Small Charitable Donations Bill

Public Bill Committee, 18 October 2012.

Andrew Turner (Conservative, Isle of Wight)

Before we begin, it might be useful if I explain how the proceedings work. The selection list for today’s sitting is available in this room. It shows the amendments selected for debate and those that have been grouped together for debate. Amendments grouped together are generally on the same issue or a similar one. The Member who tabled the amendment makes an opening speech and proposes the amendment. Any other Member is then able to speak on the amendments in the group. Once all Members have replied, including the Minister if appropriate, I will call the Member moving the amendment again. It will be useful for that Member to indicate whether he wishes to withdraw the amendment or seek a Division. The same applies to any other amendments in the group. Amendments are voted on in the order in which they appear in the Bill, although they may have been debated in an earlier group. I hope that that gives some clarity before our proceedings.

Gareth Thomas (Labour, Harrow West)

On a point of order, Mr Turner. My hon. Friend the Member for Kilmarnock and Loudoun noted in an exchange with the Minister during Tuesday’s evidence session that the Exchequer Secretary had said in his winding-up speech at the end of the Second Reading debate that the abolition of the three-year rule would significantly increase the cost of the scheme. You will be aware that we may consider today whether the three-year scheme should stay within the terms of the Bill.

My hon. Friend asked the Minister whether he had the figures with him or could get them. Perfectly understandably, the Minister said that he did not have such specific figures with him. My hon. Friend went on to inquire gently whether he might get us that information, and the Minister helpfully offered to do so. I have checked my e-mails today, and I have not yet received any such letter; I have checked with my hon. Friend, and she has not either. Have you received any such letter, Mr Turner, or any indication from the Minister when such a letter might appear?

Andrew Turner (Conservative, Isle of Wight)

Neither. I do not know whether anyone wishes to respond to that.

Sajid Javid (Conservative, Bromsgrove)

First, I thank the hon. Gentleman for raising that point. He is right that that matter was raised in the evidence session. I have just received the figures, and during the course of this sitting I will be happy to discuss them further.

Gareth Thomas (Labour, Harrow West)

Further to that point of order, Mr Turner. I am grateful to the Minister for that intervention. If it is possible to have those figures in written form for us to consider, perhaps for the start of the afternoon sitting at the latest, that would be an even greater courtesy than the Minister has offered. Will you accept a further intervention from the Minister to clarify whether that is possible?

Sajid Javid (Conservative, Bromsgrove)

That is a reasonable request.

Gareth Thomas (Labour, Harrow West)

On a second point of order, Mr Turner. You will be aware that this is, as I understand it, a money Bill, and that therefore no amendments can be tabled and accepted by peers in the other place, so it falls on this House to scrutinise the Bill and, if needed, to amend it. Yet we also know from Tuesday’s sitting that there is as yet no detailed, up-to-date public estimate in the public domain of the cost of the Bill as it stands. We know that officials and, presumably, the Minister have been working on that estimate, and that it must be put before the Office for Budget Responsibility before it can be released. It seems a little perverse, given that the House is considering the Bill with all its potential cost implications, that we cannot have sight of such an estimate now. Again, Mr Turner, I crave your indulgence to ask whether you have had any indication from the Minister or from others on the Government side as to whether such a detailed, up-to-date assessment could be released without the OBR having necessarily cleared it at this stage. We understand that the OBR has other pressing things to do in the run-up to the autumn statement; nevertheless, it would be helpful to have that detailed estimate before us. Will you solicit an intervention from the Minister to see whether that can be released?

Andrew Turner (Conservative, Isle of Wight)

Handling this a bit more quickly, may I suggest that this point of order is on the record and the Minister may respond to it later on?

Gareth Thomas (Labour, Harrow West)

Further to that point of order, Mr Turner. I am grateful for your ruling. At the very least, will you encourage the Minister to consider the matter? If he cannot make such an assessment available to us because the OBR needs to look at it for the Committee’s deliberations, can it at least be made available to those interested in its figures before consideration on Report, so that we can debate the Bill at its final stage with a view to amending it from a position of greater knowledge of its possible final cost?

Andrew Turner (Conservative, Isle of Wight)

I understand what you are saying. The Minister will, I am sure, be willing to respond to this issue as soon as possible. May we now move on to the amendments?

Gareth Thomas (Labour, Harrow West)

I beg to move amendment 16, in clause 1, page 1, line 3, leave out ‘from HMRC’.

Andrew Turner (Conservative, Isle of Wight)

With this it will be convenient to discuss the following:

Amendment 17, in clause 11, page 6, line 28, leave out subsection (1).

Gareth Thomas (Labour, Harrow West)

It is a pleasure to serve on a Committee under your chairmanship, Mr Turner. Such was the newness of the Committee proceedings that we went through on Tuesday that I did not have the opportunity formally to congratulate the Minister on his elevation to his current role or on the honour of taking this Bill through its remaining stages.

I do not know whether the Minister was regarded as glamorous by his colleagues before he got this job, but to be a Treasury Minister, as any political nerds will recognise, is to hold one of the most glamorous positions in the Government, not least because he has at his disposal the SAS or the Parachute Regiment of the civil service in the form of Her Majesty’s Revenue and Customs. I say all that, Mr Turner, because it falls to you to ensure that there is at least some balance in our proceedings today. The Minister has all the cards stacked in his favour; we on the Labour Benches rely on you to help prevent the Committee from being bullied by the Minister, who can use the expertise of his vast numbers of civil servants.

In moving these amendments, it is not our intention to change our position on the substance of the Bill, nor do we want to outline a series of new spending commitments. None the less, we do want to probe the rationale behind the inclusion of what are key restrictive clauses and to question as a result some of the grander claims that have been made about this Bill, and, in so doing, to encourage Ministers to listen to the concerns of charities, especially those representing small organisations.

I am sure the Minister has reflected long into the night on the comments made in Tuesday’s evidence sitting. He will remember and recognise that those organisations representing the smallest charities were most concerned about the way in which this Bill has been drafted.

The specific reason behind these amendments is to probe why Ministers think that only HMRC can, or indeed should, run the scheme. Amendments 24 and 25 in particular point to possible alternatives that the Minister and his hon. Friends might want to consider. For example, the Charity Commission is an excellent, independent body that Ministers have praised in the past, and other Departments might be more appropriate to run the small grants scheme. My amendments would not preclude the scheme being run by another body that another Department might think is more appropriate.

Perhaps because of the Treasury’s determination that the scheme should be run by HMRC and linked to the claiming of gift aid, the Bill has become much more complex than people outside the House were initially led to believe. It would be harsh on the Minister—I am not harsh, but others might be—to describe the level of complexity inserted into the Bill as making it a sort of Franz Kafka memorial Bill. A key thing we need to hear from the Minister today is why he is so determined, and why his colleagues, the Chancellor of the Exchequer, the Exchequer Secretary and his predecessor, are so determined that the scheme should be run only by HMRC, and why it should be linked to gift aid.

It is far from clear whether HMRC has as much experience as other departments or bodies that have worked for other Departments in organising a small grants scheme. Clearly, it has had plenty of experience of implementing tax relief. We know, and had a long discussion in Select Committee, about the way in which HMRC implements gift aid, but not about its managing small grants. The Committee should remember just how small the grants in the Bill are. The maximum that can be claimed by most charities is £1,250, and many will claim a lot less. This is a very small grants scheme.

We do not know what experience HMRC has had in running effectively such a small grants scheme. That did not come out in our exchanges on Tuesday, and it would be useful to hear from the Minister what consideration he, his predecessor or indeed the Chancellor gave to other possible ways of implementing the scheme. Partly because Her Majesty’s Revenue and Customs is running the scheme and linking it to gift aid, tying its delivery into the process of bringing gift aid online, the effect will be to pit charity against charity, and church community against church community, as I will describe. Big charities will be pitted against small charities.

When the scheme was announced, it was warmly welcomed by the sector. We were told that it could put back £100 million into the hands of 100,000 charities.

Sheila Gilmore (Labour, Edinburgh East)

Does my hon. Friend agree that, just because this scheme initially arose from the view that there are small organisations with small ways of gathering money that people cannot get gift aid for, it does not follow that we must link it to gift aid with all that goes with it, and to the use of HMRC? The two are not necessarily linked, just because the origin of the scheme was the feeling that a gap exists here.

Gareth Thomas (Labour, Harrow West)

My hon. Friend makes an extremely good point. She is right to say that some of the briefing for this Bill suggested that this small grants scheme—effectively, that is what the Bill will establish—was needed to help charities that were not claiming gift aid. As she rightly points out, we are now in the daft position whereby charities that do not claim gift aid cannot benefit from the Bill. I suspect that that is because Ministers are determined that the scheme’s delivery should be linked to the new IT system being introduced in the Treasury, which will help to ensure that gift aid claims can be submitted online. HMRC clearly needs to run that function, but it does not follow that HMRC should necessarily have to run the scheme.

Jeremy Lefroy (Conservative, Stafford)

Will the hon. Gentleman acknowledge that when this scheme was introduced in the Budget 2011, the Chancellor stated that he, with the Culture Secretary, had been working on a series of substantial reforms that will support giving from the largest donations. This is about not grants, but supporting giving on the back of what people are already giving. When he talked specifically about small donations, he emphasised that point and linked it directly to the gift aid scheme. I would worry, therefore, if we were moving very far from what the Chancellor suggested then, which I thought was an extremely good idea.

Gareth Thomas (Labour, Harrow West)

I acknowledge that the Chancellor may well have said that. I do not have the transcript to hand, but I believe that the hon. Gentleman is correct about what was said at the time. None the less, perhaps there is a greater concern now than purely focusing on giving, and that is the division that the scheme creates within the charity sector. The big charity in the hon. Gentleman’s constituency will be up against the small charity that has not claimed gift aid, and, as a result, will not be able to claim anything under this small grants scheme because of the way in which the Bill is drafted. At the moment, it appears that Ministers are determined that HMRC should implement this scheme through its new IT system.

The Minister alluded to a series of other reforms that are being drawn up by Ministers. The hon. Member for Stafford may be aware that the Cabinet Office has sought to reduce the regulatory burden on charities and encouraged Lord Hodgson to investigate in some detail how to remove red tape for charities. The effect of asking HMRC to implement this scheme, because of the need to link it to the online gift aid process, is to introduce a whole series of new forms of red tape that charities will have to deal with. I encourage the hon. Gentleman to recognise how far we have moved away from the original intention behind the Bill.

Fiona Bruce (Congleton) (Con) rose—

Jeremy Lefroy rose—

Andrew Turner (Conservative, Isle of Wight)

Order. I remind Members that it is for the speaker to give way to whom he chooses, not somebody chosen by one of the two Members who rose. Whom do you wish to call?

Gareth Thomas (Labour, Harrow West)

I beg your pardon, Mr Turner. I will happily give way to both hon. Members, but as the hon. Gentleman was intervening on me first and his intervention might be linked to his previous one, I shall let him go first.

Jeremy Lefroy (Conservative, Stafford)

I apologise, Mr Turner, and thank the hon. Gentleman for giving way. I emphasise that this is not a small grants scheme. In my experience of running a charity and, at the same time, being involved in many charities, the bureaucracy involved in obtaining grants far exceeds that involved in obtaining gift aid once a gift aid system has been set up. I acknowledge that a lot of work is required in setting it up.

Gareth Thomas (Labour, Harrow West)

I say gently to the hon. Gentleman that this may not have been conceived as a small grants scheme, but that is what it now is. Indeed, the need to consider such legislation on Second Reading, in Committee and on Report in order to establish this scheme points to the fact that it is a small grants scheme. I acknowledge that other grant-giving schemes involve bureaucracy and jumping through hoops. If I catch your eye later, Mr Turner, I hope to tell the Committee about many other grant-giving schemes that involve a lot less bureaucracy than the kind Ministers are creating in the Bill.

Fiona Bruce (Conservative, Congleton)

I recall that, during the evidence sessions, one representative speaking on behalf of charities said that where fraud occurs there is a double whammy: not only is the money taken from the charity, but its reputation suffers. Because this is a pioneering scheme involving cash—although each amount might be relatively small, as the hon. Member for Harrow West said—the cumulative sum involved may be large. It is right that we take into account the experience of HMRC in dealing with ensuring the probity of applications.

To highlight the sums involved, with regard to gift aid to charities HMRC pays some £1 billion a year. We were given evidence showing that HMRC stopped £10 million of fraudulent claims and roughly another £30 million in errors. It has relevant experience and it is right that we trust that at this stage of a pioneering scheme.

Gareth Thomas (Labour, Harrow West)

I defer to the hon. Lady, who has stated her position on the Bill. I will have to work a lot harder to convince her to echo the Opposition’s concerns and, if we are not convinced by what the Minister says, to vote with us. She rightly said that we need to protect against fraud in any grant-making scheme and she highlighted evidence from the head of the charity section in HMRC in our evidence session on Tuesday, showing that some £10 million is lost in fraud. Although we need to ensure we are rigorous in putting in place the mechanisms to cut down on fraud, we also need to be proportionate regarding the amount of red tape we expect charities to deal with to access grants.

I hope I have the chance to demonstrate to the hon. Lady that similar grant-making schemes have similar low rates of fraud, compared with other parts of the economy, but with lower levels of bureaucracy for charities. I encourage her to stay for both the morning and afternoon sittings today, during which I shall mention some examples that might tempt her to err on the side of our position on the relevant clauses.

Susan Elan Jones (Labour, Clwyd South)

Does my hon. Friend agree that one big problem with this programme in respect of bureaucracy is the matching principle, which is one of the main things that will impact on smaller charities? In my constituency, the parish of St. David’s, Rhosllanerchrugog is delighted with the potential of this programme for donors there. However, it might make life difficult for, say, the talking newspaper in Ruabon, for reasons connected with the Conservative Member whom I cited in the previous debate. Those sorts of things are problematic. We Opposition Committee members want to reduce the amount of red tape, and there is great support for that across the charitable sector and generally from hon. Members. I was hoping we could get some good consensus on that.

Andrew Turner (Conservative, Isle of Wight)

Order. Before we move on, could I just make it clear that we are to stick to the subject of amendments 17, 24 and 25? We will look at other amendments later.

Gareth Thomas (Labour, Harrow West)

Mr Turner, I am grateful for your guidance. None the less, I think that some of what my hon. Friend said is pertinent to this set of amendments. Her general point about the need to ensure that as many small charities as possible can claim from this scheme is surely one on which the whole Committee could achieve consensus. Our contention in these four amendments is that insisting that HMRC must implement the scheme means that many small charities will not be able to benefit. I am sure you would agree, Mr Turner, and one hopes that Government Members would agree, that that would be a tragedy, not least in the context of an extremely difficult funding environment for charities. We need to ensure as a Committee and a House that, where there are sources of funding through a grant scheme such as we are establishing in the Bill, as many charities as possible can benefit, subject to the overall limit that Ministers want to impose on the funding of the scheme.

Penny Mordaunt (Conservative, Portsmouth North)

I welcome the Bill. It is not perfect for the sector as it is today, but it might be ideal for the sector that we want to see. One of the issues I raised in the evidence session was that in what will always be a difficult funding environment, the sector has introduced great measures to get charities to work together in a more constructive way. Again, rather than someone setting up a small charity, perhaps in memorial of a lost child, they will work with larger charities working in that disease area. It strikes me that a charity of that nature—of the kind that I am pleased to hear the hon. Gentleman talking about—has a choice. It can either plan for the future, do its five-year business plan, grow and work towards being able to use this scheme, or it can look at other ways of working, perhaps endorsing a research call, for example, for that charity. This measure supports a lot of what the voluntary sector has been encouraging smaller charities to think about and do for some time.

Gareth Thomas (Labour, Harrow West)

I am grateful for the hon. Lady’s intervention. I certainly would not want her to leave today with a sense that I do not think any benefit can be achieved from the Bill; I do. Our ambition is try to improve the Bill to enable it to help more charities quicker. Our contention is that a different Government body, perhaps even the Charity Commission, given the same amount of money that will be available under the terms of this scheme, might be able to ensure that more of the smaller charities benefited.

At the moment, we risk a situation in the hon. Lady’s constituency and in all our constituencies where a big charity that has been claiming gift aid for some time can benefit from the scheme, but a small charity that has not yet claimed gift aid cannot benefit at the moment or for another three years. If we shifted the running of the scheme to another part of Government, that huge division—in the hon. Lady’s constituency, in my own, in the Minister’s, and, indeed, in the constituencies of every Member of the House—between big and small charities, and between charities claiming gift aid and those that are not, could be resolved.

One of the imperatives behind these amendments is the scale of the cuts in funding to the charity sector. The National Council for Voluntary Organisations estimates that some £3.3 billion will be lost to charities between now and 2015. That surely makes it even more incumbent upon us to ensure that those charities that have lost out—often smaller community charities that are perhaps reliant on local authority funding and have now been hit by the scale of the Government’s cuts to that funding—can benefit from this scheme.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I share the view of the hon. Member for Stafford that this is not a grant scheme. It is a tax refund scheme, where the decision as to who qualifies is taken by the donor, not the Charity Commission. The hon. Member for Harrow West suggests that body as alternative: has he taken into account the additional bureaucracy of making the decision at the centre? The fact is that in a scheme like this one, which is a tax refund scheme, almost all the money goes to the charity, not to fund bureaucracy in, for instance, the Charity Commission.

Gareth Thomas (Labour, Harrow West)

I want to come on to the hon. Gentleman’s final point, and the way in which the administration will work within HMRC to implement the scheme, during the debate. I also want to consider whether the staff resource that is going into setting up this scheme might be better deployed on other purposes in HMRC. Indeed, I suggest to the hon. Gentleman that that is also a reason why we might want to explore the option of using another Government body, or an agency that works for another Department, which might potentially be better placed to introduce what is—I have to tell him gently—a small grants scheme. We know that it is one because we have to go through the process of legislating for payments under the scheme.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The key point is how complicated the decision is for the Government body, be it the Charity Commission or the HMRC. A system such as the one in the Bill is nice and simple. The qualification is straightforward, the administration can essentially all be done by a computer programme and therefore almost all the money goes to the charity. That is a far better scheme.

Gareth Thomas (Labour, Harrow West)

I admire the hon. Gentleman’s optimism. He suggests that this is an immensely simple scheme. I do not know whether he was present for all the evidence sessions that we held on Tuesday, but several representatives of leading charities pointed out just how complex the scheme will actually be. Indeed, several witnesses pointed out just how many charities do not claim gift aid at the moment and therefore will not be able to benefit from the Bill.

John Hemming (Liberal Democrat, Birmingham, Yardley)

My point is that, whichever Government body it may be—HMRC, the Charity Commission, the lottery or some other body—it will have administrative overheads itself. A scheme like the one in the Bill, which is nice and simple, has a very low administrative overhead at the centre. Such an overhead has to be paid for.

Gareth Thomas (Labour, Harrow West)

I say gently to the hon. Gentleman that I do not think that it has been proved that the scheme has very low overheads or is very simple, or indeed that no other Department, or body working for a Department, could implement such a scheme more effectively than he believes HMRC would.

Sheila Gilmore (Labour, Edinburgh East)

Does my hon. Friend agree that there appears to be an assumption that, if HMRC does not administer the scheme, we will have to move away from money being matched to donations? I certainly think that we could design a scheme in which, to qualify for the money, charities would have to demonstrate that they have received donations to the defined level, and that any other body could administer that scheme just as well. It does not have to mean that we would have to assign grant-giving criteria.

Gareth Thomas (Labour, Harrow West)

My hon. Friend is right to make that point. I assume that she was motivated in part by her worry about what will happen in her constituency when the many charities, with which I know she is in contact, ask her whether they will benefit from the scheme. She will have to tell them that, because of the link to the HMRC online gift aid implementation system, which is fundamental to making the system work, after April 2013, only charities that are already registered for gift aid will be able to benefit. Some charities in her constituency will not be able to claim under this small grants scheme; others will be able to. I know that she shares the concern of all Opposition Members that, with this scheme, we are creating an unnecessary division in access to funding.

I suggest to Government Members that they might want to think through, from a slightly different perspective, how this scheme might come across. If the Committee were to imagine for a second that we are members of the Tea Party—very challenging for Opposition Members, but potentially less so for Government Members—perhaps we would consider this scheme to be an example of big boots government of the sort that Paul Ryan, the vice-presidential challenger, has railed against.

Jeremy Lefroy (Conservative, Stafford)

Will the hon. Gentleman give way?

Gareth Thomas (Labour, Harrow West)

Let me just take the analogy a little further. It might help the hon. Gentleman understand where I am going with it.

Think of the powers that HMRC has at its disposal. It is a body with significant covert and surveillance powers. It has 2,000 criminal investigators working for it. This scheme, remember, has just £1,250 potentially available at the end of the process. There are already 60 pages of guidance that have to be read, understood, digested and followed extremely closely in order for a charity to claim gift aid. There would have to be further guidance for this scheme to be implemented. It could result in a huge amount of bureaucracy of the type that would provoke—unnecessarily, I agree—the ire of the Tea Party, were they to come across from the US and look at this scheme. Of course, Opposition Members do not see it like that, but I wonder whether putting it in such provocative terms to Government Members might encourage them to recognise that there is, or might be, another body better placed than HMRC, which has so many other functions, to implement this small grants scheme to help those in small charities who might be intimidated by having to fill in a form that will go to HMRC, and worried about the anti-fraud talk that we have heard at such length thus far. Perhaps we can find another, slightly less intimidating, body to implement the scheme.

Jeremy Lefroy (Conservative, Stafford)

I was a little puzzled when the hon. Gentleman mentioned the Tea Party, because I could not see what Lewis Carroll had to do with the debate. Unfortunately, I think the hon. Gentleman is living in Wonderland. I proudly have a picture of President Obama on the wall of my constituency office, and so perhaps he should reconsider his idea that all Government Members are necessarily in agreement with something that comes across the Atlantic.

More seriously, I am a little concerned because I think the hon. Gentleman is trashing his own Government’s great legacy, gift aid, which was one of the best things they did. I find it a pretty straightforward solution to this particular problem. It may take time to set up at the beginning, but I ask him to be a bit more charitable to his Government’s legacy and say that it would not be beyond HMRC to make a very good job of this scheme, as they have of gift aid in the years under his Government and, indeed, in the past two years of this Government.

Gareth Thomas (Labour, Harrow West)

I apologise to the hon. Gentleman for the suggestion, or for allowing him to think, that I thought that he was a Tea Party enthusiast. I am delighted to hear that he is a supporter of President Obama, and it is good to have one of the few modernisers in the Conservative party on the Committee to help us explore this subject. From some of my comments, I can see why he might be worried that I was trashing the previous Government’s record, but that is the last thing I want to do. As he quite rightly says, gift aid is a great success and, indeed, HMRC’s implementation of gift aid is to the credit of all the officials in HMRC who worked on it.

However, I come back to the point that I was making: because of the way the Bill is designed, there is a risk that we will make many small charities feel that the scheme does not work for them. Ministers raised the problem of charities, and small charities in particular, that do good things—whether in the constituency of the hon. Member for Stafford, that of the Minister’s or mine—but do not claim gift aid at the moment. The scheme does not help those organisations. I contend that that is because we are, effectively, creating a small grants scheme and linking it to gift aid unnecessarily because Treasury Ministers insisted that implementation of the scheme must stay within the responsibilities of HMRC’s charity section.

I hope that the hon. Gentleman will accept my apology for impugning him, or creating any sense for his constituents that he may be one of the more extreme Conservative Members. Clearly, he is a moderate, and we welcome his presence in the House to help tone down some of the views of others in his party—he looks as though he is preparing to intervene again; let me allow him to do so.

Andrew Turner (Conservative, Isle of Wight)

Order. If the hon. Member for Harrow West is thinking of giving way again, could I ask him to stay nearer to the motion?

Jeremy Lefroy (Conservative, Stafford)

I am in no way implying that, just because there may be disagreements on this side over the Tea Party, I consider them to be as the hon. Gentleman described them.

Gareth Thomas (Labour, Harrow West)

Mr Turner, I risk falling foul of your guidance, but my reading of the hon. Gentleman’s remarks, and its relevance to this set of clauses, is that he is perhaps moving back from his initial position; I need to reflect on what he said. Perhaps I should avoid allowing him to divert me from the substance of the amendments, as he appeared to be tryimg to do.

Perhaps this is an opportune moment to consider which tasks we—in this great House, and the other place—ask Her Majesty’s Revenue and Customs to perform for us and then, given the scale of the tasks we ask it to do, to consider whether this small grants scheme sits well in that list of functions. It is worth reminding the Committee, and the House, that, in no particular order of priority, we ask HMRC to collect and administer direct taxes, such as capital gains tax. There is also the requirement on it to collect corporation tax, income tax, inheritance tax and national insurance contributions.

We ask HMRC not only to do all those tasks but to collect and administer a series of indirect taxes, including excise duties, the insurance premium tax, the petroleum revenue tax, stamp duty, stamp duty land tax and stamp duty reserve tax. We also ask it to collect VAT, which has been unnecessarily raised by the Chancellor of the Exchequer, potentially giving it an even more difficult task. We ask HMRC to do not only those tasks but to pay and administer child benefit. We also used to ask it to administer the payment of the child trust fund, and we still ask it to pay and administer tax credits. That is a huge list of very significant tasks that we ask of Her Majesty’s Revenue and Customs.

John Hemming (Liberal Democrat, Birmingham, Yardley)

There is a long list of things that HMRC does, and it includes administering gift aid. Is the hon. Gentleman suggesting that HMRC should not administer gift aid, or is that as mad an idea as some of the Tea Party ideas?

Gareth Thomas (Labour, Harrow West)

It is as mad an idea as many of the Tea Party ideas. It is good to hear a further voice of reason on the Government Benches, arguing against the tendency of some Government Members to be enthused by the Tea Party. It is entirely right that we ask Her Majesty’s Revenue and Customs to implement, to pay out and to help charities understand how the gift aid process works. As I made clear in response to the hon. Member for Stafford, it does an excellent job on that score. I give way to the hon. Member for Stafford.

John Hemming (Liberal Democrat, Birmingham, Yardley)

Stafford is represented by a Conservative Member. If it is as mad as some of the ideas of the Tea Party to ask HMRC not to administer gift aid, what is the difference with this particular scheme, which is, after all, a tax refund?

Gareth Thomas (Labour, Harrow West)

I am grateful for the intervention. I suppose it is about the balance of tasks that we ask of HMRC. Let us think through, as I hope to give the Committee the chance to do, the impact of the efficiency savings on HMRC and its ability to perform the tasks that I have just described and the administration and dispensing of gift aid. It is worth remembering that there are some further tasks that we as Parliament ask HMRC to enforce and administer.

George Mudie (Labour, Leeds East)

The hon. Member for Birmingham, Yardley asked an interesting question, but does my hon. Friend not agree that there is a difference between this scheme, gift aid and the payment through wages? Two schemes have a clear connection with tax. As the document and HMRC have explained it, they have a clear audit trail. The only reason that this scheme is complex is that because of the cash collection in tins there is no audit trail, so the HMRC and the Minister have connected it to gift aid to get some sort of audit trail, which does not really matter. The two things are entirely different. The first one is connected, because it is a tax relief scheme. This scheme is simply related to the amount of money collected in buckets and does not have a trail.

Gareth Thomas (Labour, Harrow West)

My hon. Friend makes an extremely good point. One can understand Ministers and parliamentarians in general wanting to help the charities that were not claiming gift aid to get further financial support at an incredibly difficult time to get access to public funding. As my hon. Friend rightly said, Ministers have made the scheme unnecessarily restrictive. Ministers originally said that they wanted to help charities, but they are actually excluding them from the terms of this scheme as drafted.

Cathy Jamieson (Labour, Kilmarnock and Loudoun)

Does my hon. Friend also recognise the point that was made on numerous occasions during the evidence session about those who give via small cash donations, who do not have an income on which they pay tax, so there is no benefit to them from filling in gift aid forms? That is important.

Gareth Thomas (Labour, Harrow West)

My hon. Friend makes an extremely important point. She highlights a further example of the divide that Ministers are unnecessarily creating between charities registered for gift aid and those that are not. It is the Opposition’s contention that were it not for the HMRC gift aid online system that is helping to implement the scheme, the divide would not have needed to occur. We should explore whether another Department or non-departmental public body, or indeed an organisation that works and liaises with other Departments, might be better placed to implement the scheme.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Does my hon. Friend recognise that for many existing charities using gift aid, a scheme such as that proposed in the Bill for what is essentially supplementary gift aid for small donations could be appropriate as a sort of lean-to on gift aid? The problem with the Bill is that it insists that small charities receiving small donations, who basically just want a complementary top-up payment, have to construct a gift-aid house and then get the lean-to. What we need from Government is a route 1, such as is in the Bill, for the bigger charities that are comfortable with gift aid, but we also need a route 2 option for small charities so that they can get their small donations topped up.

Gareth Thomas (Labour, Harrow West)

My hon. Friend makes a critical point and cuts to the heart of the dilemma before the Committee today. Her Majesty’s loyal Opposition have proposed the amendments to try to encourage Ministers to be a little more open-minded as to who might be the best source for implementing the scheme.

Fiona Bruce (Conservative, Congleton)

A few moments ago, the hon. Gentleman referred to another Department working or liaising with HMRC. Is that not a real give-away? The hon. Gentleman is saying that there will have to be additional administration and therefore additional costs. Why cannot HMRC have a simple route 1 or route 2? There is nothing to stop it having an arrangement that gives charities an opportunity to make a claim as simply and cleanly as possible, as in any other Department.

Mark Durkan (Social Democratic and Labour Party, Foyle)

The Bill will stop them.

Gareth Thomas (Labour, Harrow West)

To be fair to the hon. Lady, I can see why she makes that point, but other Departments and non-departmental public bodies already make grants to other bodies. They already liaise with HMRC to see what information it has on possible fraud. In that sense, we are not seeking to insert a new process in the Bill. There is a further judgment for the Committee to make: is the sum total of the burden of tasks that we ask HMRC to perform such that it would be better for another Department to implement the small grant scheme?

Some time ago, before I took the various interventions that were extremely helpful in illuminating the choices before us, I was describing the general functions that we ask of HRMC, and I had not quite completed the list. We not only ask HMRC to do a series of challenging tasks, but also to help enforce and administer border and frontier protection, environmental taxes, which I know will not be of concern to Conservative Members because they are no longer interested in green issues, and the national minimum wage, to ensure that it is not denied to some of the most vulnerable people in the country.

I suspect that the hon. Members for Birmingham, Yardley and for Bristol West share our concern and believe that HMRC should continue to enforce national minimum wage legislation. I am not sure that other hon. Members are quite so worried about whether it continues to be a prime responsibility of HMRC.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I agree that it should continue to be a responsibility of HMRC. I see no difficulty in adding the tax refund relating to small donations to gift aid. It is logically within HMRC’s area and would not prevent it from enforcing the minimum wage.

Gareth Thomas (Labour, Harrow West)

I welcome the hon. Gentleman’s continued support for HMRC enforcing the national minimum wage, but there are problems with the enforcement, which I hope to mention in the debate. I encourage him to factor into his judgment whether asking HMRC to administer the small grant scheme is asking one task too many.

I am sorry, Mr Turner, that I accidently provoked the hon. Gentleman to intervene before I completed reading the huge list of tasks that we ask HMRC to perform. You will recognise the significance of the one further task that we ask of HMRC from the heated row—it is fair to use such a term—we had when Liberal Democrats reneged on their tuition fees promise and brought in fees of £9,000: we expect HMRC to recover student loans. Inevitably, with fees to attend university having gone up by so much, that is sadly likely to be a bigger task for HMRC. Hon. Members will recognise that we, as Labour Members, did our best to minimise the burden on HMRC of recovering non-paid student loans, by ensuring that fees to attend university were not unnecessarily high. We lost the argument on the numbers, so HMRC faces a hugely increased burden. The small grant scheme that we are asking for HMRC to be approved to administer is one task too many.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The hon. Gentleman’s argument is that HMRC is so overloaded that we cannot add any more taxes. Yes, we have introduced a graduate contribution tax, which means that lower-paid graduates pay a lot less—29% over their lifetime pay less than previously—and it is administered by HMRC. However, the Opposition propose a graduate tax, which I presume would not be administered by the Charity Commission, but by HMRC. Following the logic of the hon. Gentleman’s argument, HMRC is now so overloaded that there cannot be a banker’s bonus tax because that overloads it, there cannot be a graduate tax because that overloads it, so what will the Opposition do? Will they create a completely new body to cope with all those additional tasks that are beyond the powers of HMRC?

Andrew Turner (Conservative, Isle of Wight)

Order. That is completely out of the range of the Bill.

Gareth Thomas (Labour, Harrow West)

You were quite right, Mr Turner, to chide the hon. Member for Birmingham, Yardley. HMRC will potentially have a series of additional responsibilities. We certainly think there should be a banker’s bonus tax. I believe the hon. Member for Birmingham, Yardley is a supporter of the Business Secretary, who supports a mansion tax. Presumably HMRC would have that responsibility.

Andrew Turner (Conservative, Isle of Wight)

Order. We have now spent an hour on Mr Thomas’s introductory speech. I draw that to his attention and say we have to stick to these four amendments.

Gareth Thomas (Labour, Harrow West)

Mr Turner, I am grateful to you for pointing out the need for me not to be provoked by Members such as the hon. Member for Birmingham, Yardley. Nevertheless it is important to dwell on the task that we are asking of HMRC and to consider whether organisations in other Departments would better placed to run the scheme.

Let us think through the character of HMRC. It is a law enforcement agency with a strong and effective cadre of criminal investigators, responsible for investigating serious, organised fiscal crime. They face huge tasks in cracking down on smuggling tobacco, alcohol and oils, I am told, and it is their task to prevent the loss and ensure the recovery of billions of pounds stolen from Her Majesty’s Government’s revenues. We task HMRC staff to have the skills and resources to engage in intrusive and covert surveillance and achieve all those tasks. Government and Opposition Members know that HMRC has seen a series of cuts in the number of its available staff.

Again, there is a judgment about where the balance of responsibilities and tasks across Government should lie. As my hon. Friends the Members for Foyle and for Leeds East highlighted, the small grants scheme is not directly related to the core tasks HMRC has to fulfil. Why does it need to sit within HMRC? We need to hear from the Minister why there is no other Department that could deliver the scheme? Surely, one of the key tasks that the Minister set out for HMRC is to help small charities to make a judgment about whether a donation of £50 should be included in their total for registering gift aid. That is surely not a task on which one needs HMRC to advise, but something that another Government body might be better tasked to do or, indeed, an organisation that works with charities on a regular, daily basis, perhaps on the instruction of another Department.

Fiona Bruce (Conservative, Congleton)

HMRC deals with charities on a daily basis, and I am sure that it is perfectly capable of appointing staff at an appropriate level—not senior HMRC staff—to deal with the kind of inquiry to which the hon. Gentleman has alluded.

Gareth Thomas (Labour, Harrow West)

The point is this. If HMRC is appointing staff, albeit at the appropriate level, to give advice on whether £50 should count towards the charity’s total under the scheme, it has less resource to appoint people to crack down on non-payment of capital gains tax, corporation tax or income tax. I gently suggest to the hon. Lady that that is a classic, clear reason why the task that we are trying to load on to HMRC should be offered to another Department. We are already asking HMRC to do a huge number of tasks.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Does my hon. Friend accept that although the hon. Member for Congleton is right to say that HMRC obviously deals daily with many charities of scale, there are probably very few community amateur sports clubs that HMRC deals with every day, but it will have to deal with such bodies under the Bill?

Gareth Thomas (Labour, Harrow West)

My hon. Friend makes another extremely important point. That group of vital community organisations could surely be supported in gaining access to the small grant scheme by another Department. One worries that some people will be deterred from seeking to benefit from the scheme, because it is HMRC that has responsibility for implementing it. People across the country recognise the importance and quality of the work that HMRC does in cracking down on fraud. It rightly has a reputation for pursuing fraudsters. As I shall go on to demonstrate if I am able to catch your eye on other groups of amendments, Mr Turner, there is no doubt that people who do not have regular contact with HMRC are deterred from wanting to claim gift aid, because HMRC is responsible for implementing that scheme.

The hon. Member for Stafford asked whether I was proud of the contribution of HMRC in implementing gift aid. I am. I do not think that because people who are not claiming gift aid at the moment have one or two fears, we should somehow shift overall responsibility for gift aid elsewhere. However, my hon. Friend the Member for Foyle’s point was well made. We need to be aware that there are people in charities or other community organisations who do not have regular experience of HMRC and the way it works and who, sadly, would be deterred from taking advantage of a small grant scheme that it administered.

George Mudie (Labour, Leeds East)

Does my hon. Friend agree—I think that this is what he is alluding to—that HMRC’s ethos is damaging to the direction in which the Government want to travel? The Government are providing this scheme, which is expected to cost £100 million. Because they have given it to HMRC to deal with, it is packed with all the worries and rules that HRMC comes with; they are part of its baggage. That, we fear, will affect the outcome of the scheme in a way that the Government do not want. Let us consider this. We are giving the Department for Environment, Food and Rural Affairs £90 million to kill badgers. This scheme is expected to cost £100 million and has more paperwork. I wonder how much paperwork people have to fill in before they kill a badger in order for the figure of £90 million to be reached. It is sheer silliness to give this light scheme to a Department that comes with such detailed baggage.

Gareth Thomas (Labour, Harrow West)

My hon. Friend will have heard me use the word “Kafkaesque” to describe how the scheme has slowly emerged since the Chancellor first announced it. HMRC does a hugely important job in collecting capital gains tax, corporation tax and income tax, but I say as someone who believes he is honest that occasionally, when I have to send information on my tax return to my accountant, I am conscious of HMRC’s power and authority, and I suspect that all Members recognise that sense of the need to be very diligent in our dealings with it.

What, then, should a charitable organisation with little contact with HMRC feel? One can understand such organisations’ fear of getting involved with the scheme. Given the considerable concern expressed by Members about anti-fraud and HMRC’s responsibility to crack down on fraudulent claims within the scheme, one can understand the reluctance to be involved. That is surely, I contend, a further reason why we should explore assigning the implementation of the Bill to another Department, another body that works for a Department or indeed a non-departmental public body that works with charities.

The hon. Member for Birmingham, Yardley pointed out the evidence that we received on the amount of fraud involved in gift aid. Mr Edwards, the head of HMRC’s charity section, pointed out rightly and to his credit that he, his staff and others within HMRC had successfully prosecuted a fraudster responsible for some £500,000-worth of gift aid-related fraud. We know from other evidence, reading between the lines, that other prosecutions and investigations are ongoing, and we know that at least another £9.5 million in fraud needs to be detected. Again, surely we would be better off asking HMRC, if additional resources are going its way, to crack down further on fraud under the existing gift aid scheme rather than to implement a new small grants scheme that another body might be better placed to implement.

I have been hinting at, although I have been diverted by interventions from discussing, the series of alternative bodies in Government that might run the small grants scheme. I will set out for the Committee shortly the options before the House regarding who might be asked instead of HMRC to run the scheme. I recognise that it is incumbent on the Opposition, as we moved the amendment, to suggest and explore the pros and cons of possible alternatives to HMRC, and I intend to do so, but before I come to that part of the case for our amendments, it is worth dwelling on the scale of the cuts in staff at HMRC, which Ministers have insisted on since the election, and the impact on all those tasks that we are asking HMRC to perform for us.

I have not had the chance to check the accuracy of the media coverage of this issue, but I understand that 10,000 staff at HMRC will have left its employ by the time of the next election. That will inevitably impact on its ability to do as good a job as it might in collecting and administering capital gains tax, corporation tax, income tax, inheritance tax and national insurance contributions. It is reasonable to ask the Minister where the axe will fall in particular Departments, and whether staff who will be required to implement this small grants scheme might be better deployed on some of those other HMRC functions and tasks.

I know hon. Members follow closely the work of the Public Accounts Committee, for which the National Audit Office produced a report setting out the amount of tax loss as a result of some of the cuts in staff. That is surely a salutary reminder for this Committee of the impact of cuts in staff on the ability of HMRC to perform all its functions. It is, therefore, even more incumbent on us to consider whether this additional burden that we are legislating for HMRC would not be better allocated elsewhere.

There is a further, more political argument that I might return to later: the concern that the Chancellor of the Exchequer effectively controls the implementation of the small grants scheme. Is a Department of Government controlled by the Chancellor best placed to run a support for charities, given the scale of the cuts in funding for charities that he has driven through elsewhere, and given that we are talking about a maximum of only £1,250?

We need to consider some of the problems facing our country that we ask HMRC to tackle. Tasking HMRC with the administration of this scheme might make it more difficult, even in a small way, properly to address those other challenges. One challenge faced by the country is how to tackle tax evasion and avoidance. Ministers have said it is a priority to crack down on both areas. Who could not support Ministers wanting to do that? The question before the Committee, considering the evidence we have received, is whether additional resources from efficiency savings should be allocated, as a priority, to running a small grants scheme rather than tasking HMRC to do more to crack down on tax evasion.

There is a judgment to be made. We place a huge range of tasks on HMRC, with particular challenges around tackling tax evasion, which is much more of a concern according to media reports. Surely, if there are ways of freeing up staff time within HMRC, we should be putting those resources into cracking down further on tax evasion and, indeed, tax avoidance, rather than implementing a small grants scheme that a series of other Government Departments might be able to administer just as effectively in respect of the level of fraud.

I hope to bring to the Committee’s attention some evidence that was sent in for us to explore regarding the different levels of the tax gap within our economy.

Tony Baldry (Conservative, Banbury)

On a point of order, Mr Turner. I am a bit new to this still, so I wonder if you can help me on processes. Am I right in thinking that the House has agreed the number of sittings for the Committee? If it has, by definition the Committee has a finite time for which it sits. So far, we have been sitting for an hour and a half, and the hon. Member for Harrow West has made just one point. At that rate of progress, a considerable number of the amendments that have been tabled will never be reached or properly discussed. It is a matter for you, Mr Turner, but there is a thin line between what we are hearing and simple filibuster. If anyone reads the record of our proceedings in Hansard tomorrow, they will know it does not require an hour and an half to say, “I think someone else other than HMRC ought to be running this scheme”.

Andrew Turner (Conservative, Isle of Wight)

I have been fairly careful to observe when the Minister and other Members are staying within the rules and when they appear to be going beyond them. I shall continue to do that, although I agree with the many people who may observe that the Opposition have some discretion on how they use the time.

Gareth Thomas (Labour, Harrow West)

Further to that point of order, Mr Turner. You will understand that I am quite shocked by the accusation made by the hon. Member for Banbury. I have extremely high regard for him, but to say that I have been making only one point since we began the debate suggests that he has not been paying full and proper attention to it. What measures are available to me, Mr Turner, to correct the outrageous impression that the hon. Gentleman has given the Committee?

Andrew Turner (Conservative, Isle of Wight)

I am sure that that will be observed. Can we move onward, please?

Gareth Thomas (Labour, Harrow West)

Mr Turner, I am grateful to you for trying to protect me from such slanderous slurs.

I was talking about the particular challenge that our country faces in tackling tax evasion and avoidance. I am sure that you and even the hon. Member for Banbury, who just made a point of order, are avid readers of the newspapers and will have seen that the issue of tax evasion or tax avoidance surfaced dramatically once again before the House this week: the case of Starbucks and the low amount of tax that it pays in the United Kingdom.

Andrew Turner (Conservative, Isle of Wight)

Order. The hon. Gentleman is being too specific on a different issue.

Gareth Thomas (Labour, Harrow West)

I am grateful to you, Mr Turner, for your guidance. I was not making a judgment about the particular company, but merely wanting to highlight the fact that the issue has resurfaced before our very eyes. Presumably, HMRC will be tasked by Ministers to look into that case. That prompts the question whether there will be a diversion of officials at HMRC to look at that challenge. Not loading the small grants scheme on to the responsibilities of Her Majesty’s Revenue and Customs might enable those officials who are being diverted to examining the Starbucks issue to continue to perform their day-to-day tasks.

Stephen Williams (Liberal Democrat, Bristol West)

I was the first MP to raise the issue of Starbucks earlier this week. Is the hon. Gentleman seriously suggesting that the Inland Revenue staff who look at transfer pricing, international agreements and other areas of forensic accounting are the type of people who will be used to administer gift aid? If he is, his amendment is not credible.

Gareth Thomas (Labour, Harrow West)

I was not aware that the hon. Gentleman was the first Member to raise the issue of Starbucks; otherwise, I would have drawn the Committee’s attention to his role in such matters. I am not suggesting that the forensic accountants and criminal investigators who might be working on the Starbucks case would otherwise be working on the small grants scheme. It is absolutely right to say that that would be ridiculous.

However, surely the hon. Gentleman will recognise that, if we keep loading responsibilities on to a particular part of the Government, inevitably, certain tasks will not be done as well as they could, and fewer people will be given advice on how to handle difficult issues because fewer people will be answering the office helpline. It is not the direct correlation and risks to which I was referring, but the knock-on impact of loading on to HMRC an additional responsibility of administering a small grants scheme. It is far from clear that it has experience of such matters and, there must be another part of the Government that could do the task as effectively, allocating £1,250—for goodness sake, hardly a big sum of money—just as effectively, if not more so, than HMRC. I hope to have the chance to draw attention to some of the other Departments that might undertake the task.

We are fortunate to have my hon. Friend the Member for Leeds East in Committee. He has been tasked with chairing a Sub-Committee of the Treasury Committee and has hinted or made clear—I am not sure which, but his suggestion is in the public domain—that he will call HMRC officials to give evidence on tax evasion. That is a further small example of how officials at HMRC are being diverted by recent publicity. Surely we should make it a little easier for HMRC to perform the full range of its functions, particularly regarding its responsibility of reporting to and being held accountable to Parliament. I therefore genuinely suggest to the Committee that we explore another option for the management of the scheme.

Mr Turner, you rightly chided me for making a specific reference to a specific case.

Andrew Turner (Conservative, Isle of Wight)

I remind the Committee that with this we are discussing the following:

Amendment 17, in clause 11, page 6, line 28, leave out subsection (1).

Gareth Thomas (Labour, Harrow West)

On a point of order, Mr Turner. In the light of that traditional guidance, may I thank the Minister for sending through some additional information about the cost of the matching requirement? That is extremely helpful and we will reflect on the letter over the course of the debate. Have you had any information on when we might see the estimate of the overall sum that will be spent on the Bill? Will it be during the course of the Committee stage or before Report to allow us to consider the measure with due diligence?

Andrew Turner (Conservative, Isle of Wight)

None has reached me.

Gareth Thomas (Labour, Harrow West)

I am grateful to you, Mr Turner. I look forward to probing the Minister on that point. Whenever one speaks in the House one should approach the occasion with humility. I realise that I perhaps have not done a good enough job thus far to convince the Committee of the quality of the amendments and that they deserve to be accepted. So, conscious that I have to step up a gear in trying to persuade Government Members, I went over some of the evidence presented to us. Questions 98 to 100 in column 61 help us to cut to the real truth behind why the Opposition believe that the amendments are worthy of consideration by the House.

The longest serving Member here, the hon. Member for Banbury, sought the Minister’s support in question 98 to help him understand how the scheme might work for Banbury Sea Cadets, whose president he is. The Minister replied and the hon. Gentleman thought that he had it clear in his mind. He asked another question and it was clear that the explanation had not provided him with a full understanding. He is a very distinguished Member. He is very intelligent and very shrewd. If he has questions about how the scheme will work, it would hardly be surprising if a whole series of charities wanted to get on the phone to Her Majesty’s Revenue and Customs to ask for advice. The Minister drew our attention to the free HMRC phone line. As I understand it from his evidence, that phone line will not see any increase in staffing. It will just be more pressure on that phone line to give accurate information.

A later question, question 100, is one that I posed to the Minister and his officials, about the number of officials in a particular charity section of HMRC who will be available for the implementation of this Bill. Mr Edwards helpfully made it clear that there were approximately 190 staff in the HMRC charities section, presumably all available to help with the administration of this scheme or to answer the queries of people in the charity sector. He also said that there would be a significant slimming down and that in the next couple of years the 190 staff would be down to 150. That is a significant reduction: a 25% cut in the number of staff available in the charities section, just at a time when a funding scheme that is hugely significant for many small charities is coming into force.

Fiona Bruce (Conservative, Congleton)

Was it not also the case that in evidence the response to the rationale for reducing staffing numbers was that a new IT system was coming into force?

Gareth Thomas (Labour, Harrow West)

My understanding is that a new IT system is coming into force to help make it easier to claim gift aid and that that is part of the reason Ministers want to link the small grants scheme to gift aid. However, it does not necessarily negate the point about the impact of such a significant reduction in staff in the particular section of HMRC that will be available to help charities implement small grants schemes.

Cathy Jamieson (Labour, Kilmarnock and Loudoun)

I wonder whether you share my concerns and those of many hon. Members who have raised the question of the staffing levels at HMRC, particularly the ability of HMRC to meet the targets for dealing with phone inquiries and other forms of inquiries within the time scales? It is not something that I am blaming individual staff for; but there have clearly been problems with the system.

Gareth Thomas (Labour, Harrow West)

I am grateful to my hon. Friend for that intervention and I apologise to her. I had not seen her previous questions raising this perfectly legitimate concern. It is a worry that, presumably, a whole series of sections of HMRC face pressure due to cuts in the number of staff to whom people in the charity section might have been able to turn for support in the initial implementation stage of this small grants scheme to deal with the queries that new charities will have. Clearly, they are not going to be available.

Mr Edwards gave some fairly revealing information in the second part of his answer. This is at column 61, question 100.

“The new scheme does not require many extra staff”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 61.]

So it would appear that the scheme does require extra staff to implement it. One wonders what impact the deployment of those extra staff to the management of this scheme will have on the rest of HMRC. I can give a further real-life example of an organisation which does not have as its president a very distinguished Member of Parliament such as the hon. Member for Banbury to whom it can go. Imagine, if you will, a youth and community centre that provides space for all sorts of activities for some 60 young people that help both to give them a good time and to keep them out of trouble. Imagine that it is set to close. No alternative facility is being provided for those young people. When the organisers are thinking what they might do to organise a place to meet, they consider establishing a charity. We know that they might want to phone HMRC for advice on how they might access the small donations scheme—not knowing clearly, at this stage, that they must be registered for gift aid and must have three years’ worth of gift aid claims in before they can do it. That is a real scenario.

In the Minister’s constituency, exactly that situation is happening. Rubery youth and community centre—Rubery is in the Minister’s constituency—tonight faces Worcestershire county council, which is determined to shut it down. The question is, where will those 60 young people go? What will happen to the centre? Perhaps they will want to organise themselves into a charity and will need to seek advice.

Sajid Javid (Conservative, Bromsgrove)

The hon. Gentleman raises the issue of Rubery youth centre, and he is correct that local young people are rightly concerned about it. However, he asks where they will go. They will go to the brand new £5 million youth centre that has opened one and a half miles up the road.

Gareth Thomas (Labour, Harrow West)

With all due respect to the Minister, one welcomes investment in youth and community facilities, but, for the children and young people who use Rubery community centre at the moment, one and a half miles is a significant distance. The new centre is perhaps unlikely to be used as much as the Minister hopes. He will be aware that an alternative facility just opposite Rubery youth centre was on offer for those young people to use. However, I fear I am digressing. Needless to say, that facility is no longer on offer, and, as he quite rightly said, those young people face a one and a half mile trek down the road. It is unlikely that they will take advantage of it.

To help those young people directly, the Minister could think about whether shifting this scheme somewhere else might free up staff time to support those young people to enable them to establish themselves as a charity and secure assistance under this scheme. If he is not prepared to try to save Rubery youth centre, and it appears that he is not, he could consider accepting our amendment, which will make it just that little bit more possible for those young people to get advice.

Nigel Mills (Conservative, Amber Valley)

I am loath to break the hon. Gentleman’s wonderful flow, but surely the logic of his argument is that this charity would need to ring up not only this mythical new place that might give them advice, which probably would not yet exist or have any expertise, but HMRC to get advice on the gift aid scheme, which would probably raise more money towards their noble goal. Is that not making life harder for that charity?

Gareth Thomas (Labour, Harrow West)

The young people believe that it would be better if their youth and community centre stayed open or if another facility in Rubery were made available, but that is moving away from the subject of the clause. Needless to say, the hon. Gentleman’s intervention might encourage the Minister to think again about what else he can do to help those young people.

Just before we broke for lunch, we were looking at the challenges that face the country, and therefore HMRC, in cracking down on tax evasion. Mr Turner, you follow these things closely so you will remember that in last year’s Budget the Chancellor, quite commendably, chose to shut down three forms of tax avoidance. One wonders whether, faced with the same type of scenario in the future, he might be able to shut down four forms of tax avoidance if staff were not having to be diverted from tackling tax evasion and avoidance, which is surely HMRC’s core function. Instead, we are having to set up a small grant scheme.

Fiona Bruce (Conservative, Congleton)

I will hopefully not need to intervene again. In giving evidence, Mr Edwards said,

“The new scheme does not require many extra staff because it is being brought in at the same time as we are introducing a new IT system for gift aid, which we have designed with this scheme in mind.”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 61.]

Does the hon. Gentleman agree that it would be fatuous to have a completely separate IT system set up in a completely separate Department, when this plan has already been put in place and seems to be the most economical one that we could possibly propose?

Gareth Thomas (Labour, Harrow West)

The hon. Lady might be right, but what we need to hear from the Minister is the extent to which he has talked with colleagues in the Departments for Education and for International Development, the Charity Commission, the Cabinet Office and the Big Lottery Fund about whether they can implement the small grants scheme, which is what we are establishing under this Bill, just as effectively, or perhaps more effectively, than HMRC. There are other bodies providing grant schemes in Government that could run this scheme. We need to know whether the Minister has properly explored those options. From the evidence that we heard, it was far from clear that there had been a conversation with those other Departments. A number of Members raised the issue of the Awards for All programme, which is run by the Big Lottery Fund, and it was not clear whether there had been any deliberation within the Treasury, by the Chancellor and the Minister’s predecessor, about whether the Big Lottery Fund might be a place for housing the administration of this scheme.

I mention the issue of tax evasion, but, as I said earlier, HMRC faces a series of other significant challenges. One of them is the enforcement of minimum wage legislation. Surely no one in this Committee would not want to see the Government make a wholehearted effort to crack down on those who will not pay the minimum wage. The fear is that the scale of cuts to HMRC may make that task a little harder, which is surely why it is incumbent on us to consider again whether those few extra staff, who we know will have to be diverted from other tasks such as minimum wage enforcement, might not be better deployed in tackling the existing challenges facing HMRC.

Nigel Mills (Conservative, Amber Valley)

I am just trying to find the logic of this argument. The hon. Gentleman is saying that it is wrong to give HMRC something new to do that is not strictly related to tax, yet he is taking us back to the previous Government’s decision to give HMRC the minimum wage legislation to enforce, which is not strictly to do with tax. Is he not better off suggesting that HMRC should now be left to focus only on tax collection and enforcement, and that its other responsibilities should all be moved? Does he think that the previous Government made mistakes on that score?

Gareth Thomas (Labour, Harrow West)

I do not think that the previous Government made a mistake in this area. The point I was making this morning was that there is a balance to these things. One needs to consider the burden of tasks that one gives to particular Departments. Surely that is especially true when the Government have asked HMRC to downsize to the tune of 10,000 staff by 2014-15.

Let us briefly consider the scale of the challenge that faces HMRC in the enforcement of the minimum wage. The hon. Gentleman might have seen the evidence from the Institute for Public Policy Research suggesting that there are 100,000 interns working in the UK, some of whom should be paid the minimum wage but are not. Perhaps if there were additional officials who were not tied up with the implementation of this scheme, things might be improved for those interns. If the minimum wage is not properly enforced, the only two options available for those affected are either to accept the situation and to live with it as best they can—a grim scenario if they do not have the resources to back them up—or to go to court, which is a challenge that is almost as daunting as a small charity trying to fill in a gift aid claim when it has never done so before. Again, it is about thinking through the balance of tasks that we are asking of Her Majesty’s Treasury.

There has been a particular challenge in the film industry; 20th Century Fox is being challenged by interns who are not being paid. One wonders whether there is the same problem on the new James Bond film. We do not know and, at this stage, nor should we, but we should be able to have confidence that HMRC has the staff at its disposal to crack down on unpaid internships to which the minimum wage legislation should apply.

There is also the huge challenge that HMRC faces with the implementation of universal credit. As we know from the leaks from No. 10, there is considerable concern across government about whether universal credit will be implemented effectively come April next year. Indeed, many businesses are also extremely worried about their responsibilities to provide real-time information to the Government.

On Monday, I was at an event at Harrow council in my constituency where businesses met, together with an extremely effective, Labour-run council, to consider what else could be done to support business. Representatives from HMRC were present, and businesses wanted to ask about the support they would get for the implementation of the real-time information provisions.

Universal credit is a huge change across Government, and there is a huge responsibility on business to give real, accurate information. Understandably, there is genuine concern as to whether the scheme will be properly implemented and what it may mean for businesses if they, perhaps inadvertently, do not provide the right information for the Treasury.

Potentially, that scheme could be introduced at the same time as the Bill’s scheme, and universal credit is surely the bigger challenge that faces HMRC in terms of new responsibilities, so why do we want to load on another responsibility in terms of a small grant scheme when there may be other Departments that could handle the challenge?

I have alluded to the scale of the problems that HMRC may face in terms of reclaiming student loan debt, as the burden rises significantly. In our brief break, my hon. Friend the Member for Leeds East downloaded a most interesting publication that has come online—from HMRC, I believe—which looks at the scale of the tax gap we face. In that hour, I skimmed the 11 pages of the scheme, and I cannot find any reference to a tax gap in the charity sector. Significant information is given in terms of the VAT gap collection rates, diesel tax gap rates and spirits and beer duty tax gap rates, but nothing about the charity sector or gift aid tax gap. That suggests that HMRC faces a much bigger challenge in terms of reducing the tax gap in areas other than the charity sector, and begs the question: if fraud, tax evasion and tax avoidance are more of a problem in other parts of the economy, as a Committee, should we not ask HMRC to focus purely on those bigger challenges? Then we could leave some other Department to examine the challenges around the implementation of the scheme, and, as far as is possible, prevent abuse under it.

I know that the Committee has eagerly awaited my suggestions for other possible Departments or non-departmental public bodies. What about the Charity Commission? We mention it in our amendment. It is a non-ministerial body; the thought that Ministers will not be able to interfere in its running will be attractive to many charities. It is completely independent of ministerial influence; it is also completely independent of the sector—again, giving confidence to the sector. The commission is required to report annually on its performance, so the House would get an annual report, which would include how this new scheme is being introduced. The commission is also responsible for the registration of charities, the very organisations that will benefit under this scheme, and for ensuring that they understand and comply with charity law. Surely, at first glance at least, it is an ideal body to be tasked by the Treasury with implementing what is, after all, a small grant scheme, not a tax relief scheme.

Susan Elan Jones (Labour, Clwyd South)

I know that there have been some discussions about the Awards For All programme. I accept that there are certain differences, which the Minister alluded to. However, what is interesting is that there has never been any insinuation that there has been a high level of fraud in the Awards For All programme. I would venture to suggest that that is because Awards For All links very closely to local media publicity. I suggest that the Government have gone a bit too far over the top and are being overly statist in their approach. If there is publicity in a particular area and people think, “Well, this is a dodgy organisation,” the local community, who are, of course, the big society, would report the organisation to the relevant body or to the police. That is true in our villages and towns, where people can often smell fraud in advance of the official bodies.

Gareth Thomas (Labour, Harrow West)

My hon. Friend makes a very good point. If she will forgive me, I will park her comment about Awards For All and come back to it shortly.

It is worth making clear the scale of charities that have some connection with the Charity Commission. As of 31 March this year, Mr Turner, there are some 162,098 charities, which between them have an annual income of £56.9 billion. The vast majority of those charities would have been registered with the Charity Commission. If they are not registered, they will have had to have considered and understood that although they did not need to register, they nevertheless needed to be familiar with the commission and the concepts underlying it as the sector’s independent regulator.

I recognise that there may be some arguments as to why the Charity Commission should not be the body that handles the implementation of the scheme, and it would be wrong of me not to outline those arguments for the Committee’s consideration. It is true that as some charities do not need to register with the commission, they will not have had the day-to-day contact that might be required, on occasion, when a charity is first registering. If a charity’s head office is not in England or Wales, it may not have had direct contact with the Charity Commission, as Scotland and Northern Ireland have their own regulators; nevertheless, the fact that those charities have to deal with an independent regulator might suggest that they would be comfortable with the concept of the Charity Commission.

It is also true that if they are part of a larger organisation, some smaller charities that are effectively independent and control their own funds will not have to register with the Charity Commission; nevertheless, those charities will be familiar with the concept that their parent body registers with the commission. I would gently suggest that for people setting up charities who have never had any contact with Government before, the prospect of engaging with the Charity Commission will not be a more intimidating one than that of engaging with HMRC.

The other argument, I suppose, as to why the Charity Commission should not be asked to take on this task is that it too has seen significant cuts in funding, which is down from £29.3 million in 2010-11 to some £21.3 million come 2014-15. That might make the hon. Member for Congleton even more determined in her view that the Government have got it right by asking HMRC to handle the scheme. I gently suggest to her that on balance the commission might be a more attractive place for more of the smallest charities, which are already familiar with it as a regulator.

If Treasury Ministers cannot abide the thought of giving responsibility for the scheme to an independent body not controlled by Ministers, they may want instead to pass responsibility for its implementation to another part of Government. What about the Cabinet Office? It has already had to handle the transition fund. The Cabinet Office chose to have the Big Lottery Fund administer that, in partnership with the charity infrastructure body, the Association of Chief Executives of Voluntary Organisations. The experience of charities engaging with ACEVO and the Big Lottery Fund, given the huge number of applications that the fund received in the wake of the huge cuts in Government funding for charities, suggests that the Big Lottery Fund and ACEVO could implement and administer the scheme effectively in partnership, could have the confidence of the charitable sector and could take a small part of the burden that Ministers want off HMRC.

The Cabinet Office might want to directly manage the scheme. It still has officials in the Office for Civil Society and is used to working with local organisations, such as the transforming local infrastructure fund and the investment and contract readiness fund. Those are two examples of the amounts of money—albeit tiny relative to what there was before—available to charities to access from the Cabinet Office.

An argument against the Cabinet Office having responsibility for administering the scheme is that the Office for Civil Society has faced a significant cut in its funding and, as a result, in its staff. That cut is of almost a third and has had a significant impact. Nevertheless, it has a good track record of working with charities. There may be a way of ensuring that it has the support it needs to administer the scheme.

The responsibility could be given to the Department for Culture, Media and Sport, which, again, is used to engaging with charities through the National Lottery. There are other key lottery funders, such as the Arts Council, Sport England or the Heritage Lottery Fund, which are all used to working with voluntary organisations and might be a better place than HMRC, in light of the existing burden on HMRC, for handling the existing small grants scheme.

My hon. Friend the Member for Clwyd South referred to the Big Lottery Fund’s Awards for All scheme in her intervention. I have with me the guidance that Awards for All sends out. It gives out small awards of up to £10,000. That is 10 times the maximum amount available under the scheme in the Bill. The Awards for All scheme does not have a 60-page book of guidance, as is required by the Treasury for gift aid. It is a much more manageable 20 sides, designed to make it easy for the newest charity to claim, or the individual who has never claimed a grant for local community works.

If the Big Lottery Fund can work with the smallest organisations already and can recognise through its Awards for All programme that it has the staff and expertise to go into our communities and ensure that lottery funding gets to the UK’s smallest charities, why can the BLF and Awards for All not be the body specifically tasked to run the small grants scheme? I recognise that that would move the scheme out of Treasury and HMRC control, but the BLF has the great advantage of being an organisation with which many charities are already familiar.

If I have not yet convinced you, Mr Turner, or other Committee members that those other bodies or the Charity Commission, the first body that I suggested, might be the best place for the small grants scheme to reside, let us consider two types of charity and what would be the most comfortable source for them to access the scheme.

Andrew Turner (Conservative, Isle of Wight)

Order. I think that if the hon. Gentleman moves into a comparison between two different organisations that might both be suitable, he will go outside the scope of the amendments. It is all right for him to speak about where they might go, but it is not necessary for him to compare A with B.

Gareth Thomas (Labour, Harrow West)

I am grateful for your guidance, Mr Turner. I will not make the comparison, but I will explain to the Committee why those two organisations might be more comfortable with the Charity Commission, one of the organisations named in amendment 24. There are 19,000 parent-teacher associations across the UK, but just 16% are registered for gift aid at the moment. The vast majority of PTAs in our schools must register with the Charity Commission—although not if they are in Scotland or Northern Ireland—but only 16% of them have contact with HMRC. Proportionately more of those registered for gift aid are in the south-east and south-west.

PTAs in general do not have a history of being linked to HMRC, but they do have a history of being linked with and familiar with the Charity Commission. An estimated 70% of PTAs in the UK are registered with the Charity Commission. That excellent association, PTA-UK, is promoting a model constitution for school PTAs that has been agreed by the Charity Commission. PTAs are small charities; the average amount of money a PTA raises is about £8,000, although some raise more and others raise less. It is a relatively small amount, but it is significant in the context of what it can do for the children in a school. As I said, 70% are already familiar with the Charity Commission, and the other 30%, facing the work by PTA-UK to promote the model constitution, may also become familiar with the Charity Commission as we go forward.

The other types of charity that might prefer accessing a small grant scheme via the Charity Commission to HMRC are hospital radio stations. Radio Northwick Park, which serves my constituency hospital, is excellent. There are about 230 hospital radio stations around the country. Virtually all of them are registered charities, familiar with the Charity Commission and its work and comfortable with its independence and style of operating. About 40% of those 230 hospital radio stations are not registered for gift aid, so do not have any track record of liaison with HMRC. If we are looking to help the smallest charities, who are part of the bedrock of community life in our constituencies, surely in the case of hospital radio stations at least, we should recognise that the Charity Commission might be a better place to house the small grants scheme. Those are two examples of charities being more likely to be familiar with the Charity Commission than with HMRC.

To summarise this group of amendments, there are a series of reasons why the Minister might want to consider that HMRC is not, as first believed, the most suitable home for the small grants scheme. The last offering of thoughts for the Minister comes not from me directly, but from the Gift Aid Forum, which reports to the Economic Secretary to the Treasury. Presumably this report was prepared for his predecessor. Its first recommendation to the Treasury says,

“small charities are particularly vulnerable at times of economic stress and some find dealing with Gift Aid difficult. Their needs should be a priority for Ministers”.

I say again that if that is the best advice from a forum set up by Ministers themselves, and recognising that at the moment the scheme is directly linked to gift aid and therefore directly in the hands of HMRC, perhaps it is time to listen to the experts the Treasury got to look at gift aid and recognise that another Government body might be better placed to administer the scheme. I am open to be persuaded that HMRC is still best placed for it and I will listen with care and diligence to the Minister’s response.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I am very pleased to speak on this issue. It is quite amazing how much time can be spent on amendments that are basically as absurd as these. We start with the principle of what we are trying to achieve. We are trying to be efficient so that the money paid by taxpayers, or in this case refunded to taxpayers, is used as efficiently as possible for the purposes for which we would like to use it. In this instance, the purpose is to support charities. If we have the opportunity for a slight change to the gift aid computer system, so that HMRC can handle the administrative process and refund some of the tax paid on the basis of money donated to those charities by a top-up payment—not a grant scheme—that is an obvious thing to do. There is a Department that has the experience of handling that and this is an extension to gift aid. I accept that there are constraints to avoid fraud, but otherwise the difficulty in handling a grant scheme is having to make judgments about whether grant is payable. In this instance, the judgment is quite straightforward. It is based on money paid in tax and money donated to the charity. On the basis of those calculations a sum of money is refunded to the charities. The fact that it may actually encourage more charities to register for gift aid is good in itself. As the Opposition spokesman said, it would be absurd to try to handle gift aid in any other way.

Unless the aim to is to disconnect completely and have a scheme to calculate how much money is being given out per word of that Opposition statement, we get some comparatively very cheap words. Given that the amounts of money will not be great, that was one of the longest speeches I have heard on a minor issue. It would be surprising to have a more efficient system than HMRC handling an extension to what it is doing already.

We also need to look at the other amendments, not just 16, but 17, 24 and 25. We have to consider, in passing legislation, that we are giving authority to a Minister to do something. The authority is not to say to his or her researcher in the office, “Why don’t you manage this system?” The Opposition are suggesting in amendment 24 that the job should not be guaranteed to HMRC but to a Government Department or the Charity Commission. They have not said that it can be the Minister’s researcher who handles it, or that it can be handed to a quango, a non-ministerial public body. Instead, it can go to any Government Department.

HMRC is interesting, in that it is a non-ministerial Department. Wikipedia may not be the fount of all wisdom but it does offer definitions. In the section on UK Government it says,

“Non-ministerial departments generally cover matters for which direct political oversight is judged unnecessary or inappropriate.”

What is being proposed by the Opposition is not that the job could go to any other non-ministerial Department but that it could also go to a ministerial Department. We as parliamentarians should be concerned about the discretion that we give to Ministers. We should not suggest that a Minister should be able to interfere in details of a grant scheme such this, and who gets the money and who does not.

I am mystified why the Opposition wish to take the task from a non-ministerial Department—HMRC—that is well qualified and experienced in this area, and give it to any old random Government Department, be it DEFRA or wherever. I am mystified as to the logic of that. It is clearly not appropriate to have ministerial interference in such a matter. This is rather sad: the Opposition suggest not only a very inefficient system, requiring a lot more taxpayer money to be spent on administration and less on charities, but that the task could go to any Government Department that would not necessarily be even within the Treasury.

If the Opposition were suggesting that the task should go to a non-ministerial Department, one could perhaps say that they had put a little bit of effort into thinking about their amendments, rather than into finding things to say about badly thought out amendments. In practice, there is a proposal to give very wide discretion to the Government as to who handles the scheme. Frankly, I do not think it appropriate, with a scheme of small grants such as this, for a Minister to say, “We can give a grant to this person but not that one; to that cause but not another.” This issue should be handled by a non-ministerial Department.

Today, we face a choice between the Opposition’s amendments, which propose a lax regime where anything could happen, or a straightforward system run by HMRC, which already has the experience to encourage charities to register for gift aid to get extra money on their cash donations. Given the choice between an improper proposal from the Opposition and an entirely proper and efficient proposal from the Government, there is no choice but to support the Government’s position.

George Mudie (Labour, Leeds East)

My hon. Friend the Member for Harrow West has taken a long time to go through this, so I can be brief. There is some misunderstanding, despite the care he has taken. We are getting caught up in the issue of HMRC, and there are two reasons. I sit on the Treasury Committee and I chair the Sub-Committee which is responsible for HMRC. At the beginning of our proceedings, my hon. Friend felt that he might be bullied by the Minister calling in the paratroopers of HMRC. When I came to the Committee today there were a number of soldiers in the building because regimental matters were being discussed. I hope they did not hear that comment, because I would prefer to compare HMRC to Dad’s Army, rather than the Parachute Regiment. This is not disrespect: this is a dysfunctional Department with enormous problems.

This is not a party political issue. I trace the decline in the Department to the decision to merge it with Customs. In all the discussions I have had at various levels, many levels of HMRC make this point: there was an ethos, a professionalism and a way of dealing with things, but the merging of two Departments, each with its own ethos, has led to dysfunctionality and the problems are there to be seen.

The Treasury Committee produced a report on customer care which covered a full list of problems. The Mail on Sunday did a marvellous job and presented me with a thick dossier of complaints from ordinary people having all sorts of problems with the Department. We brought our report out on a Sunday, and I travelled down here to speak to the press, at its invitation, about it. I almost thought that it was unnecessary, because HMRC immediately apologised. It held its hands up and said, “Yes, these things are happening and we are sorry about them. We apologise.”

I have said that this is not a party political thing. This was a merger under our Administration. Matters were made worse by the fact that a very powerful Chancellor wanted discipline and savings in other Departments. One thing he did was to provide an example through the Departments under his control, such as the Treasury and HMRC, by pushing through cuts in staffing that are still going on. These are having amazing, disastrous effects in the Department, added to by a great belief in the power of computers to take over from human beings. That is fine, but as we have discovered in Parliament, it is always better to get the computer working, the programmes tested and running before dispensing with the human factor. Parliament and Governments of all kinds have not had any success in introducing major computer systems that have worked immediately and come in on cost; so HMRC, having dispensed with human beings, has found itself in all sorts of trouble.

As every Member here knows, HMRC has closed offices—I know I am making a political point—and opened call centres. If anybody here has had a human, sensible, reasonable conversation on a matter of detail with anybody in a call centre, they are to be congratulated. People do not phone call centres and expect to have a detailed discussion that they can later quote, or decide that they can speak to the same person they spoke to the day before. The response would be “Who’s John?”, if indeed they got a name in the first place. They get an anonymous person who takes down what they say and has no decision-making power. That is what was happening to ordinary people, with the closure of offices, the cutting of staff, and the imposition of a call centre with everything done by computer. It has been chaos.

I do not blame the people who run it. Sadly, Dame Lesley Strathie, who was the chief executive, died suddenly, when she was getting to grips with things. She had come from another Department, but she got cancer, and died. The new person running it is only just in power, and the chairman has gone and there is a new one. They are coming before us within three weeks, and we will see if they can give us some hope, but I do not see, out there in the country, the respect that there used to be for HMRC.

That all might be history, and irrelevant, but what my hon. Friend the Member for Harrow West is saying is that we are not trying to be unhelpful. I have raised the matter with previous Ministers, and warned them about it. Universal credit, and the real-time information that underpins it, is due to come in in 2013, which is about three or four months away. There is great scepticism and many worries. Many private conversations are going on about how worried everyone is, and, considering the past record of computer systems in this place, I would not advise the Minister to stand up here and say to the Opposition and to the public that the scheme is spot on and will work wonderfully. It is, however, the jewel in the crown of the Government. It is a key policy with which even the Chancellor was not able to interfere, and so to start expecting a Department to do this, that and the other when the roof is falling in on it and it has the crucial task of getting ready in six months, is unfair.

Penny Mordaunt (Conservative, Portsmouth North)

I have been critical of a lot of the public’s experience of HMRC, largely because of the complexity of the tax code, but I ask the hon. Gentleman to be a little more generous towards HMRC, and in particular towards its charity unit. I have spoken about the fact that the Bill looks not only at the sector as it is, but at where we want it to go. The key evidence that the unit is fit for purpose and for taking stewardship of the initiative is the very existence of the Bill.

George Mudie (Labour, Leeds East)

I am coming to that. I have not criticised the unit; my conversations have been about the Department generally, and the great policy matters that need to be addressed. If we want to deal with the issue, however, we must look at the evidence, not at the staff, and that is where my good friend, the hon. Member for Birmingham, Yardley, goes away from the point.

My colleagues and I want the scheme to succeed, and we pay tribute to the Chancellor of the Exchequer for the initiative he has taken. The hon. Member for Birmingham, Yardley should listen to the Chancellor a bit more closely, because in making his speech he has defied the Chancellor, and I will tell Members why. In 2011, the Chancellor said, when introducing the scheme, that it would be light in bureaucracy,

“without the need for donors to fill in any forms at all.”—[Official Report, 23 March 2011; Vol. 525, c. 962.]

The Chancellor must be congratulated on the scheme, the vision and the ambition—

Mr Thomas rose—

George Mudie (Labour, Leeds East)

I am sorry, am I being too generous to the Chancellor?

Gareth Thomas (Labour, Harrow West)

My hon. Friend must make his comments in the way that he wants to; I would not dream of stopping him. He is right to focus on whether we can make the scheme a success. There is concern about the community buildings provisions in the Bill, which introduce a new concept into charity legislation. Does my hon. Friend agree that that is one example of the new complexity in the scheme, which the hon. Member for Birmingham, Yardley might want to focus on over the weekend as his homework for next week’s deliberations?

George Mudie (Labour, Leeds East)

You mean to say there is going to be more? My hon. Friend’s remarks are excellent.

I want to take the hon. Member for Birmingham, Yardley back to the unit and gift aid. He is defying the Chancellor and should be aware of that. Careers are on the line here: not his, but those of Committee members on the Government Back Benches. Gift aid has been successful, but not in terms of numbers. Figures show that 65,232 of the 162,098 charities registered with the Charity Commission claimed gift aid. If Committee members think that that is acceptable, they must factor into the equation a recent examination suggesting that there are between 200,000 and 350,000 charities. Good as it is—it is an excellent initiative—

George Mudie (Labour, Leeds East)

I am very sad that the hon. Member for Birmingham, Yardley is not here. I apologise for misquoting the Chancellor. I said “without the need for charities to fill in any forms at all”. I could not read my own writing, but it was obviously “donors” and not “charities”. The basis of the scheme was no bureaucracy—or light bureaucracy—and donors, unlike with gift aid, not having to fill in any forms. That is what was envisaged. I invite Government Members, whether they want to leave it with HMRC, which is beyond doubt for the majority, to look at whether that meets the Chancellor’s wishes and vision of how the scheme would be run.

I was talking about gift aid before the Committee suspended. I was pointing out that the figures demonstrated that, with such a scheme where there was a need, as the hon. Member for Birmingham, Yardley said, for some bureaucracy, because tax was involved, even lighter bureaucracy has meant that take-up has been low. That is why the Chancellor has extended the scheme through the scheme that we are now considering. Sadly, take-up is below where we would all want it to be—65,000 out of 162,000 registered charities. It is even lower if we include substantial numbers of non-registered charities.

Interestingly, 47,000 of the 65,000 registered charities, which is 73%, claim payments under £5,000. The point that we were making—because we think those figures need to be improved; we share the Chancellor’s view—was about extending the scheme that was easier. The point about tax is that it is involved with gift aid and payroll giving. The Revenue has a part to play. It has to have administration and a system.

However, with the scheme that we are considering, tax is not involved. The charity simply has to register with the gift aid scheme and participate in it for three years successfully, and from that point, its gift aid allocation is doubled, up to £1,250. A magic, big, bureaucratic machine is not necessary, because the Chancellor is quite right that the more complicated the scheme is made, the fewer the people—and small businesses—who will use it, as demonstrated by gift aid itself. On two occasions, my hon. Friend the Member for Harrow West mentioned 60 pages of guidance, but that is for only two clauses. There are 80 pages of guidance on the HMRC website—and that is for a scheme that is supposed to be light on bureaucracy.

Gareth Thomas (Labour, Harrow West)

I had not realised it before, but the amount of bureaucracy involved is even greater than I feared. My hon. Friend said there are 80 pages of guidance for a charity to claim gift aid. Further guidance will be published by HMRC about the implementation of this scheme. Effectively, what he appears to be implying is that there will be close to 100 pages of guidance for a charity to claim gift aid and a small top-up payment under this grant scheme. By any definition, that is surely Kafkaesque.

George Mudie (Labour, Leeds East)

That is pretty accurate. However, the major worry about the involvement of HMRC is that, as I described earlier in an intervention, it brings baggage, and quite rightly. HMRC is the body that brings in the revenue. I shall not get political and I shall not refer to a certain coffee company, but people are willing, able and looking for opportunities to find any loophole that enables them to evade or avoid paying their proper share of tax. So, the Inland Revenue over the years is well established in terms of knowing that it has to be specific and that it has to have detailed regulations. Above all, it has to understand that, however detailed its regulations are, there are unscrupulous people and companies out there, and the minute the regulations are written and passed they set out—at enormous expense to them, but in the hope of enormous gain from avoiding tax—to avoid those regulations and to beat them. So we do not expect anything else from HMRC: it is doing its job; that idea is in its mindset; and that is the way it should be.

Before I forget, let me say that if we have a straightforward scheme that only means £1,250 to a small charity—my hon. Friend the Member for Harrow West earlier referred to the fact that a charity often arises out of an incident, such as a shooting or a flood—because of these regulations, that charity may well wait three years before it is eligible for the new scheme, and in that three years it has to claim gift aid, with all the bureaucracy involved. Well, whatever help the charity was going to give flood victims—God forbid, it has to wait three years. Even Governments bring aid to people more quickly.

Gareth Thomas (Labour, Harrow West)

My hon. Friend is making a good point. He said that he did not want to mention the particular coffee company, and I recognise that if I were to do so again, I would probably incur the wrath of the Chair, but my hon. Friend will acknowledge that part of the reason, I assume, why his sub-committee wants to see HMRC officials and generate that extra work load for them in the handling of that particular coffee company, is because a series of other allegations has been made about other companies doing what he says. I have no knowledge of the accuracy of those allegations, but one suspects that there will be further work for HMRC, not only to answer my hon. Friend’s inquiries, but other inquiries. Schemes such as the one we are considering today potentially detract from HMRC’s core responsibilities of handling those issues.

George Mudie (Labour, Leeds East)

My hon. Friend is absolutely right. The information sent to me today by HMRC—maybe it was sent to members of the Treasury Committee, or to us all—confirmed that the tax gap sits at £32 billion in 2010-11. One can imagine the effect on the Government’s financial position.

David Mowat (Conservative, Warrington South)

The lowest in Europe.

George Mudie (Labour, Leeds East)

Does the hon. Gentleman wish to intervene?

David Mowat (Conservative, Warrington South)

I cannot.

George Mudie (Labour, Leeds East)

We were simply making the point that this scheme is going to cost £100 million. It is common sense that, if we had resources, and these figures come from HMRC itself, taxes being avoided on the scale of £32 billion—

Andrew Turner (Conservative, Isle of Wight)

Order. The hon. Gentleman should revert to the amendments.

George Mudie (Labour, Leeds East)

Yes, I am just going to finish. That is what we would rather it put its efforts into.

I reiterate that we wish the scheme well. Although we have taken up a lot of time, we have done so more in sorrow than in anger or opposition. We want the scheme to work. On the basis of its complexity, we fear the worst. If I can just close on one particular written piece of evidence that came in from Ian Clark, which I thought—

Gareth Thomas (Labour, Harrow West)

Before my hon. Friend makes his final remarks, it is worth alluding to the heckle from the Minister’s Parliamentary Private Secretary on the tax gap. If I heard the heckle, or sedentary intervention, correctly, the hon. Member for Warrington South implied that the tax gap—bringing it down must be the core task of HMRC—was the lowest in Europe. I do not know whether he is correct. He clearly believes that that is the case, but surely that is not a reason for complacency when the tax gap is £32 billion. Surely we should be looking at what else we can do to free up the resources to allow HMRC to get stuck into that gap, and this is another reason why our amendments would be helpful to the Government: in reducing the tax gap.

George Mudie (Labour, Leeds East)

I am sad that my hon. Friend has brought that my attention. I heard a noise from my good friend across the Committee and I thought he was signifying approval. I thought it was muted applause. Clearly, I am over-optimistic.

I was making my final point, which relates to Ian Clark’s written evidence, and it should be a worry for everybody in this room. He seems to be an individual with great experience and good judgment. He indicates that he shares the Chancellor’s ambition to get 35,000 additional charities to participate, but in his opinion, because of the Bill’s complexity, they will be lucky to get 350.

Jeremy Lefroy (Conservative, Stafford)

It is an honour to follow the hon. Gentleman. I oppose the amendment because I believe that HMRC is the best body for this, and the only body that should be involved. I will briefly give four reasons for that. The first reason is intent. As hon. Members said earlier, the intention of the Bill is to support giving, rather than making grants. That is a big distinction: grants are usually for projects, whereas the support of giving affects donations. The key is in the title—the Small Charitable Donations Bill. To me, the intention of the Bill is clearly that giving is key. Until now, the body that we have used to administer Government support for giving is gift aid, an excellent scheme set up by the previous Government. As I have said, I give them full credit for that, and for the improvements that they made to it. When I first set up a charity in the 1980s, I had to go through extremely time-consuming covenants. Gift aid has cut out a lot of that work and has increased the number of charities, which have benefited enormously.

The second reason is efficiency. HMRC already has a system in place, and we are told that it is preparing to incorporate this new top-up payment in its system. I believe Governments should always look for efficiency. We hear that rather ugly phrase “joined-up Government”; this is an example of efficient, or joined-up, Government.

Gareth Thomas (Labour, Harrow West)

The hon. Gentleman says that there is a system in place, but there are systems in place in a series of other bodies to give out money to small charities. Surely that part of his argument—I will listen with interest to the rest—does not hold water, given the number of other places that could, because of the many systems in place in those Departments, administer small grants to small charities just as efficiently.

Jeremy Lefroy (Conservative, Stafford)

I thank the hon. Gentleman for that intervention. I listened extremely carefully throughout the two-plus hours of his speech, in which he made some persuasive arguments along those lines, although he did not persuade me. My point is that we are talking about the intention of rewarding and increasing the value of donations, rather than making grants. The Government’s current system for rewarding donations is gift aid, which is not something the Government have to do. In many countries across the world, charitable donations do not attract tax relief; in this country we have rightly decided that they should, and we have generously supported that through the tax system over many years. The clause is an example of that being extended. There is logic here. I have listened carefully, and I am not saying that there are not other bodies that could do this, but I believe HMRC is the best body for the role, because it already possesses the gift aid system.

Gareth Thomas (Labour, Harrow West)

I apologise for pressing the hon. Gentleman, but has he had a chance to dwell on the final point raised by my hon. Friend the Member for Leeds East? My hon. Friend presented evidence from a man who has been appointed to a charity tax group specifically to advise HMRC on a range of giving-related tax reliefs. He was specifically asked to comment on this scheme, and he said that, in his view, not only will we not realise the target of getting 100,000 charities to benefit from the £100 million or so under the small grants scheme, but that, at best, just 350 will benefit. That suggests that the scheme is not so efficient and is not likely to achieve the Chancellor’s targets.

Jeremy Lefroy (Conservative, Stafford)

I have heard that, and I understand it. All I would say is that I believe that the hon. Gentleman is wrong. I believe that far more than 350—10 times, maybe 20 or 30 times that—will apply, qualify, and become part of the scheme. I believe that the scheme will become very attractive as people learn about it. I want to see the guidance restricted as much as possible; I think everybody would like that. I ask the Minister to ensure that the system is made as simple as it can be. A hundred pages of guidance sounds far too much.

I have set up a gift aid system and I do not find it particularly complex, even at the moment. I would argue with those who tend to underestimate the capacity of people involved in charities to grapple with HMRC, and perhaps to set up the charity with the Charity Commission in the first place. Setting up a charity with the Charity Commission involves going through the wording of the trust deed and putting together all the other documents. To me that is a bigger administrative task than registering with HMRC and fulfilling its requirements.

Gareth Thomas (Labour, Harrow West)

I am not surprised that the hon. Gentleman felt entirely comfortable registering for gift aid; he is a shrewd, intelligent and clearly extremely effective member of his community. He is confident in his ability in a variety of areas. There are many people—we have heard evidence to that effect—who are not as confident as perhaps he was when he approached the gift aid scenario. That is surely an argument for trying to make a grant scheme as simple as possible. This scheme is not simple. It introduces whole new concepts, and it will be very difficult for many small charities that are not as confident as he is about how to handle gift aid.

Jeremy Lefroy (Conservative, Stafford)

I thought carefully before making my comments, because I suspected that the hon. Gentleman would come back with something along those lines. I still disagree with him. There are tens of thousands of charities up and down the country with excellent people running them who can cope with the current gift-aid scheme, which, as I have said at least twice, his Government improved. It was not one of the schemes instituted by his Government that was a bureaucratic nightmare. It is simple and straightforward. I believe that this can be done, but I agree with him that it is incumbent on the Treasury and HMRC to look very carefully at the take-up of the new system. If they find that the number of the smallest charities is as low as has been predicted— I am pretty confident and sincerely hope that it will not be—action must be taken. I agree with him there.

Gareth Thomas (Labour, Harrow West)

The hon. Gentleman understandably urges the Treasury and his ministerial colleague to monitor the scheme extremely carefully for take-up. I welcome that comment. Does he not think it would be helpful if there were a report to Parliament that looked at the level of take-up? In the light of all the concerns we heard on Tuesday, we should ask Ministers to report back on take-up; that would enable Committee members to focus on whether the scheme is likely to see an extra 35,000 charities register for gift aid by 2015.

Andrew Turner (Conservative, Isle of Wight)

The hon. Member for Stafford need not reply, as I do not think that point is in order.

Jeremy Lefroy (Conservative, Stafford)

Thank you for your guidance, Mr Turner. I would just say that the suggestion has merit. If that provision is not put in the Bill, I suggest that Members on both sides ask parliamentary questions on the subject. They would get the answer pretty rapidly. I point to the example of the Rural Payments Agency, a body that we all agree had problems when it started. I do not wish to make any particular political points about that; it has improved greatly over the past couple of years, following changes made by the previous and current Governments. It is therefore possible for a body designated to do something to ensure that its performance improves, provided it monitors it carefully, even if it is slow on the uptake. I am not for one moment suggesting that HMRC will be anything other than incredibly efficient in taking up the scheme.

The point I was coming to is about additionally—a rather ugly word, but I cannot think of another. As Members on both sides of the Committee have said, we want more charities to take up gift aid as a result of the measures. Bodies that must, for the first time, enter the gift aid system will suddenly realise what they have been missing out on over the past 10 or 15 years through not claiming gift aid. That is another reason why it is essential that the responsibility remains with HMRC; it administers gift aid and is therefore able to help bodies to claim the top-up and traditional gift aid.

My final point, on fairness, is perhaps slightly more esoteric. A fundamental advantage of the Bill is that it recognises for the first time that non-taxpayers’ charitable donations should be entitled to a top-up or payment from the Government. That may not be the prime intention of the Bill, but it is certainly an effect.

Susan Elan Jones (Labour, Clwyd South)

There is merit in the point that the hon. Gentleman makes. Does he agree that the change will benefit only those charities that reach the matching amount for gift aid? Therein lies a problem that I hope the Government will solve.

Jeremy Lefroy (Conservative, Stafford)

Yes, and although we are not discussing that issue at the moment, we will come on to it. I am sure that Members on both sides of the Committee will want to make some points about it, and I know that the Minister will listen carefully.

I would like to stress the point about fairness. The proposals mean that when people put donations of £1 and £2 coins and £5 notes into buckets, those donations, which historically did not attract any top-up from the Government through gift aid, can do so for the first time. As such top-ups are given through gift aid by HMRC, it is entirely logical that the scheme should be administered in that way. For those reasons—intent, efficiency, additionality and fairness—HMRC is the obvious body for the task, so I must oppose the amendment.

Sheila Gilmore (Labour, Edinburgh East)

I want to address a couple of issues that Government Members have raised. In effect, they have ended up arguing the point the wrong way round.

Clearly, the origins of the proposals lie in the fact that small donations—largely, but not wholly, collected by small charities—were not easily eligible for gift aid. That was seen as a problem and perhaps a disincentive for people to give. It therefore seemed appropriate to look for a means of incentivising such small giving and to assist the mostly small charities that fall into this category. The argument is that as there appears to be a gap, or a failure of gift aid to reach out to those people, the solution must be a quasi-gift aid scheme that must go to HMRC. We should not, however, necessarily make that connection simply because someone has identified that problem.

The appropriate legal description is “donation” rather than “tax relief”, hence the type of Bill that we are considering. Government Members are concerned that if the scheme were not run as suggested in the Bill, it would not encourage donation. At one point, while doing some preparatory reading about the complications, I wondered why we do not just give everyone £1,250, but I certainly acknowledge that that would undermine the purpose. The Bill is intended to encourage donation, and it is not necessarily the case, if we tie the payment to donation, that the scheme has to be administered by HMRC.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The scheme does not have to be administered by HMRC. Does the hon. Lady not agree that it should be administered by not a ministerial Department, but a non-ministerial department, to avoid ministerial interference?

Sheila Gilmore (Labour, Edinburgh East)

Certainly other organisations could be more appropriate, and one such might be the Charity Commission. If the scheme is tied to donations, and people clearly have to demonstrate that they have collected those donations, I am not entirely sure that we should be too concerned about whether the rules have been drawn up correctly. Clearly, there have to be some rules.

Gareth Thomas (Labour, Harrow West)

This is encouraging; we appear to have begun to swing the hon. Member for Birmingham, Yardley in the direction of supporting our amendment. To give him further confidence that there might be a body other than the Charity Commission that is free from ministerial diktat—I can understand his worry about control freakery and ministerial diktat with regard to which charities benefit, given the Ministers in the Treasury—I point out that the Big Lottery Fund is similarly independent. My hon. Friend the Member for Edinburgh East might like to encourage the hon. Member for Birmingham, Yardley, to feel further confidence in our amendment, as there is that second obvious organisation that could do the job.

Sheila Gilmore (Labour, Edinburgh East)

I thank my hon. Friend for his helpful intervention. Those of us who have experience of the Big Lottery Fund know that it works well and that it has been found to be relatively simple for applicants.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I apologise; I left the room to go to a ministerial meeting. While I was away, did the Opposition withdraw amendment 24, which would not allow the Big Lottery Fund to be such a body?

Sheila Gilmore (Labour, Edinburgh East)

We have not reached the point at which amendments might be moved or withdrawn.

As for the other reason why HMRC has been suggested as the appropriate body, it has been said that what we are discussing is a form of tax relief, but it cannot be that, because we have no means of identifying who is making the donations or whether they would be eligible to claim such relief. That is the whole point of the Bill; it covers a situation in which it is, in essence, very difficult to qualify for tax relief. Clearly, anyone could fill out forms for every pound donated into a box, but people collecting who had to stop and wait for forms to be filled out would collect far less than they otherwise might. That would be counter-productive.

As some of what has been claimed is not necessarily the case, the argument that the body has to be HMRC is lessened. We may be putting the cart before the horse, partly because of the arrangement of the Bill, but if we take out some of the other provisions, which we shall debate shortly—I know that it is not appropriate to discuss them now—as I sincerely hope that we will, the argument for assigning the scheme to HMRC would be reduced. If we amend the Bill in that way, we may, as many of those who gave evidence suggested, want to come back to the issue, perhaps on Report.

Sajid Javid (Conservative, Bromsgrove)

It is a pleasure to serve under your chairmanship, Mr Turner. I welcome you to the Chair, as this is my first opportunity to speak. That seems a bit odd, as we have been speaking for hours. Why? Because the Opposition spokesman has spent almost three hours making a simple suggestion. He could have made his point in a few minutes rather than a few hours, as was said by my hon. Friend the Member for Banbury, who is not in his place, and many others.

I understand that the purpose of the group of amendments is to enable a debate on HMRC and its role as the administrator of the small donations scheme. I am happy to have that debate, but I shall ask the hon. Member for Harrow West to withdraw his amendment in any case, because if the amendments are made, they could result in administrative complexity and uncertainty for charities, and significant extra costs for the Exchequer, which I do not think any of us in this room would support. That point was made by a number of hon. Members who spoke; it was also well made by my hon. Friend the Member for Birmingham, Yardley.

The amendments are intended to allow other departments to run the scheme instead of HMRC. However, numerous references to HMRC would remain in the Bill, although not enough to enable HMRC to administer the scheme. If the amendments were passed, HMRC would still be the only body that could make orders relating to community buildings under clauses 7 and 8 and receive overpayments or top-up payments under clause 10. It would also be one of the several bodies empowered to make regulations under clause 11.

That sounds like an administrative and accounting nightmare. Which Department would decide who would run the scheme and make regulations? Charities could face a situation in which one Department is paying out money but another Department is responsible for receiving any payments. My hon. Friend the Member for Birmingham, Yardley, said that he was mystified as to why the Opposition were suggesting that another Department should be involved, and I think he was absolutely accurate in his description.

Gareth Thomas (Labour, Harrow West)

So far, the Minister does not seem to be dealing with one of the substantive points that we sought to make. He says that £60 million will be spent in the first year, and we are led to believe that that might rise to about £100 million or £125 million. Why cannot another department spend that £60 million and get it to small charities through an existing channel? There is no reason why only HMRC should be allowed to do so. Why just HMRC and not other bodies? He has not explained that yet.

Sajid Javid (Conservative, Bromsgrove)

I shall come to those points.

Parliament needs to be confident that the money is being handled properly and that there is a clear account of how the powers that it has granted to operate the scheme are being used. Having numerous different parties involved would certainly not be the clearest and most efficient way to ensure that. The Government are anxious to act transparently.

It is not clear that the amendments would actually empower HMRC to operate the scheme. The references to HMRC that the amendments would delete were inserted to ensure that the commissioners for Revenue and Customs have sufficient authority to operate the scheme. Without those references, it is questionable whether HMRC could continue to work on implementing the scheme, which could lead to unwelcome delay while a new administrative body was being set up.

I have set out some of the problems that would arise from the amendments, but there are also good policy reasons why HMRC should administer the scheme. The first, and probably foremost, one concerns gift aid, about which we have heard much during this sitting, and I want to refer to the excellent speech made by my hon. Friend the Member for Stafford. I find myself almost always agreeing with what he says in most debates, but I hope he will permit me to correct him on one thing that he said today. If I remember correctly, he mentioned that the gift aid scheme was established by the Labour Government. It was actually established by the Conservative Government in 1990. More interestingly, I noted that the Opposition spokesman was quite happy to take the credit when my hon. Friend said that, so it is either that he did not know or that he was deliberately trying to make an impression that would have been misleading—I am sure that he was not trying to mislead anyone.

Gareth Thomas (Labour, Harrow West)

On a point of order, Mr Turner. I would have been at risk of incurring your displeasure by going into the history of gift aid on a clause relating to HMRC. Under the next set of amendments, I hope to go into some of the details of the establishment of gift aid and the history of the reforms that the previous Labour Government brought in.

Sajid Javid (Conservative, Bromsgrove)

I agree that I would also not want to incur your displeasure, Mr Turner but my point is clear. I note a pattern of behaviour with Labour Members in that while they will take the credit for things for which they were not responsible, they will quite often not take the blame for things for which they were responsible.

George Mudie (Labour, Leeds East)

Given that the Minister pulled up my hon. Friend the Member for Harrow West, I wish to know whether, if he had not been passed a note from certain quarters, he would have known when gift aid was introduced.

Sajid Javid (Conservative, Bromsgrove)

If I remember correctly, the hon. Gentleman was a Minister in a previous Government. I wonder whether he was ever passed a note. Perhaps he always turned them down.

Jeremy Lefroy (Conservative, Stafford)

I apologise for my mistake. Indeed, I was sitting here kicking myself as I remembered that gift aid was indeed introduced earlier, but I have to pay credit to the fact that the scheme was improved under the previous Government, so both sides can take credit for the current operation of gift aid and both will take credit for the top-up payment when the Bill is passed.

Sajid Javid (Conservative, Bromsgrove)

My hon. Friend is far more gracious than I.

Susan Elan Jones (Labour, Clwyd South)

Had the Minister read my speech on Second Reading, he would have seen that I gave full credit to John Major, but I also mentioned the improvements. In 1990, the minimum donation that earned gift aid was £600, and it went down incrementally to £100 when my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor, but we will not quarrel over that nor the Labour improvements to the scheme.

Sajid Javid (Conservative, Bromsgrove)

In that case, may I thank the hon. Lady for doing something that the hon. Member for Harrow West was unable to do?

Susan Elan Jones (Labour, Clwyd South)

He was too modest.

Sajid Javid (Conservative, Bromsgrove)

Yes.

The purpose of the Bill has always been to allow charities to collect a gift aid-style payment on small cash donations for which it is impractical to collect a gift aid declaration. If the scheme were a tax relief like gift aid, it would be administered by HMRC and legislated through the Finance Bill process. We all know that the absence of a gift aid declaration, and therefore the absence of a link to a donor’s tax record, means that the scheme will be funded through public spending. That is a major technical issue, but it does not subvert the policy intention of the scheme being an extension to gift aid, as a number of Committee members mentioned.

The integration of the scheme with gift aid brings a number of benefits. It will be an add-on to gift aid, which means that the costs of administration will be low for both charities and HMRC. Charities throughout the UK are already familiar with the gift aid rules and working with HMRC. Indeed, we heard from witnesses at the evidence session on this point.

The hon. Member for Kilmarnock and Loudoun asked a witness a question during the evidence session, prompting a response from the first panel we heard from on this group of amendments. I did not want to rely just on my memory, so I checked the record and I do not think that a single member of that panel agreed with her proposition. [Interruption.] Does the hon. Lady want to intervene?

Cathy Jamieson (Labour, Kilmarnock and Loudoun)

If the Minister had read the record, he would have noted that at that stage I was not proposing anything; I was simply asking questions.

Sajid Javid (Conservative, Bromsgrove)

I thank the hon. Lady, but I think she is not disagreeing with my point that not a single member of the panel agreed with the suggestion of having an agency other than HMRC. It would be simplistic and wrong to think that another Government body handing out public money would not have rules about which charities were entitled to payments. If any other public body were to administer the scheme—

Gareth Thomas (Labour, Harrow West)

We are not disputing that another Government body would have to have rules for administration of a scheme. We are suggesting that the complexity implicit in HMRC’s having responsibility under the Bill would not be there to the same extent with another Government body.

Sajid Javid (Conservative, Bromsgrove)

If another Government body were involved, that would potentially lead to more complexity and higher costs. Let me deal with costs, because the Opposition spokesman raised that, understandably, on a couple of occasions.

First, the hon. Gentleman knows that HMRC already works extensively with charities on a number of issues, not just gift aid. It has a special unit dedicated to working with charities on income tax issues, as well as gift aid, and on corporation tax and helping them with VAT issues. That unit could be described as a one-stop shop for charities on all issues related to tax matters. I am sure that most charities would say that that is helpful.

Given that that provision already exists with HMRC, I am sure that many Committee members would agree that the cost to HMRC of administering this new scheme would only be a marginal addition to its costs, because it could get economies of scale from the work that it already does for charities. That is important, particularly at a time—

Gareth Thomas (Labour, Harrow West)

I wonder whether the Minister is as accurate as he might be in terms of the administrative costs. I understand that the ambition behind the scheme, if we believe the Chancellor’s announcement in his Budget statement, is to move from 65,000 to 100,000 charities claiming gift aid and benefiting from it as a result. We are talking about another 35,000 charities having to register for gift aid at a time when the hard-pressed charities section of HMRC is being cut from 190 staff to 150. One wonders whether there would not be a surge in phone calls from charities wanting to register for gift aid and to take advantage of the scheme such that the Minister would have to divert additional resources from other parts of HMRC or the Treasury to support even more hard-pressed members of staff. We want to prevent that from happening.

Sajid Javid (Conservative, Bromsgrove)

I thank the Opposition spokesman for his comments. He knows that during this debate we have heard about the new online system that HMRC is about to roll out for the gift aid system. That is a significant development that will lead to significant savings in costs for HMRC, and reduce the burden of costs on the charities involved. I believe that during the evidence session some of the witnesses referred to that, and that they all did so positively.

Cathy Jamieson (Labour, Kilmarnock and Loudoun)

Briefly, something the Minister said has triggered a question, but if he cannot answer it now, perhaps he will get inspiration from elsewhere. How many charities have registered for gift aid for the first time since the announcement of the Bill?

Sajid Javid (Conservative, Bromsgrove)

I do not have that information, and I do not think the hon. Lady expects me to have it. However, as she suggested, I am happy to find it, and perhaps she will permit me to write to her with it.

If any other body were to administer the scheme, clearly some of the details of the policy would need to be revisited.

This may be an opportune moment to turn to some of the comments from the hon. Member for Leeds East, who referred to the merging of the Customs part of our tax system with the Inland Revenue. If I understood him correctly, he seemed to criticise that, and said that it should not happen. That made me wonder whether, given his role in a previous Government—if I recall correctly, he was a Whip, so he had a significant role in ensuring that that Government’s policies went through—when the Government he supported decided to do that, he spoke up and made that point. If he wishes to intervene, he may do so.

George Mudie (Labour, Leeds East)

I certainly do. I think the Minister is looking for a political battle between us that is not there. We have said that we are totally in favour of the scheme, but its complexity is putting people off. On that point, it was accepted in the House without much worry that bringing the two together could make significant savings because there was an overlap. I have made the point, however, that it is accepted almost universally that the departments operate differently, and had different methods of working and a different ethos. That merger has harmed and been detrimental to HMRC. In retrospect, it turned out to have harmed a very proud and long-established department with great traditions. I think that is regrettable, and that is the point I was attempting to make.

Sajid Javid (Conservative, Bromsgrove)

The hon. Gentleman has made his point clearly. On another point, he referred to the complexity of the scheme, as did the Opposition’s spokesman. Again, I ask them to turn their minds to the evidence session, when the issue came up several times. Kevin Russell gave evidence on behalf of Stewardship and said of the scheme’s complexity:

“My thought here is that once the scheme is in place and people have experienced it, they will say, “What was all the fuss about?”

Gareth Thomas (Labour, Harrow West)

The Minister quotes from the evidence session. The Government wanted Kevin Russell and Stewardship there, and it is reasonable that he quotes from that evidence, but I gently suggest that in his position as a Minister he should stray a little wider than just the witnesses who offered him most comfort. The gentleman who came to speak to us from WaveLength, a small charity, commented on the scheme’s complexity and said that he could not see how the scheme as currently drafted would benefit his organisation.

Sajid Javid (Conservative, Bromsgrove)

I thank the Opposition spokesman for that intervention. I am talking about the general sense of the evidence session. There is no doubt that there is complexity in any new scheme that is introduced; there is some level of complexity that one cannot get away from. I picked the points of evidence that I did because those people have significant experience of working with HMRC. Within their organisations, they have branches of charities that are perhaps smaller than others. Their experience is important when it comes to the issue of complexity.

I would therefore like to pick one more point, which was made by John Preston from the Church of England. He said:

“We have already looked at what our guidance would look like for this Bill.”

That is the guidance that the Church of England would provide to its smaller churches. He continued:

“Although the Bill is complex, I am confident that the guidance for parishes need not be, such that I think that it can probably fit on one sheet of paper.”––[Official Report, Small Charitable Donations Public Bill Committee, 16 October 2012; c. 5, Q6.]

Those were very important contributions, and if I may say so, I do not think that at any point during the almost three hours of speaking time taken by the Opposition spokesman, he made it clear how his suggestions would make this system any less complex.

Gareth Thomas (Labour, Harrow West)

The Minister was right to quote John Preston from the Church of England in the way that he did, but he will recognise that the Church of England is able to provide considerable support to its parishes on the implementation of gift aid and the liaison with HMRC. It is an extremely good thing that it does that. I hope to go on to show that there is a similar organisation, with considerable links to the Church of England—the Churches Conservation Trust—that is worried about the Bill as currently drafted. I am thinking about the needs of those small charities that do not have access to the infrastructure of a bigger, experienced parent body. The critical point is that those are the organisations that are most at risk of not benefiting from this scheme because of the way the Bill is currently drafted.

Sajid Javid (Conservative, Bromsgrove)

Again, I thank the Opposition spokesman for his intervention.

I would like to respond to a point made by the hon. Member for Leeds East about IT systems. The point that he was making, if I understood correctly, was that IT systems can go wrong and money can be wasted on new IT systems. I wondered whether what he had in mind as an example was the NHS national programme for IT, which was reported to have lost more than £10 billion for the Government before it was abandoned. Had that £10 billion been spent on a scheme such as this, it would probably have paid for about 100 years of payments under this scheme.

Gareth Thomas (Labour, Harrow West)

That is an interesting, cautionary example; the Minister is right to make that point. Is he telling us that he is completely confident that the IT system for this scheme will be up, running and perfect from 5 April 2013?

Sajid Javid (Conservative, Bromsgrove)

That is a good question. I am very confident and I will explain why. The IT system that will be used for this scheme is the same IT system as will be used for the gift aid system. In fact, this point touches on complexity as well. What will be required from any charity that is making a claim under this small donations scheme are the answers to a simple couple of questions. It will have to identify the relevant tax year. This will be done within the gift aid declaration, so there will be a separate couple of additions to that. It will have to identify the tax year. It will also have to identify the amount of money on which it wishes to claim these top-up payments.

Gareth Thomas (Labour, Harrow West)

To be clear for the record as this is an important point, in the Minister’s view there will be no problems with the online system, and charities will not have any problems with the scheme as a result.

Sajid Javid (Conservative, Bromsgrove)

HMRC is a non-ministerial department.

Gareth Thomas (Labour, Harrow West)

Oh.

Sajid Javid (Conservative, Bromsgrove)

No, I am stating the facts. HMRC is a non-ministerial department, so Ministers are not involved in its day-to-day running, nor should they be. With the assurances that I have been given, I am confident that the system will be up and running in time, and I do not anticipate any problems.

George Mudie (Labour, Leeds East)

Getting up to explain my speech is almost as bad as giving it. The point I was making on computer systems was not related to the computer software for this scheme and its importance to the Government. HMRC is working with the Department for Work and Pensions on a huge scheme on universal credit and in-time information. There are great worries that it will blow up in the Government’s face, and that would be catastrophic as they believe in that scheme. I was making the point that we should not take any attention away from that big scheme. The Minister has again challenged me in relation to the complexities putting people off. He did, none the less, agree to put in writing to my hon. Friend the Member for Kilmarnock and Loudoun the number of charities that have registered since the publication of this Bill and that are already clocking up time. That would give us an early indication of how many feel that it is worthwhile to claim under this new scheme. I ask the Minister to confirm that we will have that information in time—unlike the information we received today on our computers, eight minutes before the start of the sitting—to consider it as part of our discussions next Tuesday.

Sajid Javid (Conservative, Bromsgrove)

I thank the hon. Gentleman for that. If that information is available, I will try to provide it as soon as I can.

George Mudie (Labour, Leeds East)

With the greatest respect, I think that the Minister has forgotten that he is the Minister. We are asking him not to go to the moon or anything but to ask civil servants to provide him with information, which is not subject to computer work, about how many charities have registered. I assume that now I have clarified that, he will be able to say to my hon. Friend the Member for Kilmarnock and Loudoun that she will have that information in good time, and certainly not eight minutes before the start of the Committee.

Sajid Javid (Conservative, Bromsgrove)

If that information is available, I will provide it. As a Minister, I cannot promise to provide information that I do not know is available, let alone whether it is available in time to inform this Committee before we next meet. I do not want to make a commitment about timing that I might not be able to keep. I am sure that the hon. Gentleman, with his years of distinguished experience of working in the House, will agree with me.

Penny Mordaunt (Conservative, Portsmouth North)

I urge my hon. Friend to resist the temptation to do a scheme down before it has even been set up. The sector wants clear guidance, but we should be encouraging people to make use not just of the existing gift aid system but the new scheme when it is brought in, as I hope it is.

Sajid Javid (Conservative, Bromsgrove)

I agree with my hon. Friend.

John Hemming (Liberal Democrat, Birmingham, Yardley)

One presumes that HMRC has plans in place to develop the appropriate arrangements to deal with the small donations system, and that if it were handed to another Department, there would be a massive delay.

Sajid Javid (Conservative, Bromsgrove)

I thank my hon. Friend, who is absolutely right: HMRC has spent considerable time preparing for the introduction of the scheme. That means that as soon as the House passes the Bill and it receives Royal Assent, we can ensure that we stick to the timetable. HMRC has started working on the required guidance, and I am confident that when it comes out and charities see that guidance, they will find it far easier to use the scheme than they anticipate.

Cathy Jamieson (Labour, Kilmarnock and Loudoun)

Can the Minister say when we might see draft guidance? It will be important for the wider sector, but also, given that he said during the evidence session that the guidance would explain many things, it would be helpful to have a time scale for its appearance.

Sajid Javid (Conservative, Bromsgrove)

First, HMRC will produce two levels of guidance, which I gather is not unusual in such circumstances. Entry-level guidance will set out the rules in a simple, approachable way, supported by examples, flow charts, and so on, in order to make it as easy to follow as possible. That will be followed soon after by detailed guidance, which will set out thorough explanations of how the law works more specifically. If charities then want to discuss the guidance with HMRC and make suggestions on how it could be improved, HMRC would work together with the charity sector and support them in making the most of the new legislation. In terms of timing, we expect it to be complete by the end of the year.

I turn, for one moment, to devolution and the devolved areas. Not much has been said about that issue, even though the Committee includes Members from all over the United Kingdom. Charity law is a devolved matter in respect of Scotland and Northern Ireland. It would be a big step for the Charity Commission for England and Wales, for example, to start regulating charities in Scotland and Northern Ireland, only in order to administer the scheme. I am not sure how the devolved authorities would take that, as that area was purposely devolved to them.

Any scheme handing out money would be targeted by fraudsters—fraud has come up a number of times in our discussions, as I am sure it will again. Any public body that is handing out public money must take steps to prevent fraud. Where the money available is unlimited—as it is in this scheme; there is no limit to the number of charities that can take part—the anti-fraud measures must be proportionate and robust.

Gareth Thomas (Labour, Harrow West)

The Minister says that the money is unlimited, but we greet that assertion with surprise, given the scheme’s complexity. It appears to have been drafted so that three years of gift aid claims must be implemented before a charity is eligible. He made it clear that he is not yet tempted to accept our amendments to clause 2, on reducing the three-year rule, because of the cost involved in increasing the scheme. He needs to be careful with the House, in terms of stretching our collective credibility and saying that the scheme is somehow unlimited.

Sajid Javid (Conservative, Bromsgrove)

The scheme is unlimited in terms of the number of charities that can make use of it. The Government have rightly not set any limits on the number of charities that can take part in it, as long as they meet the criteria.

Cathy Jamieson (Labour, Kilmarnock and Loudoun)

Just for the record, it would be helpful if the Minister could state how much the scheme would cost during the course of a year if every charity eligible to participate in it claimed the maximum.

Sajid Javid (Conservative, Bromsgrove)

I do not have that number to hand. We talked in earlier sessions about the number of charities. Of the 180,000-odd charities in the UK, approximately 100,000 already have a relationship with HMRC, and in a typical year about 65,000 are making claims under gift aid. One could use those numbers to provide an approximate answer to the hon. Lady, but I am happy to see if there is a better way and whether I can come up with a more useful number for her.

Before I finish, I just want to address a couple of other points that hon. Members kindly raised. The hon. Member for Foyle is not in his place, but he asked a question about community amateur sports clubs. Since they are covered by these donations, I think that the question that he was asking—it is an understandable question—was whether they have a relationship with HMRC. I believe that his assumption was that they did not have a relationship so it was perhaps harder for them to work in this scheme than for charities that already had a relationship with HMRC. However, more than 6,000 community amateur sports clubs are already registered with HMRC and working with it. Those clubs benefit from a range of tax reliefs, including mandatory business rates relief. It is helpful that that relationship already exists for such organisations.

Gareth Thomas (Labour, Harrow West)

I am slightly reeling from the Minister’s answer to my hon. Friend the Member for Kilmarnock and Loudoun. He talked about the number of charities that already claim gift aid at the moment. Broadly, about 65,000 charities, between them, get £1 billion of gift aid. If the scheme is as unlimited as he says it is and if every charity were to benefit from what is—to paraphrase the words of the hon. Member for Birmingham, Yardley—an amazingly simple scheme, potentially another 120,000 charities will benefit from it. In very round figures, that suggests that another £2 billion of gift aid will be available.

I do not know if Ministers are seriously suggesting that they have made provision for that level of cost in the scheme. Clearly the Minister cannot do so today, but it would be helpful if he could give us a clear sense of how many additional charities he thinks will claim gift aid under the scheme and, as a result, what provision the Chancellor is making in the best-case scenario, in the Minister’s term, in which every charity claims gift aid, or, in the worst-case scenario that my hon. Friend the Member for Leeds East described, in which only an additional 350 charities claim gift aid.

Sajid Javid (Conservative, Bromsgrove)

The hon. Gentleman will know that I am referring to the scheme in the Bill that we are discussing today, the gift aid top-up scheme—[ Interruption. ] I give way.

Gareth Thomas (Labour, Harrow West)

I apologise to the Minister for my sedentary heckle. He cannot ignore the implications for gift aid of what he says will be one of the benefits of this scheme. If he is right and this scheme is so attractive that it leads to a surge of organisations registering for gift aid, there will be an additional cost to the Exchequer for gift aid as well as for this new scheme. If he is right, we need to know those figures.

Sajid Javid (Conservative, Bromsgrove)

Clearly, when HMRC is making its estimate of the total cost of this scheme, it needs to consider—to the best of its ability—behavioural changes that will come about. Those kinds of changes are notoriously difficult to assess; I am sure that the hon. Gentleman will agree with me on that.

In the original costing of this scheme, HMRC has estimated that, after it starts on April 6 next year and once it gets up and running, the benefit for charities will be around £100 million a year. That is the best estimate that HMRC is able to make at this point. As a result of some of the amendments that we will discuss during our deliberations, that costing may change. Once any new estimate has been tested with the Office for Budget Responsibility, we will be able to provide some numbers. However, it is sensible to test any estimate with the OBR’s modelling first.

If I understood the hon. Gentleman correctly, behavioural changes could occur that would impact on gift aid claims, as opposed to claims under this small donations scheme. Clearly there are likely to be some behavioural changes. HMRC has made its best estimates of that, but they are just estimates. I am sure that he understands why.

Gareth Thomas (Labour, Harrow West)

I understand that there may be behavioural changes and this may lead to additional costs. It would be helpful to understand what HMRC thinks will happen. If we are unsuccessful in amending the scheme, how many additional charities in each of the next four years will apply for and receive gift aid under this scheme? That has a significant cost to the Treasury. This small donations scheme is, in part, advertising to get more organisations to claim gift aid. So what, in HMRC’s view, will be the number of additional charities in each of the next three years that will start claiming gift aid in order to benefit from this scheme as well?

Sajid Javid (Conservative, Bromsgrove)

Let us say that the gift aid effect of this Bill has already been taken into account in the estimates that HMRC has made. When it comes out with its fresh estimates, it will include that.

Gareth Thomas (Labour, Harrow West)

On a point of order, Mr Turner, given what the Minister has said, we need to see those estimates in order to have a properly informed debate in Committee. Will you use your best efforts to encourage the Minister to find a way round the OBR problem, to allow the Committee to have access to those estimates? They have apparently been done and are absolutely fundamental to the costs involved in the amendments that we might want to pass, table or indeed reject? We are a responsible Opposition, we do not want to get into the realm of making uncosted spending commitments. That would be a terrible thing to do. It certainly never happened under the watch of my hon. Friend the Member for Kilmarnock and Loudoun, but we need a proper sight, in good time—ideally well before Tuesday—to make that assessment.

Andrew Turner (Conservative, Isle of Wight)

I think I understand the point you are making. The point is, though, that this amendment is on HMRC and is not wider than that. I am sure we will get to the points you raise, but not today.

Sajid Javid (Conservative, Bromsgrove)

The Opposition spokesman refers to unfunded, reckless spending commitments. His party has experience. Considering the public funding problems that this Government are having to deal with as a result of the terrible inheritance from the Labour Government, they are taking a much more robust and tougher line on public spending and making sure that things are costed properly at the outset. Allow me to sum up. We have had a useful, wide-ranging and lengthy debate, and I hope that hon. Members now have a fuller understanding of what the impact would be if HMRC was not able to administer this scheme, as set out in the Bill. Hon. Members from all sides have made some excellent contributions and some good issues have come up. I hope that the debate has been helpful and that the points raised, which were perhaps related only tangentially to these amendments, have helped us to understand this Bill better.

I have explained that the effects of the amendments would be to delay the start of the scheme and would increase complexity and uncertainty for charities and increase costs for the public sector. For all those reasons, I hope that the hon. Member will withdraw his amendments.