The £600m in new tax incentives to support philanthropy that was cited by Nick Hurd in an open letter to Sir Stephen Bubb earlier this year has been exposed as a cumulative estimate for four years ahead.

The figure was cited by Hurd, minister for civil society, in his official response to Sir Stephen’s widely-reported letter to the Prime Minister in early January, in which the Acevo chief described the Big Society as “effectively dead”.

Hurd, who was asked to respond by David Cameron, wrote an open letter outlining all the new policies to support the sector that the coalition government has introduced since it came into power.

In it, he wrote: “I have been closely involved in our efforts to make Britain an even more generous country in terms of giving time and money…we have given £600m in new tax incentives to support philanthropy, including new support to enable more legacy giving and small donations to charities.”

In a comment on civilsociety.co.uk’s story about Hurd’s letter, Jay Kennedy from the Directory of Social Change wrote: “’£600m in new tax incentives to support philanthropy' - really Minister? I would be very interested to know how that breaks down.”

So civilsociety.co.uk asked the Cabinet Office to provide a breakdown of the figure.  More than three weeks later, a spokeswoman responded with the following statement: “We are on track to deliver around £450m in new tax incentives to support philanthropy by 2015/16, and looking ahead to 2016/17, we expect our new tax incentives to have increased charity income by nearly £700m.”

But she did not give an itemisation of these figures, saying that was a matter for the Treasury.

The Treasury was able to provide a breakdown within a day.  This shows that the total cumulative cost to the Exchequer of the Cultural Gifts Scheme (previously called Gifts of Pre-eminent Objects), the changes to inheritance tax, and the gift aid small donations scheme, is estimated to be £450m by 2015/16, and £685m by the end of 2016/17 – the second year of the next Parliament.  The Treasury only calculates income and expenditure figures five years ahead.

DSC responds: 'At best optimistic, at worst fictional'

Jay Kennedy responded that while he accepted Nick Hurd had a “personal interest and sincere belief” in trying to develop the philanthropy agenda, the £600m figure is “at best optimistic and at worst fictional”.

“My guess is that the Treasury will have significantly overestimated the potential costs of the tax reliefs [as] they won’t want to be caught out by any unanticipated expenditure,” Kennedy said.

“I would be stunned if the gift aid small donations scheme achieves the figures projected by the Treasury…the figures on inheritance tax are also likely to be optimistic.

“Most deceptively, the Treasury figures show massive increases in expenditure on these tax reliefs during 2015/16 and 2016/17 – the first years of the new Parliament.  We have no guarantee that these reliefs will remain in place in their current form or at all under a new government.”

Invited to comment, Sir Stephen Bubb added: “The government has done some good things on tax relief, and we can debate how much has gone into those changes but the key message in my letter still stands – in its programme for the rest of this Parliament, the government needs to be more ambitious on promoting giving, reforming public services and protecting the most vulnerable.”

 

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