The year in policy and politics: 2012

The main developments of the past twelve months included a U-turn by the Chancellor, George Osborne, on his proposal to cap tax relief on charitable giving

George Osborne
George Osborne

Two stories dominated 2012 from a policy perspective: the government’s plan to introduce a cap on tax relief granted on donations to charity and the publication of Lord Hodgson’s review of the Charities Act 2006.

The tax cap took the sector by surprise when it was announced by the Chancellor, George Osborne, in the Budget in March.

He said that anybody wanting to claim more than £50,000 in higher-rate tax relief would have the amount capped at 25 per cent of their annual income from April 2013. The announcement immediately led to warnings from the sector that major donations would be severely reduced and resulted in a campaign to persuade the government to drop the idea.

The Give it Back, George campaign, led by the National Council for Voluntary Organisations and the Charities Aid Foundation, acted as a focal point for the sector’s protests. After several weeks of intense lobbying, the government announced at the end of May that it would drop the planned cap.

Hodgson published his review of the Charities Act 2006 in July. He put forward more than 100 recommendations, including charging for registration with the Charity Commission, raising the income threshold for compulsory registration for charities from £5,000 to £25,000, bringing solicitation of direct debits by face-to-face fundraisers into the local authority licensing regime, and amending the law to put social investment by charities on a firmer foundation.

The most controversial proposal, that charities with annual incomes of more than £1m should be able to pay their trustees without Charity Commission consent, was met with general opposition from the sector - with the notable exception of the chief executives body Acevo.

The government’s interim response to the review, published in December, turned down this proposal. Hurd also said he would not abolish national exemption orders, as proposed by Hodgson, but was non-committal on many of the other major proposals.

In September, three members of the Public Administration Select Committee – one Liberal Democrat and two Labour MPs – attempted to block the appointment of William Shawcross as the new chair of the Charity Commission after his pre-appointment meeting with the committee.

Greg Mulholland, the Liberal Democrat MP, cited an article Shawcross had written for the American conservative website National Review Online before the UK general election in 2010, in which he said: "Only a vote for the Conservatives offers any hope of drawing back from the abyss."

But the trio were outvoted by their Conservative counterparts and Shawcross’s appointment was confirmed.

The PASC also took evidence from a number of charity sector figures as part of its inquiry into the implementation of the Charities Act 2006. Sir Stephen Bubb of Acevo, Sir Stuart Etherington of the NCVO, Nick Hurd, the Minister for Civil Society, Shawcross and Sam Younger, chief executive of the Charity Commission, were among those that appeared before the committee for its ongoing inquiry.

The Charity Commission’s decision to deny charitable status to the Plymouth Brethren group in Devon formed a major part of the committee’s discussion with witnesses and led to criticism of the regulator for an alleged anti-religious stance. It also heard from Plymouth Brethren representatives.

The Public Service (Social Value) Bill, the private members’ bill introduced by the Conservative MP Chris White, completed its passage through parliament this year.

The bill, which would require public sector commissioners to consider social value when procuring services, gained royal assent in March.

Legislation to introduce the Gift Aid Small Donations Bill, which will enable charities to claim Gift-Aid like payments on small cash donations totalling up to £5,000 a year without individual paperwork, was brought before parliament in the Small Charitable Donations Bill. 

Sector umbrella bodies expressed concerns that the requirements to qualify for payments under the scheme were too strict and would prevent too many charities from benefiting from it.

The government subsequently softened some of the criteria, around the amount of actual Gift Aid that must be claimed alongside payments under the GASDS, and the number of years that charities must have made Gift Aid claims. The bill was sent to the House of Lords at the end of November.

Figures published by the Treasury alongside the Autumn Statement in December showed that the GASDS could raise almost £150m a year for the charity sector by 2018. It was a minor point of note in an otherwise mainly benign Autumn Statement for the sector as a whole.

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