Charities: Budget Legislation (Hansard, 29 April 1986)

§ Baroness Lane-Fox
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ Lord Brabazon of Tara
My Lords, the benefit to charities will depend on the public response to the Budget proposals, but it could be at least £120 million next year and perhaps more.

§ Baroness Lane-Fox
My Lords, I thank my noble friend for that encouraging reply. May I further ask him whether he agrees that at this time many people are showing a wish to give to what they see as good causes in response to successful fund-raising events? That being the case, does he further agree that the incentive offered in the recent budgetary arrangements will have the advantage of encouraging these people to give more and others to give something?

§ Lord Brabazon of Tara
My Lords, I agree with the points made by my noble friend. In particular I think she refers to the new payroll deduction scheme, which could be a great success.

§ Lord Barnett
My Lords, would the noble Lord care to comment on a letter in today's edition of The Times which indicated that many well known charities will be worse off if the legislation remains as it is? I note the Answer that he gave to his noble friend that the cost could be as much as £120 million. I should like to ask him whether he is aware that in the Budget debate the Chancellor estimated that in a full year the cost in loss of tax would be £1 million. If he is right, is it not all the more important that the money should go to genuine charities? Will the noble Lord agree therefore that a new definition of charities should be introduced to exclude establishments such as Eton, Harrow and other public schools?

§ Lord Brabazon of Tara
My Lords, first let me say that I saw the letter in The Times this morning. I have taken advice on it. It is a fairly complicated issue and I think that there may well be a misunderstanding in it. I am sure that my right honourable friend will take note of the contents of the letter, and I point out that this matter is subject to debate in another place during the passage of the Finance Bill.
As regards the second point raised by the noble Lord, the figure I quoted in my original Answer was the estimated benefit to charities from these proposals, which was £120 million. Regarding the charitable status of public schools, these measures do not allow people to use the payment of fees as a form of charitable status. The legislation would only be applicable to building works or other such things.

§ Baroness Carnegy of Lour
My Lords, following the last question, may I ask my noble friend whether he will ask his right honourable friend to look carefully 133 not only at the possibility that the taxation of some charities may adversely affect large, important and well known charities, but also at the effect on small ones such as parochial church councils?

§ Lord Brabazon of Tara
My Lords, I take note of what my noble friend says and I shall indeed ask my right honourable friend to take those effects into account. Perhaps it would be convenient to write to the noble Lord, Lord Barnett, with a copy to my noble friend, giving a summary of the briefing which I received on today's letter in The Times. I think this will help to clarify a number of points.

§ Lord Lloyd of Kilgerran
My Lords, in view of the answer to the noble Lord, Lord Barnett, is the original estimate of the £120 million that may be available to charities the net sum or is it subject to taxation?

§ Lord Brabazon of Tara
No, my Lords, it will be the net sum, as the tax has been removed.

The Earl of Halsbury
My Lords, as the only member of your Lordships' House who is sporting an Etonian tie this day, and as I have a grandson at Harrow, may I ask for an undertaking from the noble Lord that those two scholastic establishments will not be singled out for discrimination?

§ Lord Brabazon of Tara
My Lords, I must declare an interest too as an old Harrovian and also as having a son down for Harrow, and I can give the noble Earl that assurance.

§ Lord Bruce-Gardyne
My Lords, do not the last question and the question from the noble Lord, Lord Barnett, suggest that the Treasury may have opened something of a Pandora's Box? Is it not probable that there will be considerable problems over demarcation lines regarding entitlement to the VAT concessions and that some of the money will end up in what may appear to your Lordships to be pretty surprising charities? Finally, if the worth of these concessions to the charities is £120 million, can the noble Lord tell us how it happens that loss of tax is only £1 million?

§ Lord Brabazon of Tara
My Lords, the figure of £1 million was the noble Lord, Lord Barnett's; it was not mine. The net worth to the charities is very much an estimate. As I said in my original Answer, it depends on the response from the public. But the actual Exchequer cost, on that sort of basis, we estimate to be £60 million. On my noble friend's other question about opening a Pandora's Box, I believe that, on the basis that the charitable payroll deduction scheme is limited to £100 a year, it is not likely to have the effect that my noble friend describes.

§ Lord Barnett
My Lords, will the noble Lord the Minister accept that the £1 million that I quoted was not my figure? It was the Chancellor's in the Red Book at the time of the Budget.

§ Lord Brabazon of Tara
My Lords, I shall have to look into the figure. I am not quite sure what the £1 million does refer to. It certainly does not refer to any of the figures that I have before me.

§ Lord Jenkins of Putney
My Lords, as the briefing that the noble Lord has mentioned is likely to be of wide general interest, will he find some way of making it more generally available than to the two Members of your Lordships' House in question?

§ Lord Brabazon of Tara
My Lords, I have said that I shall write a letter on the basis of the briefing. Naturally, I shall place a copy in the Library, as is the normal practice.