the hon. Gentleman. I shall go through the fiscal measures, as I was challenged to do by the right hon. Member for Wythenshawe, who moved this ill-judged new clause. I was asked to state the fiscal measures for the relief of charities. Opposition Members may not like what they have to hear, but I hope that they will do me the courtesy of hearing me out in silence. Then I hope that they will go back to the charities whose cause they affect to espouse and tell them precisely what they have heard.
I shall tell them now—[interruption.] We have had to listen to a great deal on this subject from Opposition Members and it is only right that we should put the record straight. I am sorry if it hurts the hon. Gentleman, but we know that he supplied a great deal of carefully researched material to the previous Labour Prime Minister. He must know the importance of getting the facts right. When we have got the facts right, we can all draw our conclusions and go back, in triumph or dismay, to our constituents and tell them what we have concluded.
If the hon. Member will allow me to proceed, I shall move to corporation tax. As he will know, since he has obviously paid great attention to these matters, although he did not disclose that in his speech, charities are exempt from a wide range of income tax, which we have enlarged. We have made it easier for companies to give to charities and to get relief from corporation tax. That, too, should be chalked up in our favour.
We raised the exemption limit on gifts to charities made within a year of the death of the donor for capital transfer tax purposes from £100,000 to £200,000. In fairness, the right hon. Gentleman and his hon. Friends should have reminded the House about that, too. We have exempted charities from development land tax.
I now come to the question of VAT. There have been a range of reliefs for supplies to charities, some of which. I admit, predate the arrival of the Government. They have been topped up by the Government—let both sides of the House take credit for it. To pretend, as some Opposition Members pretended, that VAT is a crushing and unqualified burden in this area is paltering with the truth.
Talking books for the blind and the severely handicapped and certain ancillary equipment are zero rated with supply to an appropriate charity. So are radios for loan to the blind. Most aids supplied for handicapped persons are also zero rated. Medical and scientific equipment, ambulances—this was introduced concurrently with the Budget—and most aids for handicapped 1105 persons when supplied to charitable institutions providing care, medical or surgical treatment for handicapped persons are also zero rated.
Donations of goods for sale by charities or charities for the relief of the distressed are also zero rated. It would have been fair for the right hon. Gentleman and his hon. Friends to remind the House that, for example, the mobility allowance will be increased to £16.50, which is an increase of about 65 per cent. since the Government took office. The blind allowance in the Finance Bill has been doubled.
The right hon. Gentleman chose to say—from time to time we know that we all descend from pure fact into rhetoric—that charities have never had it so bad. All I can say is that if they have never had it so bad fiscally under this Administration, the mind simply boggles at their state under the previous Labour Government. I ask the House to reject with utter contempt this ill-judged new clause.
§ Mr. Alfred Morris
With the leave of the House, may I say that we have heard a deeply unworthy and outrageous reply to speeches that were made with the very serious intention of helping organisations of and for disabled people.
If there was rhetoric in my speech, it was the rhetoric of those who were speaking on behalf of the disabled. I quoted the Prime Minister and the Secretary of State for Social Services. The Minister gave the impression that charities are better off now than they were under the Labour Administration. I wish to quote a letter from the director of the Spastics Society. I shall use his words to show the House the seriousness of the position that he and his colleagues now face. He said:As a consequence of the Chancellor's minor extension of relief from VAT in the last Budget, the Spastics Society will save only £6,000 of the £250,000 lost last year on VAT, and the increase in petrol duty will cost us another £30,000 per annum".That is the reality of the position as it is faced by organisations of and for the disabled. The Minister had the impudence to compare what is being done by this Government to help the disabled with what was done between 1974 and 1979. Between those years there was an increase in expenditure on cash benefits alone for the chronically sick and disabled from £474 million to £1,584 million, an increase of £1,100 million over the five-year period.
My hon. Friend the Member for Eccles (Mr. Carter-Jones) asked whether he could tomorrow tell the charities that they are better off under the present Government. The Minister knows quite well that they are worse off. He cannot challenge the figures that I quoted. He has colleagues behind him tonight who know full well, because they are members of the all-party disablement group, that the figures I gave were the figures given to that group. They know, as well as we know, that the anxieties that I have expressed tonight are those of distinguished charity administrators. I quoted Brian Rix, who said that his organisation, which exists only to help mentally handicapped children and adults, is being clobbered by the Government.
§ Mr. Carter-Jones
I am deeply concerned about the attack that has been launched. This is a narrow clause relating to VAT and the charities. I asked a simple question. Now I ask it of my right hon. Friend. Does he 1106 know of any charity concerned with the disabled that is better off as a result of the VAT regulations? That is the nub of the argument.
§ Mr. Morris
If there is an increase in VAT from 8 per cent. to 15 per cent., all charities are bound to suffer from the additional burden they are being asked to carry by the Government.
Tonight I have understated the feeling among the organisations of and for the disabled. I hope that the Minister will reconsider his position. It is clear to me that right hon. and hon. Members on the Conservative Benches accept what we have said in the debate. I hope that the hon. and learned Gentleman will think again and will accept the clause, which, if it errs at all, errs upon the side of modesty.
The hon. Member for Canterbury (Mr. Crouch) said that he would like to see a much stronger clause. I hope that he will insist, with me, that the least the Government can do is to accept the clause.
§ Question put and negatived.