§ 10. Mr. Yeoasked the Chancellor of-the Exchequer how many representations he has received requesting relief from value added tax to be granted to charities.
§ The Minister of' State, Treasury (Mr. Barney Hayhoe)During the past three months my Treasury colleagues and I have received a total of 24 representations concerning a general VAT relief for charities and similar bodies, and I was glad to meet the deputation ably led by my hon. Friend earlier this week.
§ Mr. YeoBearing in mind the extremely valuable work that is done by many charities in this country, and the fact that in many cases that work supplements the services provided by local authorities, does my hon. Friend agree that it is now high time that the present situation, whereby charities are treated less favourably for VAT purposes than local authorities — or indeed commercial companies — was brought to an end?
§ Mr. HayhoeI recognise the immensely valuable work that charities do in this country, but my hon. Friend will appreciate that it is not for me to anticipate in any way my right hon. Friend's Budget.
§ Mr. Ioan EvansShould not the Minister also take into account not just the recent representations but those that have come from both sides of the House throughout the last Parliament? Does he realise that the situation has been aggravated by the fact that this Government have increased VAT from 8 to 15 per cent? Will he take that into account and perhaps reduce VAT to the rate that was in force before this Government came to office?
§ Mr. HayhoeI also take account of the considerable help that the Government have given charities over the past four years by means of direct tax concessions, particularly through deeds of covenant. For example, the number of deeds of covenant has gone up from 600,000 in 1980 to 800,000 in 1983, and the amount of the tax refund for charities from £50 million to £86 million.
§ Mr. McQuarrieAlthough I appreciate the aid that is given by the Government, is it not disgraceful that when people make donations these are liable to VAT? Let me give as an example the Spastics Society, which paid £500,000 last year on VAT contributions. Those were donations on which tax and VAT had already been paid. Is that not unfair?
§ Mr. HayhoeIt is not accurate to say that a tax is paid on the donation, although I accept, of course, as my hon. Friend said, that a charity such as the Spastics Society pays a considerable amount in VAT each year.
§ Mr. CanavanWhen will something be done about the hundreds of thousands of pounds of tax relief given out every year to bogus charities, such as the Adam Smith Institute, which spends much of its time spreading Right-wing political propaganda? Is it mere coincidence that some extreme Right-wing members of the parliamentary Tory party, such as the hon. Member for Stirling (Mr. Forsyth), are associated with bodies of this nature?
§ Mr. HayhoeThere is concern in all parts of the House about any charity that is bogus. However, that is not a matter for me. It is a matter for the Charity Commissioners.
§ Mr. HattersleyI know that the Minister of State understands the concern that exists on this issue in all parts of the House. Can he assure us that the resolutions by which the Finance Bill is brought in will not this year, as happened last year, prevent hon. Members from tabling amendments?
§ Mr. HayhoeIt would not be appropriate for me to give such an assurance at this stage.
§ Mr. Cyril D. TownsendAlthough the Government had a very good record on charities in the last Parliament, is my hon. Friend aware that many of us are looking for a similar record for this Parliament, because we believe that relief from VAT is a very good way forward?
§ Mr. HayhoeYes. I accept the strength of feeling in all parts of the House on this matter, but, as my hon. Friend will know, there are formidable difficulties.