§ Mr. Colvinasked the Chancellor of the Exchequer what is the net effect on income to charities of the provisions of the 1979 Budget (a) resulting from the loss of deed of covenant income following the reduction in the basic rate of income tax to 30 per cent. and (b) the increase in value added tax.
§ Mr. Peter Rees(a) I regret that information on which to base a precise estimate is not available. If, however, it is assumed that income tax repayments made on account of covenanted income in any one financial year relate approximately to the income of that financial year, the loss in 1979–80 might be of the order of £5 million.
(b) The increase in value added tax could affect charities' income only in so far as they carry on businesses subject to VAT, but the amount is likely to be small. The main effect is on charities' expenditure. I have no reliable information on the additional amount of tax involved.