§ 10. Mr. RathboneTo ask the Chancellor of the Exchequer what consideration he is giving to relieving registered charities of the present VAT costs.
§ Mr. DorrellThere are a number of measures in the Budget to assist charitable giving, as well as a special transitional scheme to help charities which receive income from dividends.
§ Mr. RathboneI welcome those measures in the Budget and my hon. Friend's reminder, but could he not see his way to removing some of the VAT disincentives to contributors to charities as well as the burden on charities, which are now doing more and more and better and better, as needs must?
§ Mr. DorrellMy hon. Friend is right to praise those involved with charities for the increasing contribution that they make. We welcome that, and we have given extensive support to it. We believe that the best way to help the charity movement to carry out its task is to provide incentives to those who give money to charity. That is why 489 we have increased substantially the range of tax reliefs available—the majority of them on the giving of money to charities rather than the expenditure of money by charities. In total, those tax reliefs now have a value of £1 billion, of which £150 million amounts to direct VAT reliefs.
§ Mr. MandelsonIn view of the additional burden on charities created by the extension of VAT to fuel, will the Minister clarify once and for all whether the VAT extension will apply to standing charges on fuel bills, and will he tell us clearly what exactly is the environmental justification for that?
§ Mr. DorrellThere is absolutely no secret about this. It has been said from the Dispatch Box repeatedly since Budget day that the answer is yes, it does apply to standing charges. [HON. MEMBERS: "Why?"] As my right hon. Friend the Chancellor of the Exchequer made clear to those who were listening to his answer a few moments ago, to try to levy VAT on energy without levying it on standing charges would be to establish an easy and obvious avoidance loophole.