Small Charitable Donations Bill

The Committee consisted of the following Members:

Chairs: †John Robertson  , Mr Andrew Turner 

† Baldry, Sir Tony (Banbury) (Con) 

Bruce, Fiona (Congleton) (Con) 

Durkan, Mark (Foyle) (SDLP) 

Gilmore, Sheila (Edinburgh East) (Lab) 

† Glass, Pat (North West Durham) (Lab) 

† Hands, Greg (Chelsea and Fulham) (Con) 

† Hemming, John (Birmingham, Yardley) (LD) 

† Jamieson, Cathy (Kilmarnock and Loudoun) (Lab/Co-op) 

† Javid, Sajid (Economic Secretary to the Treasury)  

† Jones, Susan Elan (Clwyd South) (Lab) 

† Lefroy, Jeremy (Stafford) (Con) 

† Macleod, Mary (Brentford and Isleworth) (Con) 

† Mills, Nigel (Amber Valley) (Con) 

† Mordaunt, Penny (Portsmouth North) (Con) 

† Mowat, David (Warrington South) (Con) 

† Mudie, Mr George (Leeds East) (Lab) 

O'Donnell, Fiona (East Lothian) (Lab) 

† Thomas, Mr Gareth (Harrow West) (Lab/Co-op) 

† Williams, Stephen (Bristol West) (LD) 

Alison Groves, Steven Mark, Committee Clerks

† attended the Committee

Public Bill Committee 

Thursday 25 October 2012  

(Afternoon)  

[John Robertson n the Chair] 

Small Charitable Donations Bill

Clause 6 

Charities running charitable activities in community buildings 

2 pm 

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op):  I beg to move amendment 27, in clause 6, page 4, line 10, leave out paragraph (a) and insert— 

‘(a) the sum of the small donations that are made to the charity in the tax year for the purposes of running the charity’s charitable activities from a community building, or’.

This amendment seeks to remove the requirement that donations can only be made in the community building while it is running its charitable activities.

The Chair:  With this it will be convenient to discuss the following: 

Amendment 28, in clause 6, page 4, line 14, leave out subsections (4) and (5). 

This amendment is consequential on amendment 27.

Amendment 29, in clause 7, page 4, leave out lines 24 to 42 and insert— 

7 Meaning of “running charitable activities from a community building” etc

(1) For the purposes of this Act a charity “runs” charitable activities from a community building in a tax year if the activity is of a kind that the charity makes available to the public or a section of the public.’.

This amendment is consequential on amendment 27 and also seeks to amend the meaning of ‘running charitable activities from a community building’ by removing from it the requirement that 10 or more people must be present in a community building on six or more occasions.

Amendment 30, in clause 8, page 5, leave out lines 5 to 8 and insert— 

‘(1) In this Act “community building”—

(a) means a building (such as a village hall, town hall or place of worship), or those parts of it, to which the public or a section of the public have access at some or all times, or

(b) for charities that do not run their charitable activities in a community building, a building (such as an office), or those parts of it, from which a charity runs its charitable activities, but’.

This amendment is consequential on amendment 29 and clarifies that charities that do not run their services in a building that the public has access to, but instead run them outside the building, for example meals on wheels services, are able to benefit from the GASDS.

Cathy Jamieson:  It is a pleasure to have you back in the Chair for this afternoon’s sitting, Mr Robertson. I hope that we will be able to make decent progress. We are coming to areas of the Bill about which concerns

have been raised. As my hon. Friend the Member for Leeds East mentioned earlier, we are now climbing out of the foothills and into the mountain. How far up that mountain we get this afternoon will depend on how many issues members of the Committee wish to raise. We have already had significant debate on areas where the sector wished to see improvements in the Bill. I stress again that we want the Bill to proceed. As I have indicated before, we want to see it come out of Committee in better shape than it came in. 

Amendment 27 and consequential amendments 28, 29 and 30 link to further amendments that will be considered in clause 7. I do not want to get ahead of myself, but I want to make some points relevant to clause 7 so that I do not need to repeat them later. Different organisations have asked questions about how the clauses on community buildings will impact on them and how the proposals will work in practice. A range of groups and charities are involved in community buildings. They run their organisations and provide services from community buildings, and they will want clarity. 

Only this lunchtime I received information via one of my local newspapers that the local authority in my own area intends to change from running premises itself to allowing charities to own community buildings to try to reduce costs. While cost saving is of course to be welcomed, I did note that the council mentioned cost savings in relation to VAT and other taxes, so perhaps that is something that members of the Committee would want to consider before roundly cheering it. 

Some organisations not only will share some connected individuals, as we have already discussed this morning, but may now have to look at how they operate if the changes are approved and implemented. 

I want to make reference to some of the comments made during the public reading stage of the Bill. I have made some critical comments in relation to that process—not about the principle of having a public reading stage and inviting people to comment, which is something that I very much welcome, but about how difficult it was for some people to participate. When we have a public reading stage, we are duty-bound to consider the comments made during that process. The report on the Bill, which came out as a result of the public reading stage and the evidence that was collected and submitted, states in the summary: 

“Clauses 6 and 7 are linked and respondents cross-referred their comments across these, and across a number of subsections...The comments focused not on specific provisions within the Bill but rather on a broader perception that the community building rules are overly complex and are clearly designed to benefit churches.” 

We heard this morning how the churches believe that the proposed changes are helpful to them, but Labour Members have expressed concern that in solving that particular problem, there are potential knock-on consequences for smaller charities. The report continued: 

“Respondents argued that, whilst the rules help provide a fair outcome between these types of charities that have different structures, it means that they are advantaged over other charitable causes who have local groups that do not have the same characteristics and so will not be able to qualify.” 

Collections taken during charitable activities were a particular issue. I know that the Government want to make some changes to the rules on that. They mean

that charities whose beneficiaries come from different constituencies from their donors will not necessarily be able to claim the top-up payments. I am sure that we will have further discussion about that on clause 7. It is important to stress, Mr Robertson—lest you think that I am straying on to clause 7 now—that the issue relates to clauses 6 to 9 of the Bill. People have seen connections between the clauses. They have considered the detail, and made comments about it, but generally they think that overall there are problems with those clauses. 

The Government’s response to the comments in the report makes it plain that in their view the principle rationale for the community buildings rule is to fulfil the original intention of the scheme that each eligible charity should be entitled to a top-up payment on a maximum of £5,000 of small donations. As we have heard, in some situations, without the special provisions that the Government are making, the £5,000 per charity limit would lead to significant unfairness, because similar charitable organisations have chosen to structure themselves differently. Again, we recognise and understand the issues with some churches. 

The Government decided that such a marked difference was unfair. That is stated in the report and it is understandable, but they then decided to define in law what a local group or charity looked like. As I said on Second Reading, the problem is that what makes sense to parliamentary draftsmen when they are getting something on paper is not always the way things operate in the real world and does not take into account the way charitable organisations structure themselves, where, how and how often they meet or how their collections may link in with other activities. I recognise that Members on both sides of the House have a lot of experience as volunteers with charities, perhaps through serving on boards, and also have heard from their local charitable organisations. 

There are problems with clause 6, and the specified amount for charities that run charitable activities in community buildings, and with clause 7, which gives the definition of what is meant by the term “running charitable activities”, which we will come to later. 

I want to consider some of the comments from individual charities and organisations in the evidence-taking sittings. Cath Lee, the chief executive of the Small Charities Coalition, recognised that efforts had been made to consult the sector, but also made the point that many small charities do not generally have the capacity to respond, and did not respond. We have had quite a bit of debate on that. The issue is that many small charities and organisations may not yet be fully apprised of the changes that are about to come in. 

Mr Ian Clark, who has been referred to in debates on earlier clauses, pointed out that charities choose the type of structure most appropriate to their needs. He also pointed out that he sees 

“no a priori reason why the government should want to give an extra benefit to one particular type of charity structure that does not appear in the rest of charity legislation. So fundamentally I see no reason for sections 6 to 9 ‘Community Buildings’ being included in the Bill at all. … As it stands the Community Buildings provisions are likely to create as many anomalies as they cure. Why are buildings where one-to-one or small group counselling take place excluded? Why is a donation in a street collection allowed, but not one inside a shop, supermarket or pub? Why are charity groups that meet in ordinary homes or residential homes (eg nursing homes) excluded? … 

As is evident from the Bill and HMRC’s Explanatory Notes, the CB sections already occupy a disproportionate amount of the scheme, whilst the CB device does not even directly address the underlying problem of local branches.” 

I make those points because it is important to understand the complexity of this part of the Bill and the problems that different charitable organisations and those directly involved have identified. It is our job to assess whether the proposals address those problems. We will hear from the Minister on that later. 

 

John Hemming (Birmingham, Yardley) (LD):  I accept that the shadow Minister is trying to make things less complicated, but the amendment basically states that small donations would be identified by the purposes of the building, rather than by the building. It is relatively straightforward if you have 10 buildings and you have got a box in each building and you can track each box and how much is in each box, but if you have to identify the purposes, you have to have 10 boxes in each building and each one has to be counted separately so that you know the purposes of the donations. Does this amendment not increase the complications? 

The Chair:  I can assure the hon. Gentleman that I do not have any boxes. 

Cathy Jamieson:  I appreciate what the hon. Member for Birmingham, Yardley said and it leads me on to why we tabled these amendments. We do not necessarily believe that we have the wording absolutely correct to help clarify the situation. I have no doubt that the Minister, as the hon. Gentleman has, will come back with a whole range of reasons why the Committee should not accept the amendment, but the alternative to acting positively to improve the Bill and raising these issues would be simply to table an amendment to delete clauses 6 to 9. That would be a bit like saying “if we want to go there, we would not start here”. 

In an effort to be genuinely helpful and improve the Bill, we felt that it was important to probe, to raise some issues and to table amendments that would give us that opportunity, because we may see anomalies where certain types of charitable activity would qualify if they took place within a community building, but would not qualify if they took place outside a community building. We want to ensure that all the donations given for the benefit of the charity or its charitable purposes qualify in that way. 

We have had other comments on these clauses. David Tyler, the chief executive of the National Federation of Community Organisations, said: 

“In many communities, different community groups find it more efficient to share a single building, legal structure (often a community association) and charity number. They may also retain their individual identities for operating purposes and donations can be targeted to the individual groups. As it stands, the Bill may restrict the amounts available to groups that operate in this way.” 

Natasha Parker, a consultant and charity trustee, said, 

“The implementation of this scheme has totally been set up to meet the needs of churches and the needs and set-up of other charities have been ignored.” 

As I said earlier, while I have no wish to unpick the work that has been done on the churches—I can understand why the Government have done it—the knock-on and unintended consequence of it appears to be the creation

of greater complexity for those small charities and organisations that do not have the same resources as some of the larger charities and churches may have to manoeuvre their way through the maze of different activities. Natasha Parker also said: 

“It is not just this clause, but throughout that the scheme seems to have been set up for church collections”. 

That again, I think, refers to clauses 6 to 9 generally. David Israel, a member of the Institute of Fundraising and a long-time fundraiser, commented that the clauses seem 

“to restrict the range of charities that could benefit... If, for example, the charity in question were to raise its funds at one event and deliver its activities at another, this would prevent the funds raised from benefiting”. 

He added that 

“this is without the added complication of where the activity happens.” 

He cited the example of the voluntary work done by his wife as a telephone support counsellor as being no less charitable when done from her home as when done from a charity’s office or in a community building. Charities and other organisations have been telling us about those problems, which we want to probe through these amendments. 

2.15 pm 

I have already referred to Mr Ian Clark. At the opening of his submission, he pointed out: 

“The Bill is complex, more than twice as long as the original Gift Aid legislation, but for only 10% of the financial benefit to charities.” 

That again illustrates that, with the best will in the world, the bureaucracy in relation to community buildings will cause more problems than has been suggested. As I have said, his suggestion was entirely to remove clauses 6 to 9 on community buildings or to re-write the clauses in terms of “local charity branches”. I am sure that the Minister understands that the complete removal of those clauses would not help the charities that we want to see benefit, so we did not think it would be correct to table an amendment to remove those provisions while not replacing them with something positive. 

I again have to tell the Minister that, as in the public reading stage, charities and voluntary sector organisations raised such concerns from the outset. I appreciate that he cannot turn back the clock and re-do the whole process of the consultation about, and the drafting of, the Bill. However, I hope that anything arising from the public reading stage and the involvement of the sector in how the process was organised will be closely looked at in relation to future Bills and future work of such a nature. That would ensure that organisations do not simply make written submissions but are given face-to-face meetings and are genuinely involved in an attempt to solve problems before there is a draft Bill or a Public Bill Committee. As it is, we are left to imagine what different scenarios and solutions there might be, when we could have done more of that work earlier. That links to my comments about guidance, which I hope in future will be developed alongside a Bill going through Committee so that we can feed into the process of drafting it. 

Several commentators have asked for clauses 6 to 9 to be removed or substantially redrafted. One commented that the concepts around community buildings would create additional complexity and cause great confusion for small local charities, which might be dissuaded from participating in the scheme. It continues: 

“The community buildings concepts appear to have been designed to meet the needs of specific charities”— 

we have already mentioned churches, scout groups and those with unusual structures— 

“and these…could be managed in simpler ways. In trying to create ‘fairness’ in some areas it has not just created complexity but it has also created unfairness between different charitable causes.” 

One helpful comment made during the process was that, during the passage of the Bill, we will have to try to improve what we have at the moment, but whether or not a solution can be worked on in the short term, at some point we will have to consider it further in the light of wider charity legislation. However, that is not relevant to these amendments or the Bill. 

One suggestion was that, rather than entirely new legislation and complex regulations on community buildings, it might be easier if HMRC published a list of national and regional bodies with centralised structures that were allowed to claim for each established local branch. For example, for Roman Catholic dioceses, the Salvation Army, the National Trust, the scouts and various other organisations, there might be a simpler way. 

The other issue that was raised was that the concepts of connected charities and community buildings might cause difficulties for smaller organisations, because some of the clauses are thought to be ambiguous and it is possible that branches or offices of some large charities could be classed as “community buildings” so would be eligible for additional top-ups, with the large charities being able to claim much larger amounts of money; that is not really in the spirit of the policy. 

I know that a number of my colleagues want to make particular points about charities and other organisations in their own areas; there are some suggestions about how this Bill will affect such groups. Before I move on to summarise the amendments and allow colleagues to speak, I want to refer back to the Second Reading debate. I think it was the hon. Member for Stafford who asked a question about organisations that rely on street collections. The Royal British Legion, which organises the poppy day appeal, and other organisations may have a combination of community buildings, local branches, street collections and other things. Of course we want to see those organisations benefit—particularly this week, when the poppy campaign is launched—and not have all their time caught up in particularly difficult and complex arrangements, rather than in delivering the service they want to deliver. 

Let me return briefly to the amendments. I appreciate that the Government have also tabled amendments to the clause. As I have said, it has not been easy to find a way to amend what is perhaps the most complex or convoluted—depending on how people want to look at it—section of the Bill. I must say that at various stages I was tempted, although I did not give in to the temptation, to ask for those clauses simply to be removed all together and start again. 

We have tabled a series of amendments that would have the effect of defining the community building amount on the basis of what the donation is to be used for, in other words for the charitable activity run by that charity, and not necessarily in terms of where it was made, for example in a community building itself. If the amendment is accepted, the idea is that a donation could be made anywhere outside the actual community building, but if the charity had the community building it would allow it to tie in the amounts of money that are donated rather than simply the definition of the physical place in which the donation was made. 

Amendment 29 seeks to remove from the Government’s definition of running charitable activities from a community building the requirement that 10 or more people must be present on six or more occasions. We may have the opportunity to discuss that amendment in more detail at a later date, but it is important that we try to make the connections between clauses 6, 7, 8 and 9, because they all fall within that particular section of the Bill. 

We have also tabled amendment 30, which is consequential on amendment 29 but would clarify the position where charities do not run their services in a building to which the public have access but instead deliver them outside the building. We hoped to probe the issues with services such as meals on wheels. 

I said that I did not wish to take up too much time talking about these amendments. There are a number of amendments to other clauses that I wish to speak to in more detail later. On that basis, I ask the Minister to respond to the points that I have made and to understand that we are trying to ensure that these points are raised. As I have said, I am sure that he is going to tell us that there are all sorts of technical reasons why these amendments would not help. I look forward to hearing him say what will help and how he intends to fix the problems that we have identified. 

The Economic Secretary to the Treasury (Sajid Javid):  I welcome you back to the chair, Mr Robertson. Amendments 27, 28, 29 and 30 would fundamentally change the community buildings rule in a number of ways. First, donations would not need to be collected while charitable activities are taking place. Secondly, there would be no minimum number of people carrying out the charitable activities in a community building. Finally, charities that do not run their services from a community building would be able to claim under the community buildings rules. The effect would be to allow small donations collected from anywhere to qualify towards the community buildings amount. The only condition would be that the donations funded the charitable activities or services provided to at least one person from a community building. 

For policy, practical and technical reasons, I will be asking the hon. Member for Kilmarnock and Loudoun to withdraw amendment 27. Later, we will discuss amendment 12, which would enable residential properties to qualify as community buildings and which, together with the amendments we are debating, might add hundreds of millions of pounds a year to the cost of the scheme. I am sure that that is not the hon. Lady’s intention; if it is, I am sure she will not hesitate to explain how she would fund the additional cost. 

I will start by explaining the policy reasons why I cannot support the amendments. By setting out the original rationale for the scheme, I hope to answer many of the concerns that have been raised about clause 6. The purpose of the small donations scheme is to enable charities to claim top-up payments on up to £5,000 of donations. As I and other Ministers have explained, that limit would have disadvantaged some charities. If we had done nothing about the problem, they would have been eligible for hundreds or thousands of times less than other charities that did similar things but were structured differently. We could have left the affected charities to set up thousands of new charities and provided some sort of carve-out for them in the connected charities rules, but that would have been wrong. It would have gone completely against our aim of making the scheme as simple as possible for charities to administer, and thousands of new charities would have increased the administrative burden on HMRC for no good reason. I doubt that Opposition Members or the charity sector would have been happy with such outcomes. 

The community buildings rules aim to reduce the worst unfairness that would have resulted from the limit of £5,000 per charity, while restricting the overall cost of the scheme to an amount that the public purse can afford. We accept that some charities will not be able to benefit from the community buildings rules, but they will still be entitled to the central amount of £5,000 of donations as long as they are not connected with other charities. We have had to draw a line somewhere, and in setting the limit at £5,000 per charity we think we have drawn it in a reasonable place that will deliver the broad underlying policy objective. 

Mr Gareth Thomas (Harrow West) (Lab/Co-op):  The Minister said that some charities will be affected. Does he have an estimate of how many? 

Sajid Javid:  As we have discussed before, because this is a new idea and no previous Government have tried to do anything similar, we cannot be sure how many charities will be affected. We certainly cannot be sure how many charities would be affected by the amendments if they were agreed to, but we think that the scheme would cost hundreds of millions of pounds more. My speech will help to flesh out how we have reached that conclusion. 

All independent charities will be able to claim payments on up to £5,000 of donations collected anywhere in the UK. Many charities have income below £5,000 so they will not need to bother with the community buildings rules at all, because the £5,000 headline limit is enough for them. The only charities that might be concerned with the community buildings rules are charities that are connected with others, which will have access to only a portion of the main £5,000 allowance. Charities that collect more than £5,000 in small donations each year may also want to access the community buildings element of the scheme. We will discuss later the Government amendments, but the community buildings rules we propose would allow eligible charities to collect donations during charitable activities in a community building while those activities are taking place—that is, provided that at least 10 qualifying people are present. 

2.30 pm 

The rules therefore target charities where groups of people from the community come together to carry out charitable activities and where small donations may be collected at the same time. The rule is not designed to give an extra £5,000 allowance to every charity that operates out of a building or has a local branch for each of those buildings or branches. The money collected can be used for any charitable purpose of the charity. For example, a charity running educational activities can use the donations to fund charitable activities in other parts of the country or even overseas. 

The hon. Member for Kilmarnock and Loudoun suggested that multiple charities operating out of a single building might be disadvantaged. I hope I can allay that concern by saying that any number of charities can operate out of a single building. For example, in a local village hall a local women’s institute might meet one day, followed the next day by a community amateur dramatics group and the next by a medical support group. Each of those groups could potentially claim as long as they met the other eligible criteria under the community buildings allowance. I hope that is a helpful clarification. 

Mr Thomas:  The Minister may want to reflect on his example of the women’s institute, many of which are incorporated as industrial and provident societies rather than as charities. If they are community benefit industrial and provident societies perhaps they are covered, but perhaps they are not. We look forward to discussing this issue with him in a separate amendment that we have tabled. I offer him a cautionary note in his use of women’s institutes, given the way that, in my experience, they often choose to incorporate themselves. 

Sajid Javid:  I thank the hon. Gentleman for that intervention. He may well be right. Certain women’s institute groups may not be constituted as charities. It is an opportunity for me to clarify that the groups benefiting from the Bill would have to meet the qualifications. 

Cathy Jamieson:  I want to pick up on one of the points the Minister made about charities that advance education. Following a parliamentary question that I tabled, I was informed by the Charity Commission that more than 84,000 registered charities in England and Wales are classified as advancing education. I was interested to know how many of those would be schools and what the implications would be, but it was unable to give me that information. Can the Minister tell us how many of those 84,000 will be caught by the community buildings regulations? 

Sajid Javid:  The short answer is I cannot tell the hon. Lady which ones qualify. This is very particular to the structure of each charity. It is hard to know offhand how each of those 84,000 is structured. 

Cathy Jamieson:  The Charity Commission has also informed me that the Department for Education’s academies programme has so far created more than 2,300 new, publicly funded independent schools. It explains that the charities that run the schools are exempt from registration regulation by the commission, with the

Department for Education being the principal regulator for the purposes of charities. Some academy trusts run more than one school, so the number of charities is obviously less than the number of schools. Have there been any discussions with the Department for Education of any of Bill’s implications for charitable activities in those schools? 

Sajid Javid:  As the Minister responsible for the Bill, I have not any discussions about it with officials or Ministers at the Department for Education. If the academies that the hon. Lady mentioned meet the Bill’s definition of a charity, nothing will stop them benefiting from the Bill’s provisions. 

Cathy Jamieson:  I am sorry to press the Minister, but if there has been no discussion about whether those 2,300 new schools could benefit, will that be factored into the revised costings? 

Sajid Javid:  Just to make it clear, I have not been personally involved in any discussions relating to the hon. Lady’s issue, but that is not the same thing as saying that it has not been factored in. Again, I hope she appreciates, given the number of charities involved and so on, that it is difficult to factor in how charities will use the Bill’s proposals. There is always an element of estimation. 

Cathy Jamieson:  I absolutely appreciate what the Minister is saying, and I am sure that he will find out whether such discussions have taken place. I recall from a previous debate, however, my hon. Friend the Member for Harrow West mentioning the amount of support that charities would require in order to enable them to take part in the scheme, so I would assume that if these schools and organisations are eligible, the Minister would want them to benefit from the top-up scheme and he or his officials would therefore not only be giving them the information, but also ensuring that that cost was factored into the overall costs allocated by the Government to the project. 

Sajid Javid:  The hon. Lady makes a good point. Regarding educational charities, the hon. Member for Harrow West raised at a previous sitting the issue of schools—both state and private. We want schools, whether represented by parent teacher associations or other educational charities, to benefit fully from the Bill. Obviously, there is only a certain type of school that would want to take advantage of the community buildings rules. They might not apply to many, but every school that has charitable status will have that £5,000 limit before it even has to look at community buildings rules. 

Amendment 27 would require any donations collected to be used on running the charitable activities that are run from the community building. 

Mr Thomas:  I know that the Minister would not want inadvertently to mislead the House, so may I just gently point out that the schools in my example, which contrasts Eton with schools that have PTAs, will not be able to benefit from the Bill? The 84% that are not registered for gift aid will not be able to benefit, and that is one of the great unfairnesses of the scheme. 

Sajid Javid:  The hon. Gentleman mentions Eton again, but he could mention Harrow, with which I understand he is quite familiar. I assume that it has similar charitable activities and status to Eton, so I wonder why he keeps mentioning Eton when he should pick a school that he is more familiar with. He points out that many PTAs are not currently registered with gift aid. In a previous sitting I pointed out that HMRC has recognised that and has tried to get more educational charities—PTAs, schools or otherwise—to take advantage of the generosity of the gift aid scheme. I think that over time more will be able to take advantage of the scheme. 

Pat Glass (North West Durham) (Lab):  I want to clarify whether the Minister is saying that the many thousands of schools that have converted to academy status and are now publicly funded in the independent sector can register as charities and qualify under the gift aid scheme. I am not sure whether the Treasury has budgeted for that. We are talking about thousands of schools. 

Sajid Javid:  That is not what I am saying. I am saying that some schools—state schools, as academies are; state comprehensives, such as the school I went to; or schools such as Harrow, which the hon. Member for Harrow West energetically represents in Parliament—can be a charity in their own right or have a charitable arm and so forth. To the extent that schools are a charity in themselves or have a charitable arm or link, they are able to benefit from gift aid at the moment. If they meet the other eligible criteria, they can benefit from the terms of the Bill. 

Mr Thomas:  Let me be clear: I am a proud representative of all the schools in my constituency, including Harrow. The pupils and staff have noticed the difference in the quality of political representation that they have had—a dramatic improvement since 1997. My point is not to seek to do down our public schools, but to raise up the opportunities for state schools with PTAs that are not currently eligible under the terms of the scheme. It is one of the huge divisions that the Minister is seeking to define that is at the heart of the unnecessary complexity in the Bill. 

Sajid Javid:  That is not a division that I seek to defend. The hon. Gentleman knows that. However, I absolutely agree that, as parliamentarians, we should encourage schools and educational charities to take advantage of the generous reliefs that are available. 

Cathy Jamieson:  I seek some further clarification. I hope the Minister will forgive me for coming from the Scottish education system, which is somewhat different. I seek to clarify what he said in response to a question from me and from my hon. Friend the Member for North West Durham about which of the academy schools would be eligible. The information that I have from the Charity Commission—just to repeat—points out that more than 2,300 new publicly funded independent schools have been created, and are run by academy trusts. Is the Minister saying that all those schools would be eligible? He seemed to imply to my hon. Friend the Member for North West Durham that the ones that had converted

from state to academy would not necessarily be eligible. I seek to clarify that and have the actual truth on the record, so that I understand it. 

Sajid Javid:  First, the hon. Lady seemed to make a distinction between state schools and academies, and academies are state schools. 

Pat Glass:  My understanding is that they are publicly funded, but in the independent sector. 

Sajid Javid:  They are state schools and they are entirely state funded, just as the state comprehensive is state funded, albeit through its local education authority. I am not saying that every academy is a charity. For each school, the situation is different, whether they are academies or Church schools, or schools that one might think of as being in the private sector—private schools that are registered as charities. I am merely saying that to the extent that an academy is a charity and meets the other criteria in the Bill, there will be nothing to stop them taking advantage of the provisions in the Bill. 

Cathy Jamieson:  I am sorry to prolong this, but it is important. I refer again to the letter I received from the Charity Commission. It makes the point that the charities that run these schools—the academy trusts—are exempt from registration. Therefore it is important to get that relationship clarified in terms of what the Department for Education does here and what the Minister intends to do. Is he saying that while the schools may not be eligible themselves, the trusts would be? 

2.45 pm 

Sajid Javid:  I am sorry, but could the hon. Lady clarify that? When she said “the trusts”, what trusts is she referring to? 

Cathy Jamieson:  To be absolutely clear, the letter from the Charity Commission states: 

“In addition, the Department for Education’s academies programme has so far created over 2,300 new, publicly funded independent schools.” 

That clarifies my hon. Friend’s point. The letter continues: 

“The charities that run these schools, Academy Trusts, are exempt from registration and regulation by the Commission; DfE is the principal regulator for the purposes of charity law. Some Academy Trusts run more than one school, so the number of charities is less than the number of schools.” 

I was seeking to find out whether individual schools would qualify or the trusts. That was all. 

Sajid Javid:  My understanding is that the majority of academy schools are charities. Academy schools, as I said earlier, are state schools, in the sense that they are funded by the state. The difference would be that an academy gets funding directly from the Department for Education and state schools are funded by their local authority. Whether the school becomes a charity and what status it has is defined in the Charities Act 2006. It has to meet the requirements of charitable status, which include being for a wholly charitable purpose and for the public benefit. I hope the hon. Lady understands that the debate is not about how certain schools and

institutions achieve charitable status. My point is that if an entity, be it a school, has achieved charitable status and it meets the other terms of the Bill, it can benefit. 

Cathy Jamieson:  Rather than prolong the discussion any further, as obviously the Minister will want to consult the Department for Education, it would be helpful to get clarity on the number of schools and of academy trusts. I do not raise that to make mischief or be awkward. It is a genuine attempt to find out the range of organisations. We have heard from my hon. Friend the Member for Harrow West that Eton could benefit. I simply want to pick up the point that the Minister has made several times about ensuring that every possible organisation benefits. I simply wanted to understand that better. If the Minister would undertake to give us that information when it is available, that would be helpful. 

Sajid Javid:  The hon. Lady referred to a letter from the Charity Commission. If she would like to share that letter with me later, I would be happy to take that on board too and try to answer her questions. 

Cathy Jamieson:  I would be happy to share the letter, which resulted from a parliamentary question that the Minister answered, for which I was very grateful. 

Sajid Javid:  Amendment 27 would require any donations collected to be used on running the charitable activities that are run from a community building. That means that donations collected in a church service could be used to fund the repair of the church steeple but not to fund a food bank charity organised in the village hall or the building of a school in Africa. That is very restrictive, and I am sure that the Opposition would not intentionally support such a parochial approach.

Amendment 29 would remove the need for a quorum of beneficiaries to form a group in order for a building to be a community building, so any building used by a charity for charitable purposes in which the public may be involved would qualify as a community building. Amendment 30 would remove the requirement for the charitable activities to be carried out in the community building, which would mean that a charity that delivered its services to a single member of the public in their home could treat the charity’s local administrative office as a community building. 

Hon. Members have eloquently expressed their concerns about the administrative burdens that the new scheme might place on charities, but here they are inventing new record-keeping requirements. Charities would have to prove that the donations they collected were used to fund the specific charitable activities that were run from a specific community building. I can well imagine the future complaints of hon. Members and charities about the administrative burden that that had placed on charities. 

Increasing the number of community buildings by including any building to which a single member of the public has access will increase the costs of the community building rules massively. As a result, we would have to revisit and reduce, perhaps significantly, the maximum amount of £5,000 per charity to keep the cost of the

scheme within its current envelope. I am sure that charities would not welcome that, and I am sure it is not the Opposition’s intention. 

Amendment 28 would remove the definition of “remaining amount” from clause 6, which tells charities that meet the community building rules how much they can claim in total. The remaining amount is, in fact, the £5,000 headline amount of small donations on which any charity can claim. Unfortunately, the amendment would remove that definition, so who knows what the remaining amount that is referred to in subsection (2)— which the Opposition do not suggest should be amended—might possibly be? How will a charity with a community building know whether it can claim on more than just donations used to fund charitable activities from a community building? 

In summary, the amendments are not practical; in many places they would not work; and where they might work, they would require charities to keep massive amounts of records. The amendments would turn the policy objective behind the community building rules on its head. We designed the rules as a limited concession to help smooth out some of the worst discrepancies that the £5,000 limit on small donations would cause, but the amendments would make community buildings the rule rather than the exception for most charities. That would make understanding the rules far more complex for many charities, and it would increase their administrative burdens. The cost of the scheme would increase significantly, so we would have to reduce from £5,000 the maximum amount of small donations on which charities can claim top-up payments. 

Large charities that are currently limited to the £5,000 maximum would be able to show that they have thousands upon thousands of community buildings providing services to individual members of the public, which would result in a massive shift of payments under the scheme from small charities to the largest ones. The only way in which we could control those costs would be to cut the headline £5,000 limit for all charities. That would hit the smallest charities hardest, which I do not believe is an outcome that anyone, including the hon. Member for Kilmarnock and Loudoun, is trying to achieve. 

I am sure that the purpose behind the amendments is well intentioned, but their impact has not been properly thought through, so I urge the hon. Lady not to press them. 

Cathy Jamieson:  I thank the Minister for the information that he has given us during the debate. As I said at the outset, we were aware that there were difficulties with the amendments. We found it difficult to find a way of amending and simplifying what was already a fairly convoluted set of clauses. It was important, however, that we had that discussion and it was also important that we were able to get on record the concerns of those charities and organisations that felt that clauses 6 to 9 should be completely deleted and redrawn in some other way, perhaps through new clauses or an entirely different scheme.

I do not intend to press the amendments to a vote and I do not intend to take up time going over points that I have already made. I am sure that neither you, Mr Robertson, nor members of the Committee would welcome my doing that. I have to express some concern,

however, about some of the Minister’s comments in his winding-up speech. He seemed to suggest that the £5,000 limit people could look to in relation to community buildings would have to be reduced if the overall cost of the scheme grew. I am willing to take an intervention from the Minister if I misheard that, but it links back to the points that we have consistently made during our discussions in Committee: we do not have a proper estimate of how much the scheme will cost, we have not seen the workings, and we have not seen the basis on which the costings are made. During the course of the discussion of these amendments, we have remained unclear, yet again, about whether 2,300 schools or other organisations will be brought into the scheme. The Minister does not appear to want to clarify, so I take it that if more people join the scheme around the community buildings provisions, that limit could be reduced. 

Sajid Javid:  I am happy to issue clarifications where I can. The hon. Lady’s amendments, for the reasons that I have tried to articulate, would mean that the cost of the scheme could rise dramatically if nothing else was done, because many more charities would be able to access the community building rules—perhaps thousands. She knows that the intention of the community building rules is to deal with an unfairness that was clear from day one in relation to how certain charities are organised. One of the examples that came up in the evidence session was how, for example, the Church of England is constituted versus how the Roman Catholic Church is constituted in this country, and such differences could have led to unfairness. Given that the Government have attached a specific spending envelope, which we have discussed many times, to this scheme, it is prudent to have cost control. I am sure that she agrees. If these amendments were agreed, it would inevitably mean, because more charities would try to claim, that the £5,000 limit would have to change downwards. 

The hon. Lady also asked about how many charities might access the scheme and the total cost of the scheme. 

The Chair:  Order. That is a very long intervention. 

Sajid Javid:  Sorry, Mr Robertson. I think I have tried to answer the question and perhaps as we progress we can come back to this issue, if the hon. Lady wishes. 

Cathy Jamieson:  Thank you, Mr Robertson, and thank you to the Minister for giving part of the answer. We may want to return to the issue. My intention in tabling the amendments was not to expand the scheme to an unsustainable point; it was to probe issues around unfairness—the very point that the Minister raised. The amendments, by solving the problem identified at an early stage by the churches and some of the other organisations in relation to their structures, would ensure that we do not put in place a scheme around community buildings that causes problems for other charitable organisations, particularly smaller charities. To be fair, I think the Minister understands that, but I remain concerned about the costing. 

On the one hand, we all appear to agree that we want every possible charity to take up the opportunities offered by the Bill in ensuring that they get the top-up

payments, but on the other, I understand the Minister to be saying that there is an overall cost envelope, so if one thing increases, something else may have to reduce. That is the first time that we have heard that in Committee and we may need to probe that further. I am sure I will have the opportunity to do that when the Minister moves amendments later. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.  

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Sajid Javid:  I beg to move amendment 4, in clause 6, page 4, line 11, after ‘year’ insert ‘by group members’. 

See Member’s explanatory statement for amendment 6.

The Chair:  With this it will be convenient to discuss Government amendments 5 and 6. 

Sajid Javid:  Government amendments 4, 5 and 6 are intended to restrict the donations collected in respect of community buildings to those donations that are collected in the course of the charitable activities carried out in a community building. We have already debated community buildings, but it is worth repeating the policy objective behind the community building rules before I move on to explain why the Government have tabled these amendments. 

The purpose of the small donations scheme is to enable charities to claim top-up payments of up to £5,000 of small donations each year. As I explained earlier, however, that limit would have disadvantaged some charities. They could have been eligible for hundreds or thousands of times less than other charities doing similar things, simply because of the way that they are structured. The community building rules are therefore aimed at reducing the worst unfairness that the maximum £5,000 donations per charity rule would have brought. At the same time, the aim is to keep the overall costs of the scheme to an amount that the public purse can afford. 

We listened to the concerns that were expressed on Second Reading by a number of hon. Members. Some raised concerns about the potential unfairness to some charities that use commercial buildings, which are currently excluded from the community building rules. Some charities are offered the use of rooms in hotels or offices for their charitable activities, for example. We accepted that the community building rules could be loosened to allow certain commercial buildings to qualify as community buildings, and we have tabled amendments 11 and 12 to do just that, and we will be debate them in due course. 

However, those amendments cannot stand alone. Extending the community building rules to commercial buildings will inevitably increase the cost of the scheme. We need to balance the increased costs of loosening the rules, so amendments 4, 5 and 6 ensure that only those donations collected from group members during the charitable activities qualify as small donations under the community building rules. I understand the keenness of charities to be able to access top-up payments on more than £5,000 of donations, but the community building rules are deliberately framed narrowly. They aim

to smooth out the worst unfairness of the basic rule that each charity will be entitled to payments on up to £5,000 of small donations. 

Mr George Mudie (Leeds East) (Lab):  In layman’s terms, so that small charities actually understand the ground rules, the community building arrangements have been introduced in the Bill to suit, for example, churches that are at a disadvantage because of their different structures. It is not aimed at helping smaller charities. The processes in this part of the Bill are designed to prevent small charities from taking advantage of the second £5,000. It is a fraud in terms of holding out the chance to a small charity of actually ever attaining that £1,250 by raising the additional £5,000. 

Sajid Javid:  The hon. Gentleman has said a lot in our sittings with which I agree, but if he will allow me, I will have to disagree with him wholeheartedly on this occasion. He is right in one respect, in that Churches are one of the groups most affected by community building rules, so if the rules did not exist, it is fair to say that the Church of England, for example, would have a huge issue with that. In trying to answer his question, it is best to explain why the Church of England would have such an issue. The Church of England, by contrast with the Roman Catholic Church, is often structured as a small number of registered charities in each parish, for example; the Roman Catholic Church is structured differently, as what we might call a branch network. To correct myself, therefore, in the context of Churches the Roman Catholic Church would be the one to benefit most from the community buildings rule. However, one should not think of each of those branches of the Roman Catholic Church as not being small charities, because in their own village or community the local parishioners would view them as— 

Mr Mudie:  I thank the Minister for allowing me to intervene because it might save the Committee some time. I totally accept the basis for the changes in terms of the Churches. That is not an issue; I think they do the job well. In the same part of the Bill, however, there is an allusion to small charities being able to gain, but that is an illusion. The Minister may drop the Church part of the explanation, but can he tell the Committee who is actually able to contribute a donation that counts as part of the sum for getting the community building £5,000? 

The Member’s explanatory statement for amendment 6 suggests that the donations have to be 

“collected from persons with whom the charity is carrying out the charitable activity.” 

In other words, if 10 Alzheimer’s patients were in a room being looked after and encouraged, they would be the only people in the room who could contribute to the charity. In the explanatory notes for the Bill, that point is made exactly with reference to a medical charity, the phrase being: 

“from attendees during the meetings.” 

Can the Minister clarify that? 

Sajid Javid:  Yes, I happily will. The hon. Gentleman asked who can benefit from the collections in community buildings— 

Mr Mudie:  No, who can contribute. 

Sajid Javid:  Okay. I will answer that question now. The contributions made by any group member carrying on the charitable activity will count towards the £5,000 limit. A group must include at least 10 people who are beneficiaries of the charity when carrying out the activity, as discussed, but donations from any other people present will count as small donations under the scheme. 

Mr Mudie:  The Minister will agree that, according to the Bill documents, if other than the recipients of the charitable activity make a donation it is not counted for the community building part of the scheme, it is used as the other part—the other £5,000. 

Sajid Javid:  To clarify, if a charity is using this part of the Bill—the community building rules—and assuming it meets the other criteria of at least 10 people being present in the community building when the charitable activity and the collection are taking place, then there will be 10 people who are beneficiaries, but the donations of anyone else who is present and making contributions count towards the £5,000 limit. 

Mr Mudie:  Can the Minister tie that up to the penultimate and last lines in his explanatory statement on amendment 6? He stated: 

“for the purposes of clause 6 unless they are collected from persons with whom the charity is carrying out the charitable activity.” 

In other words, the poor gentleman or lady with Alzheimer’s who is the recipient of the charitable activity is the only person who can make a donation. 

Sajid Javid:  The position is as follows. When the donations are collected there must be at least 10 qualifying people there—these are beneficiaries of the charity. If there are another five, six, 10 people who are making donations—who are not the people, to use the hon. Gentleman’s example, suffering from Alzheimer’s—those donations will count. The 10 people rule concerns the beneficiaries who must be present in that community building. 

Cathy Jamieson:  My hon. Friend the Member for Leeds East has got to the nub of this problem. It is not entirely clear to me who else would be there other than the beneficiaries. There is also a danger that this conflicts with the HMRC guidance on benefits received by donors, particularly section 3.26.3, which states: 

“A benefit is ‘associated with a donation’ if it is received by the donor or a connected person in consequence of making the donation. In other words, there has to be some connection between the fact that the donor has made a donation and the benefit being received.” 

If the people with whom the charitable activity is being carried out are also the donors, is there a problem under the terms of the HMRC guidance? 

Sajid Javid:  I do not think there is a problem. The hon. Lady will know that even with the gift aid system, the system that complements this scheme, it is possible for a charity to give a limited amount of benefit to someone who is making a gift aid donation. I do not believe it conflicts with this. 

Mr Mudie:  Perhaps the Minister can receive confirmation from elsewhere that, in terms of the £5,000 relating to the community building, persons other than those who are in receipt of the charitable activity can make a donation and that that will count as part of that sum. Does a staff donation count? Does a public donation count or does that siphon sideways into the other £5,000 which is not the community building fund? Who can make a donation? What class of people other than the recipients can make a donation that counts? 

Sajid Javid:  During the charitable activity in the community building there need to be at least 10 people present who are beneficiaries of the charitable activity. If that condition is met, notwithstanding other provisions of the Bill, donations made by anyone else present will count. I hope that is clear. 

Cathy Jamieson  rose—  

The Chair:  Order. The Minister is speaking to the amendments. Contributions can be made later. 

Sajid Javid:  I will therefore commend the amendments to the Committee. 

Cathy Jamieson:  That was timely. Perhaps I will start off with the point on which the exchanges between the Minister and my hon. Friend ended. One of the issues raised during the public reading stage, on Second Reading and in the evidence session was who the recipients of the charitable activity would be and who could make those donations. My hon. Friend outlined exactly what the problem would be in many circumstances. There could be many groups and organisations that are perhaps supporting vulnerable members of the community. My hon. Friend suggested it could be an Alzheimer's group, a carers’ organisation or a group supporting vulnerable children. I am sure we could all identify possible groups. I certainly hope that we have moved away from the days when charitable works were something done to other people by the great and the good, who gathered around, made donations and did good works. I therefore appreciate the point about the recipients—the 10 members or whoever—being present, but I am still not entirely clear who else will make up the numbers in putting donations into boxes in relation to the types of charitable activities carried out in the real world. 

3.15 pm 

There may be circumstances in which 10 members of an Alzheimer’s group are in a community building where other charitable work is being done and other people are present. However, for many charitable organisations that support people, that will not necessarily be appropriate, so they may not be able to benefit, which again highlights the nub of the problem with this set of clauses. 

We have attempted to solve the problem involving the Churches, and the Minister has provided much information about why the provision is necessary. None of us is saying that that is not how it should be done. Indeed, we welcome it and say, “Good work and well done” to the Churches for securing it and the benefits arising from it. However, we are concerned that the provision will make

it more difficult for many charities that support the most vulnerable people to take advantage of the scheme. That does not seem to meet the fairness test, or to deal with the unfairness that the Minister mentioned. 

Particular concerns need to be addressed, and I know that some of my hon. Friends want to refer to organisations and problems in their communities, so I will not speak further until they have had an opportunity to do so. 

Pat Glass:  I want clarification about the amendments, particularly in relation to charities running charitable activities in a community building. In the evidence sessions, concerns were raised about the problems that might be caused for a wide range of charities. Several organisations were mentioned, including the Alzheimer’s Association and the Red Cross, that have community buildings and offer support and services, but do not necessarily raise funds while running activities and have donors and beneficiaries who are quite separate. 

The provision will undoubtedly benefit a wide range of organisations. In particular, I appreciate that the Churches will do well—perhaps I should declare that I am a practising Catholic, and that I am therefore pleased that the Roman Catholic Church will benefit—but others will apparently be excluded. Will the Minister please therefore clarify what is meant by 

“charities running charitable activities in community buildings”, 

and will he provide practical examples of that? 

Many beneficiaries of charity are not in a position to make donations, and it would be inappropriate to ask them to do so. I accept that the issue is about the figure of 10 people—we have already discussed who the others would be—but the circumstances in which charities fundraise while carrying out charitable activities are limited. The very nature of fundraising is highly dependent on the types of activities and organisations. For many if not most charities, beneficiary and donor groups are likely to be two separate constituencies, and that should not be a discriminating factor in whether a charity can access the scheme. 

In the evidence sessions, we heard that, although the scheme will support large charities and the Churches, it is most likely to disadvantage small charities and groups that work with the most vulnerable and disadvantaged people. I am thinking particularly of charities such as the People’s Kitchen in Newcastle, which fundraises with one constituent group but provides food in community buildings to a quite separate group. It would be inappropriate for the charity to charge or to ask for donations from those it is helping, so it appears to be the kind of charity and vulnerable group that could not access the scheme. Having heard the Chancellor’s original reference to the scheme in the Budget, I cannot believe that he intended to exclude such groups. 

I have some sympathy with the Minister and I can understand his frustrations. I have been in his position, not in Parliament but in other circumstances. He is introducing a scheme that will provide tax relief for charities, and instead of being grateful for what is being offered and shutting up, we appear to be carping and harassing him constantly, like Oliver Twist asking for more. However, the good intentions of the Bill may have been lost in the drafting, and it has become less about delivering good works than about preventing fraud, so I am not sure that we have got the balance

right. Even if the prime purpose were to prevent fraud, I cannot understand how the Government amendments would help. 

I have a number of questions. Does the Minister accept that elements of the Bill could lead to the exclusion of smaller charities that support vulnerable and disadvantaged people? I know that he said that he does not know how many charities would be excluded or affected, but I think he really ought to find out. It would appear that the People’s Kitchen in Newcastle will not benefit from the scheme but the King’s school, an independent school that is run by a charitable trust and has recently become an academy—the Department for Education has wiped out the school’s £2 million debt—would benefit. It is important for the Minister to find out who and how many would not benefit. Does he recognise that not all independent groups are linked with a building, and that in supporting and helping some charities the Bill would exclude others? Was that the intention, or was it simply an unfortunate consequence of the drafting? 

The Chair:  Before I call Mr Mudie, I will say that I know there is a bit of overlapping with other clauses, but I do not expect repetition in debates on those other clauses. 

Mr Mudie:  Now that some time has passed, I simply want to ask the Minister to explain the explanatory note. The church issue has been dealt with, but the Bill goes on to provide hope to small charities that they can get £1,250 if they collect £5,000 from tins, and that if they collect £5,000 from their activities in the community building they can get another £1,250. Will the Minister be absolutely clear as to how they can raise the second £5,000 in a community building so that they can benefit by £1,250? 

I would like to put on record the fact that Government amendments 4, 5 and 6 will prevent small donations collected in community buildings from counting towards the community building amount. In other words, donations will not qualify for the second £5,000, for the purposes of clause 6, unless they are collected from persons with whom the charity is carrying out the charitable activity. I am just a layman, and that is layman’s language. If we take the minimum criteria of 10 people meeting on six occasions to raise £5,000, how much would each individual—they do not have to be the same people each time—have to pay? Amendment 7 will prevent a charity from asking those people for a donation or an entry fee as they come through the door. Once they are inside, if they want to benefit the charity that is helping them, they seem to have to pay a vast amount of money. I may be misreading the explanatory notes—I am just a layman—but we need an explanation because it seems that only recipients of the charity can contribute, which seems to spell out that small charities cannot succeed. 

To be fair, the Minister made it clear that the amendments in the first group that we discussed after the lunch break were designed primarily—he may dispute that word—for religious bodies; for when people come to church with plenty of money and put it in the plate. They were not designed to allow small charities to take advantage of the provision because that would be too financially

difficult for the Government—just an open cheque. It would be better to spell that out so that people do not even dream. 

Sajid Javid:  Unlike other amendments that we have tabled, this group tightens rather than loosens the community buildings rules. We have tried to be as generous as possible on relaxing those rules, and I will explain in a later debate how we are doing that. As we are loosening some of the rules, we must be careful not to increase the cost of the scheme considerably, so to counterbalance some of the amendments that we will come to, I have tabled the group before us. 

The hon. Member for North West Durham asked some good and fair questions. To make sure that it is absolutely clear, I want to point out that there is a limit of £5,000 on donations for every single charity, so the vast majority will not come into contact with the community buildings rule, and those that do—we have heard examples today—will be structured in a particular way. 

I mention that because the hon. Lady gave a couple of examples from her constituency. Those charities may already be at or under the £5,000 limit in terms of small donations—we are talking about the small donations element, and they may benefit from gift aid and so on—and that limit may be adequate for them. It applies to every charity, whether its activities are in a house, a community building in the high street or wherever. The community buildings rules are relevant only for certain charities that are structured in a particular way. I urge the hon. Lady to bear it in mind that some of the issues she is concerned about might not be relevant to some of the charities she has in mind, although I cannot be sure of that because I do not know enough about the individual charities. 

The hon. Lady asked for further clarity, which was fair, and I will provide it by way of examples. That may at the same time help me to answer the question asked by the hon. Member for Leeds East, who touched on a similar point. The hon. Lady asked about the definition of charitable activities, and I will give an example that might illustrate that. 

A few months ago, I went to speak to an important annual gathering in a community building organised by a charity, the Macular Disease Society—the hon. Lady may be familiar with it—which has a local group in my constituency. The gathering was in a local town hall, and some of the people in the room were, sadly, suffering from that disease to various degrees. Some of the people were direct beneficiaries of that charity’s excellent work, but a number of people were there who, like myself, do not suffer from that disease. They might have pushed a wheelchair for someone or might have been helping to make someone a cup of tea, but they were not beneficiaries of that charity. 

3.30 pm 

Money was raised on that day. I made a small contribution, along with virtually everyone who attended. I am fortunate enough not to have that ailment, but under the rules that we are considering, such donations, from people who are not directly suffering from that disease—this happened before the Bill but it counts as a hypothetical example—would count as long as at least 10 people who were beneficiaries of that charity were

attending. More than 10 such people were at the event that I attended. What activities were there? There was a video about the disease, both for people who did not know much about it and for people suffering from the disease, letting them know how they can help themselves and how their partners can help them. There were exhibitions of glasses to help people with reading, driving and other things. Self-help leaflets were available and medical experts were on hand to help explain how to live with the disease. Charitable activity was taking place. I hope that that real-life example goes some way to explaining how I see the Bill working. 

Let me provide another example to illustrate this important issue. I mentioned it to officials to ensure that even I understood correctly. WaterAid is an excellent charity that I am sure many hon. Members know about. It is fair to say that the key aim of that charity is to help supply clean water in countries outside the UK, in Asia and particularly in Africa. One could say, “If that group meets in a community building, clearly it is not building wells and things in some part of Durham” and that would be right. But even in that example, at the meeting the group would not be engaged purely in fund-raising activity. The charity’s aim is not just to build wells but to educate people about what is going on in Africa in terms of the need for clean water, and so forth. The group would be engaged in activity that met its charitable charter, educating people who have gathered about the need for clean water and spreading word about its cause. People taking part in education, watching videos, listening to speeches, and so forth, are taking part in charitable activity. That is just an example. Each case will be different, but such activities can count, too. 

Pat Glass:  If, instead of simply making food, delivering it and feeding people in a community building or on the street, The People’s Kitchen was also providing them with education, such as advice on how to keep themselves warm—many of them are homeless and living outside—or on what kinds of food they should be eating, would donations collected there qualify under the scheme? 

Sajid Javid:  My reading of the Bill is that that is so, as long as charitable activity is taking place when the group is meeting in a community building, including education about one of its aims. The aims of every charity are included in its charter. To take the hon. Lady’s example, if one of the charity’s aims is to help people with food—getting food to vulnerable people who need it—and another aim is to educate people, including donors, about the need for and importance of doing that and the benefits it brings, that should qualify. That is my view. 

Each case is different. A lot of eligibility criteria need to be met. I do not want to say that every charity will almost certainly always qualify, but I hope that my answer has helped to clarify her concern. 

Cathy Jamieson:  I appreciate that the Minister is trying to be helpful by explaining the circumstances in which groups would be eligible, but does he accept that even the examples that he has given do not cover some of the organisations that raised concerns? For example, if a charity supports vulnerable children and the young people meet in a community building, it would be inappropriate to have a range of other activities going

on while the recipients of the charitable activity were present. People were concerned that such an organisation would lose out as a result of the measure. 

Sajid Javid:  Even in the example that the hon. Lady has given, that organisation, as long as it is a charity, would have its £5,000 limit. If I understood her correctly, I think she is saying that when the organisation is actually engaging in part of the charitable activity—a meeting of vulnerable children in the community building—that would count. The point is that it is not a fundraising meeting. They are not getting together to fundraise. It is a pure delivery of the charity activity, but if that charity is fundraising, it can take advantage of its £5,000 limit. 

Remember that it is a £5,000 limit per charity. It is important to note that many charities will not have to come into contact with the community building rule. For the way in which most charities are constituted and the way in which they collect, the £5,000 limit may be enough. Also, for example, if they have bucket collections in the high street—clearly that is not charitable activity, but it is an important way of fundraising—that counts, because it is not coming into contact with the community building rule. 

I know it will concern some charities—I have heard the points that hon. Members have made—but we need to control the overall costs of the scheme. I therefore commend the amendments to the Committee. 

Amendment agreed to.  

Amendment s made: 5, in clause 6, page 4, line 20, after ‘year’ insert ‘by group members’. 

See Member’s explanatory statement for amendment 6.

Amendment 6, in clause 6, page 4, line 21, at end insert— 

‘( ) “Group member”, in relation to a charitable activity run by a charity in a community building, means a member of the group of people with whom the charity is carrying out the activity.’. —(Sajid Javid.)

This amendment, and amendments 4 and 5, have the effect that small donations collected in community buildings do not count towards the “community building amount” for the purposes of clause 6 unless they are collected from persons with whom the charity is carrying out the charitable activity.

Clause 6, as amended, ordered to stand part of the Bill.  

Clause 7 

Meaning of “running charitable activities in a community building” etc 

Sajid Javid:  I beg to move amendment 7, in clause 7, page 4, line 26, leave out from ‘if’ to ‘(and’ in line 28 and insert ‘, on 6 or more occasions in the tax year— 

(a) it carries out a charitable activity with a group of people in the community building, at least 10 of whom are in the class of people for whose benefit the charitable activity is being carried out,

(b) the activity is of a kind that the charity makes available to the public or a section of the public, and

(c) none of the group is required to pay to access the building, or the part of the building, in which the activity is carried out;’.

This amendment alters the definition of “running” charitable activities in a community building so that, in particular, the activity must be of a kind made available to the public and none of the group may be required to pay for access to the building or the part of the building.

The Chair:  With this it will be convenient to discuss Government amendments 8, 9 and 10. 

Sajid Javid:  The amendments change the community buildings rule in two ways. Amendment 7 makes it plain that in order to qualify as a community building, entrance to the building or the part of the building in which the charitable activities are taking place must be free of charge. Amendments 8, 9 and 10 change the rules to allow anyone to count towards the quorum of 10 people constituting a group, provided they are attending the activities in their capacity as a beneficiary of the charity. It even applies if they are a trustee, employee or other officer of the charity. 

In our debate on the last group of amendments, I explained that extending the community building rules to commercial buildings would increase the cost of the scheme. Restricting donations to those collected during the charitable activities helps to limit any extra costs, and so does amendment 7. 

I appreciate that some charities that had expected to benefit from the community building rules will be disadvantaged by the amendment. I do regret that those charities, such as the National Trust, will no longer be able to access so much under the scheme. However, I have to look across the whole charity sector and keep in mind the policy objective behind the small donations scheme and the community building rules. 

To recap, the Government want charities to benefit from top-up payments up to a maximum of £5,000 of small donations. The community building rules are being introduced to deal with the most significant unfairness that this basic policy objective might bring. It will be up to each charity that charges an entrance fee to decide whether it would be more beneficial to lift the entry charge in order to benefit from the community building rule. 

Turning to amendments 8, 9 and 10, the original policy consulted on in the spring excluded anyone working for the charity from counting towards the minimum number of 10 people constituting a group under the community building rules. This rule was included to prevent abuse of the rule. However, we adjusted the rules to meet concerns raised in responses to the consultation. That meant that volunteers who were also beneficiaries of the charity could count towards the group of 10. However, stakeholders told us that those adjustments did not go far enough. We have therefore tabled amendments 8, 9 and 10 in response to concerns raised at public reading stage and on Second Reading. 

Some charities are structured in such a way that all officers are also beneficiaries of the charity, so they would not have been able to benefit from the community building rules. We think it is fair that trustees, employees and other officers attending charitable activities in their private capacity as beneficiaries of the charity should count towards the group quorum of 10. 

I appreciate that amendment 7 is likely to disappoint some charities, but I hope I have explained why it is needed, and that hon. Members will welcome the effect of amendments 8, 9 and 10. I therefore commend all four amendments to the Committee. 

Cathy Jamieson:  The Minister has briefly and succinctly set out what the amendments mean and do. It will be interesting to hear the comments of some of my

hon. Friends and perhaps some other hon. Members on the particular issue of the National Trust. I will come to that in a moment. 

I will briefly go through each of the amendments. As the Minister said, amendment 7 

“alters the definition of ‘running’ charitable activities in a community building, so that in particular, the activity must be of a kind made available to the public and none of the group may be required to pay for access to the building or the part of the building”. 

The Minister seemed to suggest that certain charities might have to think about whether to lift entry charges in order to qualify for this top-up under the community building rule. That is perhaps the first time we have heard the Minister make that point. I am interested to hear of the types of activity or situation to which he refers. There are a number of charities and organisations, such as community amateur sports clubs—which we have not been given a huge amount of time to debate—where there would be subscriptions or entry fees. For clarity I would like the Minister to consider the scenario of a community amateur sporting organisation meeting in a leisure centre to which there is a general access fee. It would be helpful if the Minister could talk about that kind of situation. 

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The original clause said that there must be 10 or more people in the building, but it did not necessarily specify what kind of people they would be. The amendment changes that to state that at least 10 of the people needed to be 

“in the class of people for whose benefit the charitable activity is being carried out”. 

I will not repeat the concerns that have been raised in previous clauses, but the amendment also states that 

“none of the group is required to pay to access”. 

During the evidence session, the National Trust said that it wanted us to look carefully at the amendments because under the original provisions, it was expecting to be able to take advantage of the scheme at a number of the visitor properties. It expected to engage with visitors as part of that process. It might have been doing educational work or whatever in the way the Minister suggested. The most recent change, encapsulated in these amendments, to exclude the properties where the visitor has to pay some entrance fee, would obviously exclude a number of its properties. The National Trust is concerned that although some properties could still qualify, it would be a much smaller number, and it was very disappointed with the amendment. 

Since those disappointments were expressed in the evidence session, has the Minister had any face-to-face discussion with the National Trust about the implications of such a change? How many properties are affected? How much, in monetary terms, does the National Trust fear that it will lose, given what the original intention was going to be? Given that it did flag up its concerns during the evidence session, it would be reasonable to expect the Minister to have considered the matter. 

Amendment 8, which the explanatory statement makes reference to— 

Mr Thomas:  I should declare an interest as a member of the National Trust. Before my hon. Friend gets into the meat of her speech, one of the properties owned by

the National Trust, as opposed to English Heritage, which will benefit under the Bill, is Hughenden manor, the home of Benjamin Disraeli, author of that one-nation concept which we, on the Labour Benches, believe in. Does my hon. Friend agree that the Minister’s amendment further proves how far his party is moving away from that concept? 

Cathy Jamieson:  I thank my hon. Friend. It certainly proves that as far as English Heritage and the National Trust are concerned, they are not in it together in terms of a one-nation approach, which the Government may wish to promote. I do not want to continue on that divisive note with the Government because I want to be, as always, consensual and helpful and try to move towards solutions. My reason for asking the Minister about those discussions was to see whether there was any scope for ensuring that there was some parity between English Heritage and the National Trust in the context of the Bill. I am interested to hear what has happened in relation to that. 

Under amendment 8, the staff of a charity can count towards the group of 10 or more people required for the charity to be running charitable activities in a community building so long as the staff are beneficiaries of the activity. Again, what I was seeking to do, and I hope that someone will take a note of this so that the Minister will be able to respond more fully when he returns to his place, is to get a bit more information from the Minister on exactly the types of situation that he would envisage in which staff would be involved in that group of 10, which is also benefiting from the charitable activity being run in the community building. Although I ran a Scotland-wide charity, and was therefore a member of staff, have been a volunteer with several charities, have been involved in a whole range of organisations for children and young people, including running activities as part of a wider charity, as referred to by my hon. Friend the Member for Harrow West when he was discussing the Scouts and the Guides, and, of course, was a member of and ran a Woodcraft Folk group in my earlier years, I must confess that I am trying really hard to envisage the circumstances in which a member of staff, as part of that group of 10, would be a beneficiary of the charitable activities unless the Minister is drawing a very wide definition of what beneficiaries means. 

Penny Mordaunt (Portsmouth North) (Con):  One example springs to mind. I was a director of Diabetes UK, which, as well as providing care and support to diabetics of all ages, has a charitable remit to supply education for both patients and health care professionals. The hon. Lady alluded to the fact that she was involved with organisations that work with young people and children. Diabetes UK relies on specialist diabetes nurses attending their summer camps to enable children to learn how to inject themselves and so on. It provides the health care professionals with the education that they need to go on and become specialist nurses, which their institutions rely on, at the same time as supplying care and support to young people. That is one example, but I am sure that there are many others where the actual staff at an event would also be beneficiaries. 

Cathy Jamieson:  I thank the hon. Lady for that intervention. Diabetes UK is an organisation with which I am extremely familiar and have known for many years

because my husband has type 1 diabetes. She has done her Minister a favour by ensuring that we are aware of the good work of that organisation and of how at least one charity would be able to meet these criteria. I was perhaps thinking of some smaller charitable organisations, which appear to have not been covered quite so well in the Bill. Diabetes UK is a very professional and well-run organisation that is well able to access advice and information to ensure that it complies with and takes advantage of legislation in order to promote the good work that it does. However, that may be much more difficult for smaller charities, and I hope that the Minister can give some examples. 

Amendment 9 also gives cause for concern. To be fair, the Minister has dealt with some such concerns during the debate on an earlier clause, because there was a worry about staff who are also beneficiaries making donations during the course of an event. Whether they are a member of staff or a beneficiary, a donor or a recipient, all becomes very muddled in the real world, but the Minister gave some information about the relationship between donors and beneficiaries that clarified that concern. I hope that he can deal specifically with how payment to access particular buildings is being defined, picking up on the point about community amateur sports clubs, and with ensuring that the National Trust is not disadvantaged compared with similar organisations. It seems that, once again, in trying to solve one problem with amendments—as we saw earlier with the Churches and community buildings—another problem emerges. There is a knock-on effect. 

Sajid Javid:  I know that the hon. Lady does not like these amendments; I understand that. However, as I set out in my comments about the Opposition’s amendments earlier, we cannot open up the community buildings rules to every single charity that operates out of a building or that has a number of separate branches. 

Let me try to respond to some of the points that the hon. Lady raised. First, she mentioned the National Trust as an example of a charity—a very worthy charity—that will lose out under the community buildings rules. It is important to point out that, like every other charity, the National Trust has the £5,000 limit. However, as she said, it has a number of buildings, meetings and so forth around the country. She is right to say that, because of the rule for entrance into community buildings when charitable activities are taking place, there can be no charge. For that reason, if the National Trust is charging a particular community group to enter a particular building, it will not be able to benefit under the community buildings rule. It can benefit from the Bill, with its single £5,000 limit, but it will not be able to make another claim, because it is not meeting the free entry requirement. 

I fully understand that the National Trust, or any other charity that might be caught in a similar situation, will not like that, but we have to go back to the purpose of the Bill, which is to help charities, particularly small community charities, with the small donations that they receive and allow them to get a gift aid-style top-up payment. 

Mr Thomas:  Will a National Trust property be able to qualify under this scheme if it has a number of days when it does not charge? 

Sajid Javid:  As I said in my opening remarks when I tabled these amendments, it is up to each charity, including the National Trust, to decide whether there is a way for it to change its current charging structure to try to benefit from these community buildings rules. If the action that the hon. Gentleman just described is a step that gets a charity closer to using these rules, the charity can potentially benefit. Every charity can see if there is a way that it can legitimately restructure to try to ensure that it benefits from these rules. In the case of charging, if charging is the only impediment the answer to the hon. Gentleman’s question would be yes, but clearly the charity would have to meet the other rules and eligibility criteria set out in the Bill. 

If I remember correctly, the hon. Member for Kilmarnock and Loudoun said that the National Trust will lose out. I think that is a rather strong term, because let us not forget that under this scheme, once it is up and running, we estimate that there will be at least £100 million of benefit for charities on an ongoing basis. That money will be a significant boost for charities, particularly small charities, for which any additional money can make a significant difference to their overall income. 

It is unfair to say that charities will lose out. All charities can benefit from this scheme, as long as they meet the eligibility criteria, including the National Trust. The National Trust is a big beneficiary of gift aid and it can use its £5,000 limit under this scheme. I understand that an argument can be made that because the National Trust is charging for entry it does not have the same benefits as—let us say—the Roman Catholic Church, but the National Trust has decided to charge and, as I have just said, if it wishes to change some of the way that it operates in some cases that is a decision that it can make. 

Cathy Jamieson:  I hope that the Minister will understand that in using those words, I was perhaps paraphrasing some of the comments that were made in the evidence sessions. However, I also hope that he will accept that the National Trust expressed disappointment at the changes, and therefore that it was fair to make that comment. 

On a technicality, if an organisation decided not to have an entry charge but to set a minimum donation, what would be the position then? 

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Sajid Javid:  As with all rules, particularly those relating to taxation, it is important to ensure that changes are done in the right spirit. If the change the hon. Lady suggests relates to genuine donations, that could be beneficial in accessing this. Again, I preface that with the three other criteria that the charity would need to meet. 

The hon. Lady asked about the quorum of 10 people. She asked how a member of staff, who was considered part of a quorum, could also be a beneficiary of the charity. My hon. Friend the Member for Portsmouth North, with her example of Diabetes UK, successfully answered that question. Lastly the hon. Lady asked about community amateur sports clubs. CASCs are already excluded from the community building rule because by their very nature they are established at a

local level as community groups, so they would not fall within this rule. However, they do have their £5,000 allowance which for many of them may be a significant boost to their income. 

In order to retain control of the costs of this scheme, we need to put restrictions on how these rules are used. Opening up the rules to commercial buildings means we need to impose a restriction on entrance fees to community buildings. Allowing trustees and officers of a charity to count towards the number of participants for a charitable activity to qualify is something charities have asked us for. I therefore hope hon. Members will welcome this change. I hope they will join me in supporting these amendments and I commend them to the Committee. 

Amendment agreed to.  

Amendments made: 8, in clause 7, page 4, line 31, leave out paragraph (a). 

This amendment, with amendment 7, have the effect that staff of a charity can count towards the group of 10 or more people required for a charity to be “running” charitable activities in a community building, as long as the staff are beneficiaries of the activity.

Amendment 9, in clause 7, page 4, line 35, leave out subsection (3). 

This amendment is consequential on amendment 8.

Amendment 10, in clause 7, page 4, leave out line 42 and insert ‘subsection (1)’. 

This amendment is consequential on amendment 8.—(Sajid Javid.)

Clause 7, as amended, ordered to stand part of the Bill.  

Clause 8 

Meaning of “community building” 

Sajid Javid:  I beg to move amendment 11, in clause 8, page 5, line 9, leave out from ‘include’ to end of line 10 and insert 

‘any parts of a building excluded by subsection (1A) or (1B)’.

This amendment, with amendment 12, enables parts of a commercial building to qualify as a community building in certain circumstances. Broadly-speaking, the part must be available for use exclusively by a charity at the relevant time, and its commercial use must not be the sale or supply of goods.

The Chair:  With this it will be convenient to discuss the following: 

Government amendment 12. 

Amendment (a) to Government amendment 12, in subsection (1A), leave out “residential purposes or” 

This amendment has the effect of including residential premises within the definition of ‘community buildings’ for the purposes of the Bill.

Sajid Javid:  Government amendments 11 and 12 and Opposition amendment (a) relate to the definition of a community building. We have had some lively and lengthy debates on the community buildings rules already. They are limited to help balance out some of the worst unfairness in the basic rate of donations of £5,000 per charity. They are not designed, and were never meant to be, a free-for-all for every charity carrying out charitable work in a community. The original definition of a community building excludes commercial and residential buildings from qualifying as a community building. The Government have listened to concerns expressed that some charities might not have access to the sort of

building defined in the Bill as a community building, such as a town hall or another local building. Instead, some charities use rooms offered to them by hotels or in commercial offices, for example. That is a fair point, so we drafted amendments 11 and 12. 

The amendments allow commercial buildings, excluding premises that are used wholly or mainly for the sale or supply of goods, to qualify as a community building. Amendment 12 also clarifies that a building is not disqualified from being a community building simply because it has mixed use, and is used for charitable and non-charitable activities. The part of the building used for wholly charitable purposes counts; the rest does not. I hope that that brings welcome clarification for charities. 

The Committee should note that the Government amendments leave residential buildings outside the definition of a community building. Sub-amendment (a) to amendment 12, tabled by the hon. Member for Kilmarnock and Loudoun, however, seeks to allow residential buildings to qualify as community buildings. I sympathise with the sub-amendment, but I her to withdraw it. The effect of allowing residential buildings to qualify as community buildings would be profound. It would increase the cost of the scheme unacceptably, so much so that we would need to revisit and probably reduce the main £5,000 limit on small donations. 

As I set out in our earlier debate, the cumulative cost of sub-amendment (a) together with the first group of Opposition amendments on community buildings could be in the region of hundreds of millions of pounds. Let us remember that the main objective of the scheme is to allow every charity to claim up to £5,000 of small donations. The community building rules serve as a proxy to identify one group that acts to all intents and purposes as a charity in its own right. Without the community building rules, such a group may have limited access to payments under the scheme, so the intention is for one group to get an allowance of £5,000. The rules are not intended, specifically, to reward a group working out of multiple buildings. 

We recognise that the rules may on occasions enable some groups to access more than one set of allowances of £5,000. That is not our intention, but it may be the inevitable result of helping to redress some of the unfairness of the basic £5,000-per-charity proposition. Extending the rules to residential buildings would be a step too far and would increase the costs of the scheme unacceptably. Lots of charities, such as homeless shelters or children’s homes, provide services in residential buildings, but extending the rules to such buildings would be expensive. There is no policy reason to provide such charities with more than one set of the £5,000 allowance when other types of charities would not so benefit. 

I recognise that some charities will not be able to benefit under the community building rules as a result of excluding residential buildings from the definition. Some groups meet in members’ homes and welcome any member of the public who attends the meetings, but I am afraid that there is no way to carve out such groups while maintaining the overall integrity of the scheme. There would be no independent record of a meeting having taken place, or of the admission of members of the public to the meetings. Unfortunately, that would give the green light to the unscrupulous people who

already exploit gift aid to claim multiple allowances under the scheme, and that is a risk too far for the community building rules. 

I have explained that the community building rules are a broad set of rules to help iron out some of the worst unfairness of the main £5,000-per-charity rule. There will always be “me too” calls, wherever we draw the line between those inside and those outside the provisions. It is safe to draw the line in a way that includes most commercial buildings but leaves residential buildings outside. Moving the line to bring in residential buildings would greatly increase cost and the risk of fraud. It would leave us with no choice but to look again at whether the £5,000 limit on donations is sustainable, in terms of the cost to the public purse. I therefore ask the hon. Member for Kilmarnock and Loudoun to withdraw sub-amendment (a), but I also ask the Committee to accept amendments 11 and 12. 

Cathy Jamieson:  We are making good progress this afternoon, even if we are not getting all the answers or making all the headway that the charity sector might want. 

I want to focus for a few moments on the definitions relating to residential buildings, as that is the main point we should discuss. As the Minister has said—his explanatory statement outlines the details—Government amendment 11 would leave out what was previously in the Bill, and insert, 

“any parts of a building excluded by subsection (1A) or (1B)”. 

As the explanatory statement makes clear, that would enable 

“parts of a commercial building to qualify as a community building in certain circumstances. Broadly-speaking, the part must be available for use exclusively by a charity at the relevant time, and its commercial use must not be the sale or supply of goods.” 

I note that the Minister did not give specific examples of circumstances in which that might apply, or how many charities or organisations it would help. I assume that some background work has been done, as he will have wanted to assess the cost implications of amendment 11, as well as speculating on the cost of amendments that the Opposition propose. I am interested to hear how many more organisations he feels will be helped to claim on the basis that they are covered by “community building” as a result of his amendment. 

The issue of residential properties is important, and Members on both sides of the House have raised it—the hon. Member for Congleton spoke about it on Second Reading, as did my hon. Friend the Member for Harrow West during the Committee’s evidence session—particularly, but not exclusively, in relation to hospices. I am concerned that the Minister’s amendment maintains the restriction on residential properties, but we are still not entirely clear which organisations and properties the definition would catch. The charitable sector is worried about that matter, and has specifically highlighted its concerns over hospices, hospitals, care organisations and care homes. 

In his evidence, the Minister implied that such organisations would not be caught, as patients of hospices would still be registered at their homes, and therefore, for the purposes of the Bill, hospices, and so on, would not count as residences. He said: 

“Yes, I have given it consideration, so I hope that I can clarify the situation. The residency issue around community buildings does not really apply to places such as hospices—or hospitals for that matter. They are places of care.”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 63, Q107.] 

Will the Minister be slightly more specific about what he means by “does not really apply”? There seemed to be a wee edge of doubt about whether it would apply in some circumstances. He also mentioned hospitals and hospices being “places of care”. Will he clarify whether other places of care would or would not be caught up in such scenarios? Residential provision for elderly people, or respite facilities, for example, could be affected. He may respond by saying that the residence will not count if it is permanent for someone—if, for example, a person had given up their home and was living in a care home on a permanent basis. 

I shall give one or two examples to highlight what is happening in the real world. When I was looking back over the submissions we received about the Bill, I came across one from Camphill Scotland. It did not raise the specific point about residential care, as it was more worried about issues that we have debated under earlier clauses, which I will not revisit. It was particularly concerned about cash donations and so on, because it wants to look at expanding the ways it can collect donations and explore the possibilities of new ways of enabling organisations to be supported. 

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It struck me, however, when I looked at the background of that organisation—it runs a number of schools for people with special needs, called Camphill communities, which are home to around 800 people, of whom around half have learning disabilities or other support needs—that all the communities focus on the needs of individuals. The submission explains how the organisation goes about its charitable purposes. I would be interested if the Minister could give us some guidance or way forward in terms of some of the specific services offered. Its website states: 

“Camphill School Aberdeen offers a wide range of services for individuals aged 1 to 24, including: residential provision (up to 52 weeks of the year)”. 

Even though those people may stay there for 52 weeks of the year, it may not, to all intents and purposes, be their home under the definition. Will the Minister give us some indication of whether, in those circumstances, that kind of organisation would fall under the definition that he seems to imply applies to hospices and hospitals? Is it a “place of care”, or a different type of organisation? 

Camphill School Aberdeen also runs 

“a therapeutic community and residential home for young people with a wide variety of special needs, providing 12 places for young people from the age of 16 to 25.” 

In the wider sense, that is probably not those young people’s permanent home, so it is a place of care for the period of time that they are there. It also has another project that works with elderly people, and it has set up what I believe to be the only Camphill community in the UK that offers a particular source of care and companionship to older people. It was established, according to its website, 

“to pioneer care for older people in a mutually supportive community.” 

It has 17 residents and 12 co-workers. Those people are living somewhere that is their permanent home, but they are none the less receiving some kind of care and therapeutic support during that time. 

I hope that the Minister will see that we do not want the Bill to be expanded to take account of absolutely everything. We live in the real world, and we understand that there may not be an endless pot of money for everything. He has, however, implied at various points that no matter how many organisations were eligible, they would all be able to make use of this scheme. 

Susan Elan Jones (Clwyd South) (Lab):  Does my hon. Friend agree that we also have the interests of the hon. Member for Banbury at heart as well? He described his parish to us. My concern for him is that if he was attending an event at his parish vicarage, that might not be eligible under the provision, but if he was in the church hall, assuming there is a church hall, it would be. Does that not seem to be an anomaly? 

Cathy Jamieson:  My hon. Friend again makes an important point, and I am sure that we would not want to do anything that caused problems to the hon. Member for Banbury, or any other member of the Committee who is involved in charitable works. 

I hope that the Minister understands why we tabled this sub-amendment, and I hope that, before I decide whether to push it to a vote, he will answer the questions around eligibility and give us more clarity. I assume that the hon. Member for Congleton is on other important business today, and it is important that someone speaks up for the points that she made. I take it that she is attending today’s other important debate, and that is understandable. I hope that the Minister takes on board the points that the hon. Lady made earlier and provides further clarity on hospices, hospitals, care homes and other forms of residential provision that involve people living for an extended period in a place that is not their permanent home. I hope that he will also deal with cases in which someone’s permanent home is in a charitable setting. 

Pat Glass:  I thought that I understood clause 8, but what with the Government amendments, I am not quite sure what is included now, so I seek clarification from the Minister. The exclusion of residential and commercial premises from the definition of “community building” removes the possibility of claiming for individual charity shops, local groups that exist only for fundraising, or groups held in or operated from people’s homes. I understand that that is done to prevent multiple top-ups to the same organisation. However, the definition is slightly outdated, given how modern charities operate, and the exclusions are crudely applied. The definition of “commercial purposes” is ambiguous; it is unclear whether it would exclude charities that deliver contracted services or charge for part of their services. Charities may also operate out of commercial space that they have hired, or operate on land or a community space that does not have a building. Would these be excluded from the scheme, or does Government amendment 11 or 12 now smooth this out for them? 

The definition of “community building” used here appears out of step with the Government’s agenda on asset transfer, under which a wide variety of public

buildings and spaces have been transferred to the ownership or management of community organisations for charitable purposes. It also seems out of step with the modern use of many community buildings, in which all or part of the space may be used interchangeably for charitable activity, fundraising or trading. 

Will the Minister clarify why two different definitions of “community building” are used? Does he agree that the reference to commercial buildings does not fit with the modern view of public or community spaces, and that that could cause problems for some local groups? Do the Government amendments smooth that out? If not, will he look again at the definition of a community building, so as to ensure that he does not exclude residential charitable activities? 

Are hospices in or out? I understand that they were out, and I think that they still are, but if they are, how can the Government and the Minister justify giving tax relief to large Churches and charities that are already relatively wealthy—in my part of the world, the Church of England is still the largest landowner, although the coal board comes a close second—but not providing tax relief for places such as Willow Burn hospice in Lanchester in my constituency? 

I have to leave after asking this question—I will speak and run—because I have another meeting, so I may not get the answers, but I will certainly read Hansard next week to pick up the Minister’s detailed response to my questions. 

Sajid Javid:  We have had a thorough debate on the community building rules. I hope that Committee members now understand that the rules are not supposed to be a wide-ranging and all-encompassing extra provision for all charities. The principle stands that all independent charities should be entitled to only a single allocation of £5,000. The community building rules exist only to even out the discrepancy that would be caused for a number of charities that are structured differently from others, but are similar in many other ways. 

The hon. Member for Kilmarnock and Loudoun made several points and started by asking, if residential places were included, what difference that might make in terms of the numbers, whether we had looked at the numbers and what estimates we had made. A lot is uncertain. We cannot be sure what would happen in terms of the cash amount or the number of charities. The reasons for that are fair. The reasons for that are fair. If work residences were allowed to be included, an almost limitless number of splits could take place for a charity that wanted to increase its £5,000 by multiples.

Cathy Jamieson:  Perhaps my question was not entirely clear, and I apologise if that is the case. I was not asking the Minister to identify the costs associated with an unlimited amount of residential facilities. His amendment potentially changes the number of premises that can be used, now that commercial premises are included, so my question was about what costing had been done and how it impacts on the Bill. 

Sajid Javid:  I thank the hon. Lady for that clarification. We, or rather HMRC, have done some costings. They are not significantly different from the original costing that the Government had for the scheme. Until such

figures have been tested by the OBR and we have heard back, we would not ordinarily publish them. The difference is not large enough to change the overall cost envelope significantly. I hope she understands that we will publish the costs in due course, but it is normal practice for the Government to have figures checked by the independent OBR before they say that a number is x, y or z. 

The hon. Lady and the hon. Member for North West Durham asked about residential buildings and hospices. They are right that in the evidence session I referred to them as “places of care” where people go for palliative care. The example I used then still stands and clearly has not changed. In general, when someone is, sadly, ill enough to go to a hospice for care, they do not give up their home, so their address is elsewhere. They are in the hospice for care. The restrictions on residential buildings would not apply in such cases. I hope that makes it clear. 

Cathy Jamieson:  I thank the Minister for clarifying that in relation to hospices. He may be going on to this, but will he clarify the other situations I described? People might live for a period in an organisation or in some form of care run by a charity. Would that count? 

Sajid Javid:  The hon. Lady used the example of Camphill school. She said that sometimes young people go there for up to 52 weeks of the year, and asked if that was residency. It depends on the fact pattern of each case. It would be wrong for me, as the Minister responsible for the overall legislation, to go into detail on certain hypothetical situations, but I understand why she asked the question. It is a fair and legitimate question. HMRC would have to look at the fact pattern before making a decision in such a case. I hope and believe that the guidance will look at specific examples, and the one she raises is the kind of example that officials should try to include. 

While we are on the subject of guidance, which has come up several times, I can tell the Committee that, within a matter of weeks, HMRC will get together what I call the draft guidance. Even before the guidance is published, HMRC has established a working group with trusted partners from the charitable sector. Many of the organisations that gave evidence in our first session have members on that group. HMRC will share that guidance with them before it is published in draft form, to get their feedback and comments. At the beginning of next year, HMRC will publish the guidance in draft form before it becomes final to allow input from all charities and interested groups, including the hon. Lady and other Members of Parliament. HMRC wants to ensure that the guidance captures all the issues that come up, which it might not have thought of. That is an important part of the process—using examples and other methods to answer the kind of questions that have been raised by the hon. Lady and others throughout the debate—which will help us get the guidance right. 

4.30 pm 

Mr Thomas:  The Minister is being very helpful. He alluded earlier to the fact that there will be an opportunity for charities to meet HMRC face to face and go through the guidance, not only in the preparation of the draft guidance, but if they have any questions about the final

guidance before they submit claims after April 2013. Is there a timetable that the Minister can relay to us so that charities have some foreknowledge of those events? 

Sajid Javid:  HMRC has already been meeting, on a trusted basis, a number of representatives from the charitable sector in putting together some of the changes in the amendments that we are debating today. HMRC’s working group will sit down immediately the Bill is passed with the draft guidance that it has already started to prepare. That will happen in a matter of weeks. The idea is for the draft guidance to be published by the start of the year, so that all charities and other interested groups can comment before it becomes final ahead of the introduction of the scheme in April 2013. That is a sensible timetable, and it is important to go through that process. 

Regarding residential buildings, it would be wrong of me not to emphasise the risk of fraud if the provision were increased to include all residential buildings. We often talk, rightly, about legitimate, genuine charities that only want to do the right things—exactly the charities that we want to help—but there are people out there who would take advantage of legislation such as this for non-charitable purposes. Clearly, we all want to prevent that. Allowing all residential properties to qualify as community buildings would dramatically increase the opportunity for fraudsters to take advantage of the scheme, because there is no way independently to police whether real charitable activity is taking place in a house, and we must be good guardians of the public purse. 

Only today, the Metro ran an article about an individual, about whom we can now talk publicly because he has been convicted, who took advantage of gift aid to the tune of £5 million. That is a significant amount, and it is a timely reminder to us all of how unscrupulous people with no charitable intentions can take advantage of the Government’s action to help genuine charities. 

Cathy Jamieson:  Anyone who attempts fraud that would take money away from bona fide charities, even if not on that scale, should face the full force of the law. In his deliberations about residential provision, did the Minister consider whether it might have been possible, without making every residential property eligible, to amend the Bill to capture the situations that we are most concerned about, such as a charity that runs a residential care home? Did he consider whether there might be a way of ensuring that such charities were definitely included, rather than being maybe in or maybe out? 

Sajid Javid:  The hon. Lady’s question is very well intentioned. When we developed the amendment, we considered other ways of introducing legitimate use of residential property. The hon. Member for Clwyd South, who has just re-entered the room, which is good timing, asked about vicarages. Under the definitions we have presented today, they would not qualify, because they are residences of important people. In an ideal world, one would include vicarages and more residences of worthy people, but if we tried to do that it would make this complicated clause even more complex. 

As we discussed on other clauses, we want to ensure that we have got the provision right. We do not pretend that we have dealt with every possible eventuality. Something legitimate could arise that makes us think there should be a change, and that is why we have taken powers in the Bill to allow us to introduce secondary legislation to make sensible changes. I hope that the hon. Lady will support the Government’s having that secondary power if future changes are necessary. 

We have introduced the amendments to help charities that would otherwise be excluded because they use a commercial building for their charitable activities. 

Nigel Mills (Amber Valley) (Con):  I am sorry to interrupt the Minister so near the end. Perhaps I have misunderstood, but if a charity chooses to meet in a spare room in a pub, rather than in a village hall, would that be allowed for these purposes, or would it be disallowed because the pub may be engaged in the supply of goods? Would it be allowed if the charity were using a separate room upstairs, or out at the back, as the room itself would not be for the supply of goods? 

Sajid Javid:  A commercial organisation that is engaged in the supply of goods is a category we are trying to deal with here. If I understood my hon. Friend correctly, he asked about a charity using a pub— 

Nigel Mills:  A charity meeting only. 

Sajid Javid:  Yes. If no commercial activity is taking place, there is no charge for entry, and the pub has genuinely allowed its property to be used by the charity, it would be allowed. 

Nigel Mills:  Under this new amendment? 

Sajid Javid:  Yes. 

As I have set out, it would undermine the integrity of the scheme to open it too far to residential buildings of all descriptions. I commend amendments 11 and 12 to the Committee. 

Amendment 11 agreed to.  

Amendment made: 12, in clause 8, page 5, line 10, at end insert— 

‘(1A) Any parts of a building that are used wholly or mainly for residential purposes or the sale or supply of goods are excluded. 

(1B) Any parts of a building that are used wholly or mainly for other commercial 

purposes are excluded, except at any times when— 

(a) a charity is carrying out a charitable activity in those parts, and 

(b) the parts are available for use exclusively by the charity in carrying out the activity.’. —(Sajid Javid.)  

See Member’s explanatory statement for amendment 11.  

Clause 8, as amended, ordered to stand part of the Bill.  

Clause 9 

Connected charities and community buildings 

Cathy Jamieson:  I beg to move amendment 31, in clause 9, page 6, line 19, at end add— 

(a) The Treasury must, within 24 months of this Act coming into force, prepare a report assessing the impact of the community buildings provisions on the ability of charities to benefit from the Gift Aid Small Donations Scheme and lay it before the House of Commons’.

This amendment seeks to require the Treasury to assess and report to the House of Commons on the impact of the community buildings provisions on the ability of charities to benefit from the GASDS within two years of the Act coming into force.

I noted during the last discussion that the hon. Member for Congleton was speaking in the very important debate in the Chamber. I am sure that she will be pleased that Opposition Members represented her position in her absence and that the Minister seemed to take account of that. 

With amendment 31, I want to refer to a number of the general points that the Minister has already raised in the course of debate. This is a simple amendment. It would add at the end of clause 9 a new subsection (8)(a). I would be tempted simply to refer hon. Members back to a number of the points that the Minister made today when he talked about and understood the complexity of the scheme and gave us assurances that guidance will be drawn up and that HMRC will work on producing more documentation and ensuring that, as he wishes, every charity has the opportunity to benefit. However, we have also heard a number of very legitimate concerns from hon. Members, particularly about the impact on charities of the community buildings provisions. That has been one of the areas that charities have had most concern about. 

Without wishing to repeat all the detail of the earlier discussion, I remind hon. Members that there were suggestions from the charitable sector that this whole aspect of the Bill should be taken away—struck out—completely redesigned and brought back in a different form so that it more usefully or perhaps more perfectly fitted the good intentions of the Government and caused less confusion. As I said earlier, we chose not to do that. We have tabled a number of amendments to probe the Government’s intentions. We heard some warm words from the Minister. We did also hear some clarification from him about what he intends. Some of the newspapers have been suggesting in the past week or so that he may not be long for this job but may be moving on to greater things in the Treasury. Who knows? But we do want to take up the Minister’s point that whoever was doing this role in the Treasury would of course want to follow up on the commitments that he has made today to review the overall operation of the Bill. 

I think that the Minister did indicate that he would, after three years, be willing to look at all this, although he does not want to see anything in the Bill. Again, I understand why he will be getting all sorts of advice not to put something in the Bill—it is not necessary and so on. I would have hoped that, as a concession and as a signal to the wider world that he is indeed listening, he would at least give serious thought to accepting this amendment on the community buildings provisions, because it would mean not having to wait for the three-year point, when the overall operation of the Bill would be examined. I am talking about the connected charities provisions, the levels of the top-up itself and all the other aspects of the Bill that people have raised concerns about. This amendment specifically focuses on the point two years into the operation of the Bill as the point at which to look very particularly at the

community buildings provisions. I shall explain the opportunity that that would give us, should the Minister choose to accept the amendment. 

From day one, the operation of the community buildings provisions would be under scrutiny. There would be an opportunity not just to have a working group to look at drawing up the rules and regulations in the first place, but to have ongoing meetings with charities or to review things with the charitable sector and to have something formal at the end of two years that could then make recommendations on whether further changes were required. It could examine how the provisions had operated in practice. There would be an opportunity to feed into further deliberations and discussions in relation to the overall operation of the Bill when the three-year point was reached. 

4.45 pm 

If the Minister was minded to accept the amendment, we would of course want to be helpful. We have already identified a number of areas on which he might focus attention. Does the definition of community building fit the real world, or can some amendments be made? There is also the serious issue around provisions on the residential sector. I welcome his warm words about hospices and so on, but if HMRC came up with something where we had not quite got the wording of the Bill right to meet his intent, I want to be sure that we could do something about it. 

My fear when reviewing legislation is that we may have the best of intentions but another Bill, another Minister—maybe another Government—may come along before this legislation is reviewed. Given that he accepted the complexity, that there is more work to do, and that he wants powers in the Bill to allow him to use secondary legislation to make the changes, all I ask of him is to include the amendment to ensure that a review is undertaken and, importantly, laid before the House of Commons. We on the Committee have got into the fine detail and followed it all the way through but other hon. Members, when in discussion with the charitable sector, may later find examples in their constituencies that raise problems and issues. They will want a way to focus on that. 

Rather than wait two years and then decide to do something, I would like to see the Minister, with the resources at his disposal, monitor this and bring forward that report in 24 months after the Bill has been put into operation. I sincerely hope that he will understand that the proposal is made with the best of intentions to represent the concerns and issues raised by the charitable sector. I look forward to his response. 

Sajid Javid:  Amendment 31 seems to arise from concern about the impact of the community building rules on charities. We have had quite a few stimulating debates on those rules today. I am sure that hon. Members will be glad to hear me set out again the rationale for the community building rules. The purpose of the small donations scheme is to enable every charity to claim a top-up payment of up to £5,000 of small donations. 

We have brought in the community building rules to help prevent the worst unfairness that could result between charities doing similar things where one charity is structured differently from another. We decided that we would introduce a way for the charities worst affected to be able to claim allowances at local group level. 

I understand that, having seen the opportunities offered for extra top-up payments, other charities would like extra top-up payments. However, as I have explained, we have to draw a line somewhere and we think we have drawn the line in the right place. I understand the hon. Lady’s amendment but I am not sure what it is expected to achieve. Let me explain why. It seems that she wants the Treasury to carry out an impact assessment of the community building rules 24 months after they come into force. That will mean that it will have to be done a full two years after the scheme is in place. The Treasury would have to deliver its report in a time frame to meet that two-year deadline. That would mean in practice that it will have to start preparing the report when the scheme has been operating for a year or a little more. After that time there is not much useful information that the Treasury can give. 

Cathy Jamieson:  Again, I hope to be helpful to the Minister. I understand that there is a particular way in which the Treasury tends to deal with reports, and reports are not followed and laid before the House. That may, generally speaking, apply to impact assessments. He should read the amendment carefully. It states: 

“within 24 months...prepare a report assessing the impact...on the ability of charities to benefit”.

If he were so minded, it could be a fairly straightforward report that looked at gaining information from the charities, which could be done on an ongoing basis. I do not see why everything has to stop, then start again and a report be brought forward. We are genuinely trying to be helpful. 

Sajid Javid:  The amendment is well intentioned, but would it have much material impact and would it turn out to be so helpful? In trying to meet the deadline that the amendment would set, the information that HMRC could put together within that two-year time frame would be quite limited. We could say that after the scheme has been running for a year and a bit, X number of charities have made top-up claims, which include donations of Y pounds from Z number of community buildings. I am not sure how helpful that information, after such a short time, would be. 

In the impact assessment that was published in June, the Government stated—and I have already repeated it a number of times, including during the evidence session—that we will review how the scheme is working after three years. The hon. Lady rightly pointed out that I have made a commitment as the Minister, but that Ministers change. Perhaps what she has in mind is the fact that in 2009 under the previous Government, there were three Economic Secretaries in three weeks during the course of the Finance Bill. This Government is a lot more stable. 

The Chair:  Order. We are straying from the Bill. 

Sajid Javid:  Mr Robertson, I accept your guidance. The review will take into account all the provisions in the scheme once it has had time to bed in and is running normally. I fail to see what value amendment 31 would

bring to that review. It would be premature, uninformative and potentially disadvantageous to charities that would benefit from the community buildings rule to hold a review too early in the life of the scheme. I urge the hon. Lady to withdraw her amendment. 

Cathy Jamieson:  I had hoped that we would arrive at some consensus but, sadly, the third Economic Secretary to the Treasury that I have had to deal with my in my short time as shadow Minister— 

Sajid Javid:  Not in one week. 

Cathy Jamieson:  Perhaps not in one week, but I was going to say two in one debate. 

To return to the point, which is important, my amendment sought to ensure that we did not simply pass the Bill and leave it to HMRC to go away and write the rules and regulations, albeit in the context of doing it with the charitable sector, but still effectively in isolation while all hon. Members go away and forget about the measure until a problem emerges or people from the charitable sector come to our surgeries. I wanted to encourage a different approach and to ensure that the Treasury would not wait until two years hence and then move backwards, but work with the sector and perhaps gather that information and present it to hon. Members by filing a report. 

The wording of the amendment was careful, so “prepare a report” could mean a number of things, whether a few pages—simply giving the information, which the Minister feels might not be helpful—or something far wider, including information from the charities. I did not specify. Indeed, I left it to the Minister as to how to progress the proposal. I find it disappointing that he will not give any concession on some of the information being helpful or useful. 

I recognise that the Minister has said some warm words about a review after three years, but it is important for the charitable sector to be involved in contributing information in any process over that period. HMRC is gathering information, preparing it, looking at it, analysing it and possibly making recommendations. Without that process, how could the Minister be apprised of what is going on in the real world and ensure that any changes he makes through secondary legislation using the powers that he wishes to take under the Bill make a difference? Simple. We want the Bill to include a way to ensure that that happens. 

I am disappointed but, as we shall shortly be having a Division in the House, I will not labour the point, other than to ask the Minister to consider our amendment. There will be other opportunities to scrutinise other amendments to do with reviews and I hope that he will give them more consideration than he appears to have done on this occasion. We may come back to the issue, but at this point I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Ordered, That the debate be now adjourned—(Greg Hands.)  

4.56 pm 

Adjourned till Tuesday 30 October at five minutes to Nine o’clock.