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Baroness Ashton of Upholland: My Lords, the noble Lord, Lord Avebury, hinted at my response to the amendment, but I want to place it in the context that the Government take very seriously the matter of ensuring that people who have exhausted the process recognise that we expect them to go. There is sometimes a dilemma in ensuring that that happens—voluntarily where possible; that is the most appropriate method. I argue, as the noble Lord has heard me argue before, that, in the interests of children, it is better for people to leave and look after their children in another place and get them settled, to find their own communities, and so on. I do not believe that it is right for people to remain when they should not or that that is in the interests of children.
I accept that there is toughness about this policy. In part, it is about sending a really clear signal that people who are refused asylum must go home. That is why we decided to include this in the Bill and, as the noble Lord mentioned, to pilot it. It is being evaluated in conjunction with the Department for Education and Skills, the Office of the Deputy Prime Minister, the
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pilot local authorities and voluntary organisations before any decision is made on a national roll-out. That will include exploring other options that could encourage failed asylum seeker families to take the steps that they really ought to take to leave the UK.
Further implementation of the provisions of Section 9 will depend on the outcome of the evaluation and no decision has yet been taken. Since the introduction of Section 9, there have been a number of developments on the management of asylum applications and assisted involuntary returns. The new asylum model process is intended to deliver faster outcomes, resulting in improved chances of a speedy removal. By putting the case-owners closer to the claimants, the IND will be able to manage both the case and the claimants more effectively. Enhancements to the assisted voluntary returns system are expected to result in greater uptake of that avenue of departure.
It is within that context that I am pleased to accept the amendment.
Lord Avebury: We greatly look forward to hearing the results of the pilots, when they are revealed, and to the development of the alternative methods of persuading people to return voluntarily, which the Minister explained. I am again very grateful to her for all her help in drafting the new clause.
On Question, amendment agreed to.
Baroness Ashton of Upholland moved Amendment No. 42:
"REMOVAL: PERSONS WITH STATUTORILY EXTENDED LEAVE
(1) Where a person's leave to enter or remain in the United Kingdom is extended by section 3C(2)(b) or 3D(2)(a) of the Immigration Act 1971 (c. 77) (extension pending appeal), the Secretary of State may decide that the person is to be removed from the United Kingdom, in accordance with directions to be given by an immigration officer if and when the leave ends.
(2) Directions under this section may impose any requirements of a kind prescribed for the purpose of section 10 of the Immigration and Asylum Act 1999 (c. 33) (removal of persons unlawfully in United Kingdom).
(3) In relation to directions under this section, paragraphs 10, 11, 16 to 18, 21 and 22 to 24 of Schedule 2 to the Immigration Act 1971 (administrative provisions as to control of entry) apply as they apply in relation to directions under paragraph 8 of that Schedule.
(4) The costs of complying with a direction given under this section (so far as reasonably incurred) must be met by the Secretary of State.
(5) A person shall not be liable to removal from the United Kingdom under this section at a time when section 7(1)(b) of the Immigration Act 1971 (Commonwealth and Irish citizens ordinarily resident in United Kingdom) would prevent a decision to deport him.
(6) In section 82(2) of the Nationality, Immigration and Asylum Act 2002 (c. 41) (right of appeal: general) after paragraph (h) insert—
"(ha) a decision that a person is to be removed from the United Kingdom by way of directions under section (Removal: persons with statutorily extended leave)
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of the Immigration, Asylum and Nationality Act 2006 (removal: persons with statutorily extended leave),".
(7) In section 92(2) of that Act (appeal from within United Kingdom) after "(f)" insert ", (ha)".
(8) In section 94(1A) of that Act (appeal from within United Kingdom: unfounded claim) for "or (e)" substitute "(e) or (ha)"."
On Question, amendment agreed to.
Baroness Ashton of Upholland moved Amendment No. 43:
"(a) may require the use of a specified form,
(b) may require the submission of specified information or documents, and
(c) may direct the manner in which a fee is to be paid;
and the rules referred to in subsection (1) may provide for the consequences of failure to comply with a requirement under paragraph (a), (b) or (c)."
On Question, amendment agreed to.
Baroness Crawley: My Lords, I beg to move that consideration on Report be now adjourned. In moving this Motion, I suggest that the Report stage begin again not before 8.30 pm.
Moved accordingly, and, on Question, Motion agreed to.
Charitable Remainder Trusts
7.29 pm
Lord Lyell of Markyate rose to ask Her Majesty's Government whether they will introduce charitable remainder trusts.
The noble and learned Lord said: My Lords, I am very grateful for the opportunity in this short debate to seek to persuade the Government to introduce the system of charitable remainder trusts. This initiative comes from the Institute for Philanthropy and from others in the charitable sector, including our great universities and education generally, including charities for the underprivileged, medicine and healthcare and the arts and heritage, all of whom have been working closely on this subject for several years. I am most grateful to them all for their help and to my noble friends and noble Lords of all parties, speaking for a wide variety of charities, who support this initiative. In particular, I thank those who have found time to take part in the debate, and the Minister who is here to reply for what I hope he will be able to say.
Charitable remainder trusts have been highly successful in the United States. Over the past 30 years they have raised more than $110 billion in support of charity. The reason for their success is that they have given the opportunity to individuals and families who are prosperous, but by no means super-rich, to give generously to charity without depriving themselves and their children in the mean time of moneys necessary for their own support. The figures suggest
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that there are some 3 million people in this category in Britain today, with free assets of between £70,000 and £350,000—there are more, of course, with slightly larger assets.
Because the assets which are placed in such trusts are often pregnant with capital gain, whether they be shares or real property, they enable such assets to be sold free of the capital gains tax and thus to produce income from their full capital value, both for the settlor and—I say to the Minister—for the Treasury, which would not otherwise have benefited from their realisation for many years, if at all. They also give the settlor an immediate tax credit, the size of which depends on the length of time before the remainder fund enures to the charity.
To give an example, the intending settlor—it may be a husband and wife—may have shares owned for many years; or perhaps a second home, which has likewise appreciated greatly in money terms, but yields little or no income; or perhaps pictures, jewellery or other works of art—all, say, to a value of £500,000, with a built-in capital gain of £200,000. They wish to have an income for the remainder of their joint lives and then for the fund that remains thereafter—the remainder—to go to charity. That may be one charity or a series of charities; they may seek to appoint who it goes to later.
The immediate tax credit against their current income would be based on the actuarial value of the fund—say £200,000—which, at 40 per cent, would save tax of some £80,000. The assets, once in the trust, would be realised, and the couple would then receive an income of around, say, 4 per cent or 5 per cent—£20,000 or £25,000—per annum, worth, I would remind government, some £8,000 or £10,000 per annum to the Treasury in extra tax take. Invested in a balanced fund, this should allow for reasonable capital growth and thus income growth over the years as the capital appreciates. On the second death, the charity would inherit.
Such charitable remainder trusts are skilfully promoted by charities in the USA. In Britain charities—major and minor, including our great universities—are eager to do likewise. They work closely with fund managers, who will manage the investments and also explain and handle the technicalities.
The size of the available market from which such charitable giving is likely to come can be estimated from an estimate of United Kingdom wealth distribution published by Mintel, concentrating on the sectors Mintel describes as "affluent". Taking those with average free assets ranging between £70,000 and £350,000, there are some 3.25 million people, with such free assets totalling more than £500 billion. As I said, most of them need the use of this money to maintain themselves in their own lifetimes and, perhaps, to help their children or elderly or other dependants. But with the help of a scheme like CRTs, they are likely to be willing to unlock a significant part of such assets for the long-term, but nonetheless very valuable, benefit of charity.
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Naturally the Treasury will wish to work out what the cost to the Exchequer is likely to be over time. Funds currently placed in charitable remainder trusts in the USA exceed $100 billion—say £60 billion—but this is after the scheme has been available for some 35 years. They grew slowly at first. The idea would presumably take a few years to catch on here. If one makes a broad estimate, based on the relative sizes of the UK and US economies—ours is roughly one-sixth the size of theirs—in time total funds via charitable remainder trusts might reach £10 billion.
Some revenue would clearly be forgone by the Exchequer from the initial tax credit and from the Treasury's "hope" of some large CGT payments not protected by tax planning. These should not be exaggerated, as they would probably have been reduced by other legitimate tax-planning measures. As I said, the income for the settlors and hence the income tax yields for the Treasury are likely to be enhanced and certainly received early. But I do not wish to make any case on spurious figures. I simply say that any tax forgone is likely to be very small against the overall capital figure of, say, an extra £10 billion finding its way to charity, and very small indeed against annual government income tax receipts, which in the past financial year totalled some £123 billion or, over 20 years, £2.5 trillion. An infusion of moneys to charity on this scale would surely be extremely welcome. Many of those charities, as the Government well know, carry out tasks and meet needs that might otherwise fall to government.
A further practical and philosophical benefit is the close interest that settlors of charitable remainder trusts often take in the charities of their choice—in other words, those charities that will ultimately benefit from the remainder fund. They show this in both voluntary effort and often in additional giving through ordinary gift-aided methods.
It is certainly Conservative philosophy to seek to promote and enhance the role of the charitable and voluntary sectors, and I believe it is an area that the present Government also think important.
I hope that the 10 weeks' notice of this short debate has enabled those helping the Minister to locate and dust off the files. Serious talks were held by the Institute for Philanthropy with the Government in October 2001, just four years ago, when John Whiting, three United States tax lawyers and a representative of the Rockefeller Foundation were all over here and met both Paul Boateng, then Chief Secretary to the Treasury, and the Chancellor himself, who showed close interest for the best part of two hours—for which we are most grateful. Since then charity tax officials have explored the matter and raised what they saw as some potential problems. We believe that these have been adequately and sensibly answered. We are certainly prepared to answer further questions and to give further explanation if necessary, but we do not think that there ought to be any serious cause for deep concern about tax drainage.
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I therefore urge on the Government that the time has now come to implement charitable remainder trusts in Britain, to the advantage of the generously minded citizen and the very large potential benefit to charity.
7.38 pm
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