§ 9 p.m.
§ Lord MAYBRAY-KING rose to ask Her Majesty's Government whether they will introduce legislation to help voluntary workers who man charity shops, who have been disadvantaged by the recent judicial decision of this House on the rates imposed on such shops. The noble Lord said: My Lords, it would be wrong for me to say that I am sorry to be addressing you at this late hour when the reason is the excellent debate on Europe which we have had this afternoon and evening, a debate which was graced by the presence of the noble Lords, Lord Boothby and Lord Duncan-Sandys, who were founder members of the European idea in the months following the end of the Second World War. I say, too, to those who have to stay, that if the debate had come earlier I should have had the support of the noble Baronesses, Lady Elliot of Harwood, Lady Hornsby-Smith and Lady Vickers and the noble Lord, Lord Amulree, whereas I imagine that there will be only three speakers in this debate. I begin by welcoming the noble Lord, Lord Oram, who is making his first contribution to a debate in this House from the Front Bench.
§ Britain is rich in the number of voluntary societies working for good causes, helping the poor at home and abroad, and caring for the elderly and the physically and mentally handicapped. Thousands of volunteers give service and raise money in a variety of ways. The simplest and most straightforward way of raising money is to solicit gifts. This I do every day of my life. However, voluntary groups have other ways of raising money, including garden parties, bring-and-buy sales, jumble sales, coffee mornings and sponsored walks—wonderful sponsored walks in which our children help the sick and the old. One of these methods is the gift shop. This is a place where people bring things they do not want; clothing is one example. It can be sent to underdeveloped countries, and Oxfam, Help the Aged, Save the Children and Age Concern send thousands of bales of good, used clothing to poor people in underdeveloped parts of the world. These shops also sell things 981 which are given to them and make a lot of money in that way. Often a shop which is temporarily vacant is let by a generous owner for a short time, sometimes rent free, very often at a reduced rent. Such shops have to pay rates but the rates have usually been reduced because the object of the shop is charitable. Both the labour of manning the shop and the goods themselves are given. All is profit.
§ The Law Lords had to judge last year on an appeal by Oxfam whether charity shops were entitled to rate relief. Their Lordships ruled in May of last year that the law did not entitle sonic of the shops to the relief which, up to that moment, had been given. The result of that ruling has been that this form of voluntary effort has received a heavy blow. According to an article in the Guardian in May last year, Oxfam at that time estimated that the decision would cost it £125,000 a year. However, its Director now puts the loss at £250,000 a year and points out that that money comes out of income raised by 15,000 voluntary workers in 600 shops.
§ I am associated with ASBAH, which helps spina bifida children. The noble Baroness, Lady Masham of Ilton, and I are intimately associated with ASBAH. The Secretary tells me that they receive money each year from the Charity Christmas Cards Council, which raises money by selling Christmas cards from shops which now have to pay full rates. The money raised from Christmas cards and given to the various charities concerned last year had to be reduced as a result. My friend the honorary director of Help the Aged tells me that he has recently had to refuse an offer of three excellent shops because of the terrific rates which would have had to be paid. He said: "I calculate that this is a loss of £20,000 to Help the Aged because we would most likely have had these three shops for at least six months, rent free." He estimates that the cost of their Lordships' ruling on rate relief in Help the Aged shops up and down the country was £50,000 last year and will be very much more this year.
I am also President of the Eastleigh Society for Mentally Handicapped Children. Eastleigh is a town in Hampshire. During the six years of its existence,
the society has raised a minibus to take handicapped children to a training centre, has started riding classes for handicapped children, has built an open air swimming pool for them at a cost of £5,000 and last year spent over £1,000 in subsidising holidays for handicapped children. It is now raising funds to cover and heat the swimming pool. Most of its income has been raised by a gift shop run by parents. Everything is given. To save money, people worked in the shop without electricity and the only heat has been from a paraffin stove. Year by year, the shop has made, on average, £1,200 a year for the Society. As a result of the Law Lords' ruling, the rates were increased from £120 for the year to £1,416. That meant that all the voluntary work last year not only showed no profit but showed a loss of £200. In the words of the Society's chairman,
This was a devastating blow to those who worked for several years in conditions that no paid worker would accept nowadays.
The result is to jeopardise the project of heating the swimming pool, and the maintenance costs of the minibus are also in danger.
This little Society has unanimously decided to close the shop. There will be no rates to pay and no money to be lost by the Society. I understand that the Eastleigh Borough Council has made grants to the Society to cover most of the increases in rates for the present year, but that can be done only once. This is one of the finest little groups of voluntary workers I know. In the words of its devoted chairman:
We may end up with a stall in the market, a chilly prospect for old age pensioners who have found buying second hand things at our shop very helpful to them, as it was also helpful to handicapped children.
§ One of my friends in the movement connected with spina bifida writes to me from Lincoln, where they ran a charity shop in May and July of 1975. The aim there is to supply a second minibus in addition to one supplied by the variety artistes of Great Britain, which, incidentally, is a marvellous body which has raised funds for thousands and thousands of minibuses for handicapped folk. Premises were lent to the organisation to which I refer by a building society, and money was made, until at the end of two months, a demand for £325 rates was 983 received. This amount was practically equal to what had been raised by the voluntary efforts. Inquiries were made and other premises, which had been vacant for three years, were found, but it was discovered that the rates on these premises would be £50 a month, so it was decided not to take the shop.
§ What can be done, my Lords? One local authority which I know has made a grant to a Help the Aged shop to cover the increased rate that the authority has to charge under the Law Lords' ruling, and, as I have mentioned, Eastleigh has done the same. I hope that other local authorities are doing the same thing, by making grants to cover the increase which the ruling has made inevitable. Nobody questions the interpretation of the law as it stands. That issue has been decided by the Law Lords in the Oxfam appeal case.
§ What is needed is a reform of the law in relation to the rating of charity shops. I understand that in the other place the Liberal MP, Mr. Stephen Ross, asked in May of last year for early legislation, and the Minister Mr. John Silkin said that nothing was to be done at present, but that he was ready to consider the matter in the light of the Report on local government which is to come from the Lay-field Committee. Mr. David Price, the Conservative Member of Parliament for Eastleigh, and Mr. Arthur Blenkinsop, the Labour Member for South Shields, are also pressing this matter, which is an all-Party, or should I say non-Party, appeal.
§ The noble Lord who is to reply to this debate comes to this House with an excellent record both during the war and in his service as a Minister in the other place. I say to him that at present voluntary workers in the charity shops feel that they are working to meet increased rate expenditure rather than the good cause that they wish to help. At present, just as seriously, shops which might be taken over for short periods are not in fact being taken over by voluntary bodies because they cannot afford to meet the cost. All their work would go to meet the rates. I hope that the noble Lord, Lord Oram, will impress upon Her Majesty's Government the need to do something—and to do it urgently—for 984 one very precious little corner of this wonderful voluntary service, which is more marked in Great Britain than in any country in the world.
§ 9.11 p.m.
§ Lord SANDYS
My Lords, the House would be grateful to the noble Lord, Lord Maybray-King, for giving us the opportunity to discuss this very important subject. It gives me very great pleasure to welcome from the Front Bench the noble Lord, Lord Oram, who will be making his first contribution as a spokesman for the Government. We from this side heartily agree with what the noble Lord, Lord Maybray-King, said about the noble Lord.
As the noble Lord, Lord Maybray-King, said a few minutes ago, we are not concerned here with discussing the interpretation or the ruling made by your Lordships' House while acting in its legal capacity. It is purely a question of what to do now, a question of drafting of legislation, and of seeking an opportunity to review this matter. In placing this subject on the Order Paper this evening the noble Lord, Lord Maybray-King, has performed a very valuable service to the charitable movement in this country. As a member of the council of Oxfam I must declare my interest in this question.
As your Lordships may know, I have been associated with Oxfam in one capacity or another for over 18 years, and I think my first visit to an Oxfam gift shop as a customer was as long ago as 1948. I think your Lordships would be interested to know that up till 1960 there was only one Oxfam gift shop, which was, as it happens, in the City of Oxford; and the very substantial growth in gift shops from one to 600, as it stands today, occurred very largely because of the enormous voluntary support which it had throughout the country and the very wide support which donors had for the concept of the gift shop.
My Lords, Oxfam is not alone in this particular movement. As the noble Lord, Lord Maybray-King, has already informed your Lordships, there is a large number of other charities. We believe there are 19 charities registered as charitable bodies which run or manage gift shops. All of those 19 charities are interested in the decision reached in your Lordships' House about a year ago. But 985 I should like to trace back the situation, so far as Oxfam is concerned, because it shows the very real burden which has been placed upon a charity over a period of years. It was as long ago as November 1972 that legal proceedings were set in motion between the City of Binning-ham and Oxfam. A High Court decision was reached in favour of the City of Birmingham on 1th June 1974; from that Oxfam decided to appeal to your Lordships' House, and judgment on that appeal was given in May 1975. That is a very long period for a charity to remain in a state of suspense so far as a very important matter of policy is concerned, and I think it adds considerably to the argument deployed by the noble Lord, Lord Maybray-King, on the real urgency that exists to reach a conclusion in this matter.
My Lords, I am very much encouraged by a letter from the Prime Minister's Office received by the Director of Oxfam as recently as the 4th March of this year. I think it would be for the benefit of your Lordships if I were permitted to read it. It is quite brief. It reads:Dear Mr. Walker,The Prime Minister has asked me to thank you for your letter of the 16th February about rate relief for charity shops. The Prime Minister has much sympathy with the position of Oxfam and other charities which have been affected adversely by the Lords decision. The Government fully accept that the decision should be reversed. This can, however, only he done through legislation. Parliamentary time is, as you say, at a premium, but Ministers are currently considering what method of proceeding would enable a measure to be brought before the House at the earliest opportunity.That concludes the letter, my Lords, and it suggests, if I may be permitted to say so to the noble Lord, Lord Maybray-King, that we may be pushing at an open door. If that is the case, I hope the noble Lord, Lord Oram, will be able to confirm this to your Lordships. If, however, we are in error in this, I hope the noble Lord will be able to correct the matter.
I should like to make one further point in this connection. I hope that it will not be necessary for charities, either separately or in a joint manner, to launch a major campaign to bring to the Government's attention the necessity to revise the law. This is not only a very expensive process: it is against the interests 986 of the charities concerned and also of those who benefit from the charities. It is also against the public interest, my Lords, because all demonstrations inevitably involve a great deal of expenditure of public money so far as the police are concerned. Therefore, it would be to very considerable public and general advantage if the noble Lord could give this confirmation.
My Lords, the noble Lord, Lord Maybray-King, has already expressed so much of what I wanted to say that I can add only this. I believe this is a matter of urgency. I believe that not only are Help the Aged being offered gift shops which at the moment they are in a position only to turn aside, but many other charities are in this very unfortunate position; and I hope the Government will look upon this as a matter of immediate concern.
§ 9.20 p.m.
My Lords, at the outset I should like to thank the noble Lord, Lord Maybray-King, for the way in which he has raised this important matter tonight and also for his kind personal words. The help that he himself gives to charities is very well known and it is understandable that he expresses this deep concern when charities of the kind which he supports raise money and, then, find that so much of it goes back to the local authority through the rates. The noble Lord has given the House some very graphic examples of the way in which this admitted anomaly in the law works to the detriment of these charity shops. He will realise that his concern is shared in all parts of this House, as he has indicated it is shared in another place; and this is evidenced by the speech to which we have just listened from the noble Lord, Lord Sandys.
I must say that all of us have a great admiration for the work which is done in these charity shops by people who devote such time and effort and sometimes their own personal money towards the success of their efforts. I, personally, over a number of years have been quite closely involved in the running of one such shop. I have seen at first hand how devoted the efforts of these people are. They do not ask for thanks but what they reasonably would expect is that the money they raise should go directly to the benefit of the charities for which they work.
987 The noble Lord, Lord Maybray-King, reminded us that this is but one of a considerable variety of ways in which charities raise money. He referred to the sponsored walk. This reminded me that some years ago Oxfam invited me to start off one of their sponsored walks and, in a moment of enthusiasm, I said that I should not only start it off but walk with them. I found myself, all through the night, walking from Purley to Hampstead Heath—something like 24 miles.
I think that I had the most distinguished list of sponsors any walker ever had. It included the Prime Minister, the Leader of the Opposition, Mr. Speaker—and I express my gratitude to them, now if I did not do so then—and most members of the Cabinet. We raised quite a tidy sum. I am sure that if on Hampstead Heath I had thought that the money I raised was going partly to the rates of the boroughs through which I had been walking, I should have expressed myself forcefully. The same principle applies to those who work in these charity shops.
My Lords, by raising this matter tonight, the noble Lord has given me the opportunity of assuring those whose work we so admire that the Government fully appreciate their problem—this anomaly, as I call it—and that they intend to put matters right. I think that many of them might also welcome a brief statement of how this question arose. It will not take more than a few sentences and I believe that it would be reasonable to put it on record.
The Local Government Act 1948 took the duty of valuing property and preparing assessments out of the hands of the local authorities and passed it over to the Commissioners of Inland Revenue. They were to carry out that duty on a national basis. It followed that this duty then had to be exercised on the strict basis of law. Whereas previously local authorities had been able to make their assessments, particularly of charities, with a sympathetic approach to the matter, when it became a matter for the Inland Revenue Commissioners and on a national basis, that kind of approach was no longer possible.
Then, to help the many charities and similar organisations which were facing serious financial problems, the Rating 988 and Valuation (Miscellaneous Provisions) Act 1955 introduced a system of rate relief. This did not affect assessments, but limited the amount of rates chargeable from 1st April 1956, when the new valuation lists came into force. Rating authorities were also given additional discretionary powers.
Then a Committee was set up to consider the whole question of the rating of charities and similar organisations. That Committee's recommendations were implemented in the provisions of Section 11 of the Rating and Valuation Act 1961. Section 40 of the General Rates Act 1967 is where the difficulty arises. Unfortunately, it is the wording of that section which has caused the problem that we are discussing this evening. Section 40 says rating authorities must give 50 per cent. rate relief toany hereditament occupied by, or by trustees for, a charity and wholly or mainly used for charitable purposes…".In addition, under subsection (5) of Section 40, rating authorities have discretion to grant relief to charities and certain other institutions. In short, rating authorities must give 50 per cent. rate relief to charities and may give relief on the whole or part of the remaining 50 per cent. As the noble Lord, Lord Sandys, told us, the Birmingham City Council contended that while nine Oxfam gift shops in their area were indeed occupied by a charity, they were not wholly or mainly used for charitable purposes because raising money by trading was not a charitable purpose of the charity. This contention was upheld on appeal to this House. There is also a body of case law which supports the view that fund raising of this nature is not a charitable purpose of the charity. Unfortunately, this means that shops run by charities are not entitled to relief. However, the head office and any other "non-shop" premises of charities are still eligible for relief. It is this question of trading in a shop.
The noble Lord, Lord Maybray-King, was not in any way querying the judicial decision. This is the law, and this is where the difficulty arises. Needless to say, as has been illustrated this evening, this case came as a bombshell to those charities operating gift shops, and it may help if I explain the decision. The noble and learned Lord, Lord Cross, when 989 giving his judgment, commented that Section 40 was rather curiously worded. It contemplated use of a charity premises for purposes which were not charitable purposes of the charity. A line, therefore, had to be drawn between charitable and non-charitable purposes of the charity. The line is a vague one and difficult to determine but, he concluded, it must be drawn to exclude from relief,uses for the purpose of getting in, raising or earning money for the charity, as opposed to uses for purposes directly related to the achievement of the objects of the charity.It is that decision—which no one queries—that bears so harshly on the finances of many charities. There is one way in which local authorities can help charities who are not now eligible for relief. The noble Lord, Lord Maybray-King, indicated one or two local authorities which apparently are taking advantage of this method. Section 137 of the Local Goverment Act 1972 provides that a local authority may make a contribution to,the funds of any charitable body in furtherance of its work in the United Kingdom.Of course, this is entirely at the discretion of the local authority, and the Government cannot exert any influence either way. Moreover, because it refers to work in the United Kingdom, this cannot help those charities whose work is concerned mainly with overseas charities such as Oxfam, to quote a well-known example. However, it can benefit other charities, and it is open to the managers of the various charity gift shops throughout the country to ask their local authorities to give them a grant to help to replace the rate relief they might otherwise have received.
It may be that the noble Lord, Lord Maybray-King, by giving me the opportunity to make this point this evening may have helped some charities to avail themselves of this provision, which otherwise they may not have been able to do. However, I must admit that it is not completely satisfactory as a cure for the problem. It is discretionary; and we know that local authorities are under great financial restraints, and that even if they were disposed to be charitable in this matter they might not be able to carry out their wishes. This cannot be a permanent solution and, as I have said, it helps only some of the charities and not all of them.
990 My honourable friend the Parliamentary Under-Secretary of State has met a delegation from the various charities involved. He has explained the position to them and I believe they fully understood the situation from him, as I have tried to explain it this evening. It has been said—I think in the letter quoted by the noble Lord, Lord Sandys, sent from the Prime Minster's office—that the only solution is to change the law. I can assure the noble Lord, Lord Maybray-King, and your Lordships' House, that the necessary legislation will be introduced at the earliest possible moment. I am sorry I cannot say more than that, but the noble Lord, from his experience as a distinguished Speaker in another place, knows better than most of us that it is not possible for anyone in my position to forecast the date of forthcoming legislation. But I assure him, and the House, that it is the Government's firm intention to end this anomaly to which he has drawn our attention tonight.