Conservative MP says ministers also preparing to stop tax relief limits on philantrophy after recent reversal on ‘pasty tax’
Hopes have been raised that the government will back down on controversial plans to limit tax relief on big charity donations after a Conservative MP said ministers were preparing the ground for a U-turn.
The limit on tax-free philanthropic giving was among the most unpopular to emerge from the last budget, which has already triggered a run of U-turns. Decisions to drop the widely ridiculed “pasty tax” on hot snacks such as pasties sold at above room temperature, to slash proposed VAT on static caravans, and to make concessions on key measures in the justice and security bill on Monday were seized on by campaigners as sign that the government could make further concessions. Labour said it added to a sense of “omnishambles” in the coalition.
On Tuesday Conservative MP David Ruffley, a member of the Treasury select committee, told the BBC minsters were “preparing the ground” for another major policy reverse on the plan to limit tax relief for charity donations at £50,000 or 25% of a person’s income, whichever was bigger.
“I think ministers are already preparing the ground for that,” he told BBC News. “They said at the time of the budget they would look at how this operates. The point about capping charitable relief is not just to be nice to millionaire philanthropists; it’s the charities that actually receive the money. Those are hardworking people in the voluntary sector. Many of them are Conservative supporters; not all of them, of course.
“I think the political management here really does demand that there is some lessening of the hit to charities that his cap involves. It wouldn’t surprise me if in the November autumn statement there is some change in the short run.”
There were mixed signals from Whitehall on any likely rethink following a consultation which is currently underway, the results of which are expected in mid July. One official confirmed there would be concessions but said the details had not yet been confirmed. “I don’t know what the concessions might be”, the source said. Another warned against reading too much into the fact that a consultation was going on. However charity leaders stepped up pressure on the coalition.
A Treasury spokesperson said: “The budget made clear that we want to ensure charities that rely on large donations are not hit significantly, which is why we said we’d spend time working with the charity sector and philanthropists on the details.”
The Charities Aid Foundation, which represents the interests of the sector, published new research showing that a majority of Conservative and Liberal Democrat voters believe the cap would undermine the government’s “big society” project, to encourage more voluntary organisations to get involved in public services.
“The government has shown it is prepared to listen on issues like the pasty tax and the caravan tax,” said John Low, chief executive of CAF. “Now is the time for them to listen to charities, donors and their own supporters to do the right thing and exempt charitable donations from the damaging tax cap.”
The three announcements, which appeared to have been deliberately timed for when MPs had left Westminster for the Whitsun recess, sparked a rush of pressure for further policy changes:
• Campaigners against new regulations allowing nests of the endangered buzzard to be destroyed and the birds to be taken into captivity to protect pheasant shoots joined the chorus of renewed hope, heightened by the conservation minister Richard Benyon apparently getting more than 600 direct emails from angry nature lovers.
• Officials also hinted at official confirmation of a U-turn on the “conservatory tax”, a proposed requirement to invest in energy saving measures such as insulating lofts and walls when home owners built an extension, which was very unpopular with some Tory MPs – although this had not been formally announced.
• Some recycling and waste companies have also been pressing ministers to relent on a massive hike to the landfill tax for some rubble-type waste and grit, which was introduced suddenly just under a fortnight ago by the customs and excise department – including sending skip lorries to Parliament Square last week to sound their horns in protest.
The government’s opponents seized on the latest U-turns as further evidence of what has been dubbed the “omnishambles” of unpopular government announcements and bad headlines, which began shortly before the budget.
Jon Trickett MP, Labour’s shadow minister for the Cabinet Office, said: “If David Cameron and George Osborne thought through their unfair policies in the first place, this government wouldn’t have to make so many embarrassing U-turns.”
However, government officials defended the latest announcements. “It’s difficult for government because you’re supposed to listen to people and engage with people and hear what they have to say: if the arguments are persuasive enough you should act on them, but then you’re also ‘doing a U-turn’,” said one Liberal Democrat source. “You’re damned if you do, and damned if you don’t.”
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