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Lord McIntosh of Haringey: My Lords, as regards my noble friend's first question, local authorities are encouraged to take account of the VAT situation and to make full cost recovery including overheads when they make payments to charities for providing services. I remind my noble friend that he is right that the figure is estimated at something over £400 million but one has to look at that in the light of approximately £2 billion in tax relief to charities, £2 billion in grant funding and the fact that 30 per cent of charities' income comes from government. As regards my noble friend's second question, that article has been drawn to my attention. We have not received any communication from the Commission on that matter. No doubt if we do, there will be a submission to Treasury Ministers. But I remind my noble friend that I did not refer to the EU in my first Answer.

Lord Phillips of Sudbury: My Lords, I think I am right in saying that the amount of VAT lost to charities is in excess of £4 billion but, be that as it may, is it not a fact that charities reach the parts that others do not reach, if you want to put it that way and, further, that they provide the best value for money that there is in our society? For every pound that a charity gives, the good citizens of this country add several times more in the shape of free volunteer labour currently valued in excess of £15 billion a year. So why is it therefore beyond the imagination of government to realise that they could and should extend the scheme, which I believe currently applies only to repairs to places of worship, whereby there is a grant back scheme for the VAT that is paid in the course of having those repairs carried out? Surely the living are as valuable as the dead.

Lord McIntosh of Haringey: My Lords, I am afraid that the noble Lord, Lord Phillips, lost a zero from his figures. Charities themselves estimate that the cost of irrecoverable VAT is between £400 and £500 million, not £4 billion. I ask the noble Lord to consider those figures in the light of the amount of support which government give to charities. I acknowledge the truth of everything that he said in regard to the value of what charities provide. In terms of support for charitable activity through tax relief, there is a saving of £360 million on inheritance tax, £600 million on business rates, £850 million on income tax and £200 million on VAT zero rates and exemptions for matters such as advertising, construction, disabled access and so on. There is quite rightly a great deal of public support for charities.

Baroness Howe of Idlicote: My Lords, in light of the fact that voluntary organisations probably contribute at least £15 billion to the well-being of citizens in this country, how can the Minister continue to justify no VAT relief for voluntary organisations when the same or equivalent public service provided by the public sector is exempt? Further, in view of the £125 million futurebuilders investment fund which is to last for three years, what is expected to happen after that period? The measure is clearly a sop in view of the irrecoverable VAT situation.

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Lord McIntosh of Haringey: My Lords, I remind the noble Baroness, Lady Howe, that the irrecoverable VAT problem has existed for many, many years going back to 1973 under a very large number of Chancellors, mainly from the Conservative Party. As regards the noble Baroness's second point, the £125 million applies to a three-year period. It was allocated under the 2002 spending review and will be reviewed in the next spending review.

Lord Saatchi: My Lords, what is the gain to the charitable sector as a result of the Chancellor's introduction of gift aid? Might the Minister also compare that figure with the loss to the charitable sector as a result of the Chancellor's introduction of an extra 1p on national insurance?

Lord McIntosh of Haringey: My Lords, I think that the noble Lord, Lord Saatchi, in referring to the gain to the charitable sector from gift aid, is talking about the Getting Britain Giving initiative. We are abolishing the £250 minimum limit for gift aid donations and the £1,200 maximum limit for payroll giving, encouraging gifts of quoted shares and securities to charity with a new income tax relief, and modernising the system to allow charities to certify donations over the Internet or by telephone. It is too early to say what the effect of that will be and therefore to make the comparison for which the noble Lord is looking.

Zimbabwe

2.50 p.m.

Lord Watson of Richmond asked Her Majesty's Government:

Whether new measures are being considered to bring greater pressure to bear on Mr Mugabe and his associates in Zimbabwe.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, Zimbabwe's neighbours, the European Union, the United States and others have voiced their concern about the violence and human rights abuses in Zimbabwe which followed a successful "stayaway" organised by the opposition on 18th and 19th March. We welcome the Southern African Development Community's decision to send a task force to Zimbabwe later this week to investigate the continuing human rights abuses and state repression. Its discussions will include a cross-section of civil society as well as the main political parties.

Lord Watson of Richmond: My Lords, I am grateful to the noble Baroness for that reply. Given the continuing and rapidly worsening situation of human rights abuses in Zimbabwe and the arrest of the leader of the opposition, does she agree that many people in this country will be deeply shocked and offended that Mr Mugabe bears an honorary knighthood from this country? Albeit that the honour is symbolic, will she

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not consider therefore that it now be removed as a matter of some real urgency? It is an honour that has been dishonoured.

Baroness Amos: My Lords, the noble Lord has raised the issue with me before. As the House knows, the honour was conferred during a state visit in 1994. Withdrawing it now is not our immediate priority. We are concentrating instead on feeding Zimbabwe's hungry and, with our European Union, Commonwealth and US partners, doing all we can to encourage a return to good governance, including a respect for human rights and the rule of law. We may well revisit the question in the future, but I have to tell the noble Lord that there are other priorities at the moment.

Lord Howell of Guildford: My Lords, is the question at this stage not one of giving some hope to the brave people of Zimbabwe that their nightmare is going to end? Did several of us not raise the question of the knighthood for Mugabe and the need to remove it? Why is it not a priority now? It should be. Should there not also be a priority to get a resolution through the United Nations, toughen the EU sanctions, and urge SADC, in addition to its mission, to be far more firm in its total approach to Zimbabwe? By not making those a priority, are we not demonstrating that we are not giving enough effort and care to looking after and helping the people of Zimbabwe in every possible way?

Baroness Amos: My Lords, the noble Lord has confused a number of different issues. If the nightmare for the people of Zimbabwe is going to end, what we need to see is a return to the rule of law, and an ending of the political violence and harassment that we have seen. As said by the noble Lord, Lord Watson, the honour is symbolic. It cannot be a priority at the moment in terms of the day-to-day issues that confront the people of Zimbabwe and that have been raised in the House on a number of occasions.

The noble Lord, Lord Howell, asked me about taking resolutions before the United Nations. As he knows, a draft resolution from the European Union on human rights in Zimbabwe is coming before the Commission on Human Rights. There will be a discussion this afternoon of the humanitarian situation in southern Africa in the UN Security Council, and James Morris, the director of the World Food Programme, will address it on that matter.

With respect to the wider issue of international peace and security, which we would like to see considered by the UN Security Council, I have to say what I have said before, which is that there no consensus on the matter. We continue to discuss it with our partners and allies, but at the moment there is no consensus in the UN Security Council for such a resolution. I know that noble Lords do not want to hear that.

Lord Acton: My Lords, my noble friend is quite right in saying that feeding the hungry in Zimbabwe should

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indeed be a priority. Is she aware that, as a result of the destruction of the commercial farming sector in Zimbabwe, and of the poor rains, especially in Matabeleland and Masvingo, the number of people at risk from lack of food—it is currently 7.2 million—is assessed by independent observers as likely to be 10 million by Christmas? Will the Government continue so generously to provide the funds necessary to support the needy in Zimbabwe as the numbers increase?

Baroness Amos: My Lords, we are currently feeding some 1.5 million vulnerable Zimbabweans per day, including children, pregnant women and the elderly. We continue to have a programme looking at HIV/AIDS in Zimbabwe, which has one of the highest infection rates on the continent. As my noble friend will be aware, we have contributed some £51 million to the humanitarian crisis since September 2001. Those are the priorities—dealing with the vulnerable, the hungry and those infected with HIV/AIDS, and restoring the rule of law.

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