Royal British Legion Homes: VAT (Hansard, 16 December 1985)

§ Lord Auckland
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)
My Lords, certain building alterations which improve access for the disabled are relieved of VAT when supplied to charities such as the Royal British Legion. Alterations and repairs not covered by this relief are liable to VAT as there is no general relief for registered charities from VAT on goods and services which they buy.

§ Lord Auckland
My Lords, I thank my noble friend the Minister for that detailed reply, but is he aware that that is where my thanks must conclude? Speaking in a non-financial capacity as president of the Royal British Legion for the county of Surrey, may I ask my noble friend whether he is aware that £350,000 is recoverable in value added tax from these improvements? Would he not agree that this is a very nasty rebuff for those who have given their limbs and sometimes their minds in the service of their country? Would he ask his right honourable friend to reconsider this matter and also the whole question of charities of this nature which are suffering very badly from this terrible tax?

§ Lord Belstead
My Lords, I entirely understand my noble friend's concern about building alterations being brought within the scope of value added tax. Indeed, my right honourable friend the Chancellor of the Exchequer is considering representations from the charities' VAT reform group. A meeting was held at the Treasury only last week. But my noble friend will be aware that we have always felt that the right way to go about supporting the voluntary sector is through direct grants and direct tax reliefs. Those have been increased enormously since 1979.

§ Lord Mellish
My Lords, there really is no justification—is there?—for a tax of this kind being imposed on a body like the Royal British Legion and it really is a squalid Answer that the Minister has given. If there is any goodwill at all—and there must 528 surely be, for this is not a party point—towards organisations like this there is nothing beyond the wit of man in devising immediate relief for people like this.

§ Lord Belstead
My Lords, for reasons which the noble Lord, Lord Mellish, will know, we have always reckoned that the way to go about helping the voluntary sector was, as I have said, through direct grants and direct tax reliefs. Perhaps I ought just to spell out that direct grants for the voluntary sector have more than doubled since 1979. The total of grants to voluntary organisations from all government agencies is well in excess of £1,000 million a year. Direct tax reliefs for the benefit of charities have been substantially increased since 1979 and are now worth £400 million. As this Question is about the Royal British Legion, which all of us enormously admire, perhaps it is right just to say that the Royal British Legion Housing Association Limited received £25 million from public funds last year; and I am delighted that is the case.

§ Lord Boyd-Carpenter
My Lords, while my noble friend is right to draw attention to the very proper actions of the Government in general, in view of the fact that he himself has disclosed that some of this work is relieved of VAT charges, surely it would be both rational and easy to extend this to cover all work and thereby prevent money subscribed by the public from being subjected to an unexpected and unwelcome tax?

§ Lord Belstead
My Lords, I think there is a difficulty, about which my noble friend knows probably better than I, in exempting all charities from VAT. The chief among the difficulties is that it would be an indiscriminate way of bringing help because the benefits would depend much more on the pattern of spending of an individual charity than on the level of public support which a charity attracts. It is for that reason that I come back to the basic point that we have believed in the last six years that the way to go about it is to improve direct grants and direct tax reliefs—and we have done an enormous amount in those six years.

§ Lord Cledwyn of Penrhos
My Lords, the noble Lord said that representations from charitable organisations are currently being considered by his right honourable friend the Chancellor of the Exchequer and his colleagues at the Treasury. Can he say to his noble friend in the House that this particular point is also being considered as part of that study and therefore something might conceivably emerge in the Budget on the point?

§ Lord Belstead
My Lords, I understand that this point was raised at a meeting on 11th December with my honourable friend the Minister of State at the Treasury. I should be misleading the noble Lord, Lord Cledwyn, if I did not remind the House that it is of course difficult to protect charities from every Budget change. I repeat that what is possible and what we have done is to increase direct aid to charities and to the voluntary sector.

§ Lord Auckland
My Lords, is my noble friend aware that I have some more disturbing figures? If I were to let him have them, would he ask his right honourable friend to consider them very closely?

§ Lord Belstead
My Lords, indeed I shall most certainly do that if my noble friend will get in touch with me.

Lord Paget of Northampton
My Lords, if the Minister of State is thinking about the matter, cannot the noble Lord send a message to him saying that when he raised the matter in the House of Lords he really had not got a word to say because everybody was against him? Is it not time that he came to the Minister's assistance?

§ Lord Belstead
My Lords, that may be the view of the noble Lord, Lord Paget. I am not quite so sure that the taxpayers generally in this country would be all that pleased if in an indiscriminate way all charities were simply relieved of VAT and the taxpayers were asked to make up the difference. What I think the individual taxpayer understands is that where help is most needed it should be brought to bear effectively; and, my goodness! the present Government have done this, as is shown by the figures that I have already given to the House.

§ Baroness Gardner of Parkes
My Lords, is it not a fact that the expression "charity" covers such a very wide spectrum of bodies that to give any generalised exemption could have results far beyond anything that any of us here would wish? I speak as the honorary president of the British War Widows' Association and I have extremely great sympathy with the Royal British Legion. If some sort of general exemption from VAT is to be considered, would it not be necessary almost to reclassify the charities, because while there are some we would all wish to see supported there are others such as educational institutions which I do not know have the same claim to our general sympathy?

§ Lord Belstead
My Lords, I think that to start to reclassify charities would be very difficult indeed. I am grateful to my noble friend, however, for pointing out the difficult and uncertain territory we would get into if we started going down the road suggested in this Question.

§ Lord Molloy
My Lords, is the Minister aware that no one would dispute the figures he has given but this is a very special problem which faces the Royal British Legion? Many of us think that the state should have accepted this responsibility because, were it not for the Royal British Legion, literally hundreds of thousands of disabled British ex-servicemen would have practically nowhere to go. There is an additional problem. They were disabled as young men and as they grow older—like most of us now, many are aged between 60 and 70—they face additional problems because they are limbless or severely disabled. May I put this plea to the Minister very simply. Would he be gracious enough to see the specialist committee of the Royal British Legion, which is itself voluntary and knows all about this problem? Its members have devoted their lives to it. Would he ask his honourable 530 friend whether he would be prepared to see a small deputation from us? If so, I am sure that a reasonable solution can be reached.

§ Lord Belstead
My Lords, I am sure my honourable friend would be only too pleased to do that. My right honourable friend is of course, as it were, in purdah before the Budget so far as representations are concerned. On the second part of the question, may I just say to the noble Lord, Lord Molloy, that I entirely agree with him that we have everything to be thankful for to those who are represented by the Royal British Legion, and not least my own generation. However, I do not agree with the noble Lord that this should simply be thrown on to the state. Surely the way to do it is to have a splendid organisation like the Royal British Legion, which raises huge sums of money through its Poppy Day appeal—an appeal which of course lies totally outside the scope of VAT.

§ Lord Allen of Abbeydale
My Lords, the Minister laid much emphasis on direct grants to charities, but is he aware that many charities receive no direct grant of any kind but nevertheless suffer very much from this particular aspect of VAT in regard to what the Question describes as, "refurbishment and renovation work"?

§ Lord Belstead
My Lords, I think I recognised in my first Answer to my noble friend that the change in the scope for alterations regarding VAT had a serious bearing on charities, and I therefore take seriously what the noble Lord said on this matter.