Policy and Politics: Question Time - Brian Dutton, director general, Leonard Cheshire

Do you think that VAT reform for the charity sector is on the Government's agenda?

No, I don't think it is, but I think it should be. There are two strands of Government policy running against each other. On the one hand it wants to outsource the delivery of various social services and is actively pursuing it and encouraging the sector to take part, and on the other, it is asking us to do it with our hands tied behind our backs. It flies in the face of logic.

What is the VAT burden for your charity?

VAT costs Leonard Cheshire between £1m-£1.5m every year. I therefore have no choice but to charge it on the invoice to local authorities, which makes the services more expensive, or to reduce the quality of the service.

For example, the VAT bill for rebuilding the St Cecilia's care home in Bromley was £179,000 of a £2.2m project.

Do you support the new campaign by the Charities Tax Reform Group?

Yes we do, and we are members of the group. We think that the VAT bill should be reduced progressively, starting with charities that deliver public services, as it would make their services more competitive. I think the Government would not be prepared to introduce VAT exemption for the whole sector because it represents a lot of money.

Do you support MP Bob Russell's proposal to reduce VAT from 17.5 to 5 per cent for charities?

I haven't engaged with this proposal because I think that 5 per cent would still be unfair on service delivery charities. But I acknowledge that it would be beneficial to the sector as a whole.

Is Leonard Cheshire going to lobby on the issue in Parliament in the coming months?

We have been lobbying on the issue for the past five years. It's not top of the agenda at the moment as we have been quite busy with the Disability Bill and others, but we will return to it. It is not going to go away and we will lobby until it is sorted.

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