Treasury's 'cost-neutral' Gift Aid reform proposal disappoints sector

It is now clear that Gift Aid reform is extremely unlikely to happen before the election following the first meeting of the sector-wide forum set up to discuss the way forward.

Sector representatives met Ian Pearson, economic secretary to the Treasury, on 8th February, and were dismayed to hear that while the Treasury was still willing to reform Gift Aid, any changes had to be ‘cost-neutral’.

David Membrey, acting chief executive of the Charity Finance Directors’ Group (CFDG) says, “I believe there is a willingness from individual ministers and the Treasury, but the bottom line is that it has to be cost-neutral and that is going to be difficult. There could be some savings made if the bureaucracy involved in the administration of Gift Aid were cut, but it remains to be seen if that could be cost-neutral. I’m not convinced anything is going to happen in the next two years.”

The Institute of Fundraising (IoF) welcomed the announcement of a timetable of Gift Aid reform that would seedelivery of recommendations to ministers by September 2010, but is equally concerned at the lack of progress. Louise Richards, IoF director of policy and campaigns, says, “In reality nothing is going to happen before 2011. In the meantime, the government could give a huge boost to the sector by extending transitional relief on Gift Aid.”

Transitional relief was introduced in 2008 to soften the impact of a reduction in Gift Aid in line with the lowering of the basic rate of income tax from 22% to 20%, and covers donations up to 6th April 2011. The institute believes extending the relief for an extra year would provide an additional £90m for the sector.

NCVO is less conciliatory. Following an earlier high-level meeting of chief executives of sector bodies on 1st February, chief executive Stuart Etherington told Third Sector magazine, “Reform has been kicked into the longest of long grass. There will certainly be nothing before the election." He described the concept of cost-neutral reform as an "unsquareable circle".

ACEVO chief executive Stephen Bubb did not attend this week's meeting, predicting it to be "a waste of time".

“I was right not to bother going to the meeting with the Minister,” he wrote on his blog.  “It was a waste of time and worse than that I'd probably have lost my rag when it was suggested that any changes have to be ‘cost neutral.”

Meanwhile, Shadow charities minister Nick Hurd told an Institute of Fundraising conference that if his party won the election, it would try to reduce the “bureaucratic burden” imposed by Gift Aid. He also said his party favoured creating a composite rate of Gift Aid, rather than introducing an opt-out system.