Editorial: Reshuffle is good news for the sector

During Gordon Brown's radical reshuffle of the Government at the end of last week, he repeatedly emphasised his desire for change.

Stephen Cook
Stephen Cook

It's clear that some policies and programmes will stay, some will go and some will wither on the vine - the story will vary from one department to another. The Office of the Third Sector, however, is likely to be protected from the turbulence and will enjoy an unusual degree of continuity.

This follows from the promotion of Ed Miliband within the same department. In his new Cabinet role as Minister for the Cabinet Office, he will retain oversight of third sector policies and will be in a position to push through the initiatives he began as a junior minister. All the signs are that he and his replacement as junior minister, Phil Hope, will remain committed to pushing through the number of initiatives that have been started in the past year.

One of the priorities for him and for the sector is to get on with the review of Gift Aid, which began last month. While any reform of VAT for charities is unlikely to take place this side of a General Election, the Government seems genuinely eager to find ways of improving the administration and take-up of Gift Aid. There is an opportunity here that should be grasped.

The establishment of a working party led by the Charity Tax Group is an excellent first step. A good second step is its initial project of drawing up a standard list of questions for charities to consider as they respond to the Treasury's consultation. The more coherent and united the sector can be, the better.

It would also be beneficial if the participants in the working group could reach a common position about various outstanding questions, notably transitional relief and creating a flat rate of Gift Aid, decoupled from the standard rate of income tax. The former would mitigate some of the losses that will flow from the lowering of the standard rate announced in the Budget; the latter would have the effect of turning Gift Aid from a tax rebate - unrestricted income - into Government funding with strings attached. Both provoke considerable disagreement.

There is much that could be done in other ways, including making the bureaucracy simpler, bringing in a less punitive audit system and finding better ways of communicating to donors how it all works and why they should use it.

The anomaly that allows higher-rate taxpayers to derive a personal tax benefit from Gift Aid should definitely be addressed: it was designed to benefit charities, not to reward those who are already better off.

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