Second reading of the Small Charitable Donations and Childcare Payments Bill

The Second Reading of the Small Charitable Donations and Childcare Payments Bill 2016 has passed without a division and progresses to Committee Stage. The full debate can be read here and you can track the progress of the Bill here.

The overall consensus among MPs was that it was a well-intentioned Bill, with the removal of the Gift Aid history requirement seen as the main positive, but that more could be done to improve it, subject to concerns about fraud being met. There was also general agreement that more could be done to improve communications about the Gift Aid Small Donations Scheme.

In his speech the Minister for Civil Society noted that the £26m currently claimed each year came from a total of 21,300 charities. He confirmed that there will be a Local Charities Day in December and he hopes that this will be a good opportunity to promote the Scheme. The Government has also published an Impact Assessment for the Bill, which indicates that the Government expects that the changes will cost the Government an additional £15m a year. This is welcome (and should bring the total value of the scheme to approximately £40m), but this is clearly still far lower than previous estimates. The Impact Assessment also notes that the cost of IT changes for HMRC is likely to be £100,000.

One of the main issues debated was the necessity of the matching requirement, under which a charity can only claim on donations ten times the value of donations on which Gift Aid is claimed (the 10:1 rule). The Financial Secretary to the Treasury and the Minister for Civil Society both justified the matching rule on the basis that it a) incentivises charities into the Gift Aid scheme and b) protects against fraud (which is especially important as this is a public spending measure) by ensuring charities are making claims via Gift Aid, a link which was always intended when the Scheme was originally introduced. The Government said it regarded the 10:1 threshold as progressive and not an obstacle to small charities noting that it actually started out  at 1:1 (before CTG and others negotiated a relaxation). Other MPs noted the importance of tackling fraud but questioned whether there was in fact a major risk given the values in question and the other safeguards in place. CTG has recognised the need for a link to be retained between GASDS and Gift Aid, but has questioned whether there needs to be an arbitrary matching threshold and whether simply requiring a charity to have claimed any amount of Gift Aid within a one or two year period, would be a sufficient safeguard.

There was widespread support among MPs for the extension to contactless payments, which was seen as a useful way to future-proof the scheme. There was also a suggestion that this might also be extended to text giving. CTG has been working with mobile operators and charities as part of the Gift Aid and intermediaries project to improve the take-up of Gift Aid on text giving as this is still very low compared to other forms of giving. While we think that there are other ways to better improve take-up (given the the £8,000 donation cap for GASDS), we would welcome feedback from members on whether the inclusion of text giving in GASDS would be desirable as well as any comments about any possible practical implications.

A number of MPs also called for the extension of GASDS to cheques. While we recognise that this could help take-up among smaller charities and those using older forms of giving, CTG has always empathised with the Government’s position that if somebody can take the time to complete a cheque, they can complete a Gift Aid Declaration. It is certainly less impulsive and quick, than throwing coins into a bucket, making a contactless payment or sending a text and moves a long way from the original notion of loose cash collections. We would welcome feedback from members on whether they think it would be helpful change this position and support an extension of GASDS to cheques.

There was only limited reference to the community buildings rules, other than to welcome the wider scope for charities to claim on collections “outside” a community building, within a local authority area. The Government has indicated that uniformed charities and scouts/guides groups could be supported when undertaking bucket collections and fundraising at supermarket bag-packing events etc. While in theory this is welcome it is important to note that top-up payments on collections outside the community building will only be eligible, where there is a community building in the first place. Further work is required to determine how many charities will benefit from this and whether the connected persons rules cause any problems for these types of charities. We are also seeking clarification as to whether a charity claim on collections outside their community building must also meet the requirements in section 7 (1) of the 2012 Act that they run activities 6 times a year with at least 10 people present – if this is the case it could be too restrictive, and we would call for it to apply simply where the charity has an eligible community building.

MPs will next consider the Bill in a Public Bill Committee. MPs agreed a programme motion which schedules the Bill to be considered by a Public Bill Committee. The Public Bill Committee is scheduled in the programme motion to conclude by Tuesday 18 October 2016, but could finish earlier. The membership of the public bill committee will be announced by the Committee of Selection. The earliest this would be is Thursday 14 October 2016. The programme motion also schedules the Report Stage, Legislative Grand Committee and Third Reading to take place over one day.