Gift Aid reform could be next year, says minister

Stephen Timms says donor study will be finished in time to legislate

Government research into donor behaviour will be completed in time for it to legislate on Gift Aid reform next year, according to Stephen Timms, financial secretary to the Treasury.

In April, voluntary organisations called for the extra tax relief available to higher-rate taxpayers when they donate to be redirected to charities.

The Treasury was concerned that the loss of tax incentives might discourage some rich donors from giving and pledged to carry out research into the issue.

Timms told Acevo's 2009 CEO Summit yesterday that the research would be complete by the autumn, allowing the Government time to legislate next year if it was shown that donors would not be put off.

Timms also announced that at least 10 per cent of the £1bn earmarked for the Future Jobs Fund, announced in the Budget, would be used to create jobs in the sector. The fund will create 150,000 jobs for 18 to 24-year-olds in long-term unemployment.

He said he expected voluntary organisations to play a big role as subcontractors in the Department for Work and Pensions' Flexible New Deal programmes, even though charities secured hardly any of the 24 contracts available in the first round of procurement last week. "Primary contractors won't be able to deliver what they are required to do without working with the sector," he said.

Timms said acting as subcontractors to private companies would also allow organisations to avoid the bureaucracy of public sector commissioning. But he admitted the Government needed to do more to reduce that bureaucracy to avoid "losing the expertise of small organisations."

The minister said it would be a positive development if more sector organisations became prime contractors. "But that will require a bigger scale than is available in the sector at the moment," he said. "That is why we want to create a social investment bank to increase the supply of investment capital to the sector." He said a consultation on the bank would be launched in the next few weeks.

Timms said the £20m Hardship Fund, also announced in the Budget, would be targeted at larger organisations that had missed out on help in the Government's recession action plan, announced in February.

He said it would be open to organisations whose annual income was over £200,000 and which worked in health, social care, advice, housing support or education and training. He said grants of between £50,000 and £250,000 would be available, assessed on the basis of need.

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