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Backlash on charitable giving latest sign Budget was not thought through

Posted on 11 April 2012 | 8:04am

It was on April 1 (apologies for inability to cut and paste links on the iPad but nobody has taught me yet!) that I suggested we should ‘watch out for a backlash on charitable and philanthropic giving.’ At the time, the debate was focusing on pasties and the so-called granny tax, but it was a member of the government team who alerted me to what he believed could become an even bigger post-Budget problem for the Chancellor and the PM.

We are back to the recurring theme of crashing strategies when there is lack of clarity about what the big overarching strategy may be. The Big Society is one of the themes with which Mr Cameron in particular is most associated, and in so far as people know what it means, I think most have assumed one of its principles is the encouragement of charitable and philanthropic giving. Indeed, this has also been emphasised by ministers responsible for education, sport and the arts.

But George Osborne has one over-riding goal, and that is the rescue of his thus far failing plan to sort the deficit over a single Parliament (without a strategy for growth and jobs). So he was looking far and wide for plans that would save the Treasury the money needed to fund his tax cut for the richest people in Britain.

There was something very odd about his feigned shock yesterday at the extent of tax avoidance, given that his main argument for getting rid of the top rate of 50p was that so many of those liable to pay it shifted their earnings into the previous year (just as they will now shift them to next year, having virtually been invited by Osborne so to do.)

It says something about the extent to which he is trapped by the Thatcherite prism of politics that he assumed if he gave a tax cut to people at the top, they would welcome it, and the welcome would be shared by those who aspire to being top rate taxpayers.

But here he found himself crashing into the ‘all in this together’ strategy. It was the moment that one hit the buffers.

Still they dig on … The impression now being given is that people who give huge sums to good causes are a bunch of spivs concerned only with dodging tax. No doubt some do fall into that category. But many do not.

Charities are finding times hard enough at the moment what with government cuts, a squeeze on most people’s living standards, and something of a return to the values of the 80s. But if now to be added to that is a fall in the really big donations, the situation will get a lot worse, and Mr Osborne should not be surprised if he pays something of a political price for that. What seems remarkable is that he doesn’t seem to have seen it coming.

  • If you or anyone else wants to know more about the whole issue of tax relief caps and the effect it might have on philanthropy this site  http://giveitbackgeorge.org/  was set up on the 23 March following a letter to the Chancellor on the 22 March and has some excellent infogrpahics and pieces explainign it all.

  • Robert

    I really like your line that Osborne is telling wealthy philanthropists they are a bunch of tax avoiding whatnots and that he’s determined to stop subsidising them in their cunning plan to diddle the taxpayer.

    George’ll be having tax collectors out tapping the homeless sleeping rough in the streets next because at some point they’ll be getting help from some gift-aid subsidised charity under the Big Society.

    S’only fair, after all. We’re all in this together.

  • I know this is bound to be an unpopular view but I think it is right to limit the tax relief. I think this not only because high income individuals should not need to be bribed by other taxpayers. It is also about the way the current system gives the rich power over public money. 
    If I give £10m to Eton, the taxpayer will top up my money. Charities favoured by the rich often give to activities liked by the rich. Why should other, poorer taxpayers be forced to make a contributon at the same time.
    It’s a basic rule of democracy, at least in theory, that we all have one vote. That is how we decide public spending. But tax relief for the very rich who give to charity forces the poor to subsidise the actions of the rich.

  • Olli Issakainen

    Top 100 philanthropists gave £1.62bn to charities.
    Treasury plan to have a cap on tax relief on major donations is a threat to many charities.
    Big Society is the Big Idea of David Cameron. But it needs billions more to work.
    Welfare state can protect people, Big Society cannot.
    The European social model combines wealth-creation with extensive redistribution.
    This is social justice.
    Hayekians say that European social model has to go. They are deaf to the needs of the poor and sick.
    The Tory-led government is giving political support to Hayekians.
    States are not on the brink of bankruptcy because of overspending by governments. Banks caused the mess.
    Francis Maude wants to make Britain a tax haven for big corporations.
    But corporation tax cut may not win business for Britain.
    Headline corporation tax rate is not the only factor in deciding location. Luxembourg, for example, has a corporate tax rate of 28.2%.
    (Osborne is cutting to 22% by 2014.)
    Super-rich pay 10% or even less in taxes. Tax avoidance and tax evasion are £125bn a year!
    Benefit cheats only cost £1.2bn. The fraud in the City is about £3.5bn.
    Jean-Luc Melenchon in France calls for a cap on incomes over EUR360,000 a year. He wants control over banks and a referendum on the EU treaty.
    Plato stated that the ratio between the poor and rich in society should 1:4.
    Bob Diamond earns £17m. Some hedge fund managers $100m!
    But the median income in 2011 in Britain was £26,244.
    George Osborne is a political chancellor. He puts politics before economics.
    His rightwing austerity policy is wrong. We have low growth and high unemployment.
    Private sector has not compensated for public sector cuts.
    Deficit will not go down as planned. Debt will increase at least until 2016-17.
    Messrs Osborne and Cameron are neo-Thatcherites – not one-nation Tories.
    Mrs T, by the way, was only saved by the North Sea oil.
    Gordon Brown´s Keynesianism saved Britain from depression. But then the banks wanted a return to neoliberalism.
    Results can now be seen in Greece, Portugal, Spain and Italy.
    Mr Osborne must learn from Keynes.
    Aggregate spending in economy is made of consumption and investment. Consumption is driven by income.
    State must do the spending when private sector is not investing.
    Aggregate spending can only be maintained through fiscal policy as ultra-loose monetary policy is now not working.
    If government tries to cut the deficit in a slump, a Japanese-style “lost decade” is ahead. 

  • Chris lancashire

    A tax free limit of £50,000 p.a. or 25% of an individual’s income seems eminently reasonable. For the wealthy wishing to donate more I doubt that the absence of tax relief would be a huge problem. And as Gobanian rightly points out why should the poor be asked to subsidise the donations of the rich?

    Excellent spin, as usual Mr Campbell; if this had been a Labour government introducing this no doubt the line would be stopping tax abuse by the rich. It’s all in how you tell it isn’t it?

    And I think the Budget was thought through – it’s all about trying to remedy the yawning gap in the nation’s finances left by Labour.

  • Richard

    “Plato stated that the ratio between the poor and rich in society should 1:4.”
    Was that Sid Plato of the NUR, or Dave Plato of NUS/UWT? Or Side-salad Plato of Pizza Hut?
    The golden Plato ratio? Relative heights? Weights? Earnings? Press up capability?
    Olli, you are at it again: just because you read something somewhere do not mangle it and repeat it without question as fact. It is doing you no good, but destroying the credibility of this site.

    “Tax avoidance and tax evasion are £125bn a year!” Please enlighten us as to how you arrive at this figure. (Please do not regurgitate figures given by P Toynbee and others.) It can onl;y be a guestimate of an estimate.

    “George Osborne is a political chancellor.” Please list previous Non Political Chancellors.

    Finally tell us all how much voluntary tax you pay. (Having seen what happened in our payroll department if an employee had an extra £5 stoppages, I guess we know the answer.) The populist use of the word “avoidance” both by Osborne and others is lamentable. I have never met anybody who pays voluntary income tax. Have you?

  • Roger

    Alastair – re-iPad – just tap the bit you want to copy and a little movable blue box-with-handles will appear, with options to cut/copy/paste!!

  • Ehtch

    I am not looking forward when Boris and Dave take over the Olympics this year with platformed shite. It will be 1936 Berlin Olympics again – ZEIG HEIL! and all that nonsense. And I wonder how worried Queeny is with her fiftieth? It will be wall to wall tory bastards for her. Father Ted and Mrs Doyle,
    http://www.youtube.com/watch?v=XLTnacYvvg4
    I can tell Queeny is a socialist, it is plain as day.

  • Dave Simons

     The stupidity and blockheadedness of that last sentence beggars belief. How can anyone reading this blog come out with such parrot-style drivel? Is there any point in reiterating all that’s been said about the Tories before 2008 pledging to match Labour’s public spending and what would the Tories have done if they had been faced with the financial crisis of 2008 and didn’t the mega-bank-bailout have a little to do with the state we’re in? My goodness you must want to believe what you apparently do believe, but it must be hard going when even George Osborne has confessed in a House of Commons committee that the UK is not as badly off debt-wise as most other European countries and the US.

  • Anonymous

    I suppose it’s worth pointing out their strategic blunders, but frankly that’s all there ever is.  

    In so far as I care at all, I wonder what Osborne thinks his political future might be.  Obviously he is trying to help Johnson win back the mayoralty by doling out some cash, presumably so Johnson can stay out of harm’s way at City Hall.  What I’d really like to see is Johnson released to wreak havoc on his own party.  

    The longer Osborne stays in his job, perhaps the more exposed he will become.  The failure of the Tories’ election campaign was in no small measure due to Osborne, was it not?  I have never bought the idea that he was a master strategist – just someone waiting to  be found out.  

  • Michele

     Your point about the charitable status of ‘public’ schools is oh so relevant.

    —–

    I’m sure that there can still be a way round all this for those that really do want to continue giving at the rate they have been till now – clever accountants can give them the numbers breakdown to ensure that amounts donated after tax are Gift Aided.

    I was gobsmacked by the scurrilous flinging around of speculation about how charity income is spent; surely good taste should mean allegaions of that type have to be known to be true and need to be specific to those organisations that have actually been investigated.

    Big Society?  The jerk is ensuring even less people get involved.

  • I don’t think Alastair Campbell’s post on this is spin, it is genuine concern for charities which in many cases do vital work. And I certainly don’t believe any of the stuff the government churns out about their economic policies.
    But we allow too much licence in the charity sector. Right wing think tanks pour out propaganda. Why should taxpayers as a whole be giving money to the Institute oif Economic Affairs just because millionaires do?
    Or to give another example, I went to the Queen’s Gallery in Buckingham Palace today. As I bought my ticket I was asked to sign a form so that they could claim charity relief from the Inland Revenue. Why on earth should the Queen be getting money from taxpayers in this way? It’s absurd that one of the richest women in the world is able to claim money like this.
    This would be less of a problem if the range of acceptable charitable activities were more closely defined. But they’re not.The money saved by restricting these tax concessions could and should be used for government to give proper grants to charities on the basis of need.

  • Chris lancashire

    Richard:It’s really not worth the effort – although I admire the attempt.

  • ZintinW4

    The policy failure also indicates a lack of understanding of the value of the third sector. For a number of years it has employed more people than e.g UK car industry. Any cuts in funding, therefore, have potentially major consequences on the levels of employment.

    The Government needs a concerted programme to demonstrate and mobilise support for the voluntary sector something ths encourages people to recognise the value of giving time or money to charity. We could call it Big Society and…..er hang on!? Oh my God – they’re meant to have such a policy.

    Just goes to show ‘Big Society’ cannot be delivered by small minds, mean spirits and all that the native Tory epitomises.

  • Dave Simons

    Since income tax payment is compulsory it’s unlikely that anyone will need to pay it voluntarily. If they did they’d probably want some say over what it is spent on. Wouldn’t you? Nevertheless you raise a big issue.  I don’t think in the last few decades there has been a serious debate about taxation. Instead there has been what I think is a childish policy by right-wing governments of ‘low taxation is all’, a contrast to the idea that taxation is the price you pay for being civilised. This former policy links to the idea that selfish individualism is OK and the state should not interfere – except when the state is giving hand-outs. Over Easter I visited a mansion in the Midlands, a thousand plus acres outside mostly dedicated to shooting game. The lady of the house said that in 1999 the government had payed for refurbishment of the roof in return for minimal opening of the house to the public.That government was a Labour government. I’ve no doubt that the lady of the house is a staunch Tory supporter who complains about high taxation, even though she has benefited considerably from a state grant (and probably from being reintroduced to ‘ordinary’ members of the public). That’s the trouble. As I say, there hasn’t been  much of a serious debate about taxation in the last few decades.

  • Anonymous

     Well done & thank you very much for your post. I enjoyed it very much. I doubt very much we’ll see a response from Olli, though.

  • Sue

    Completely agree, life is difficult enough for charities and fund raising – and then along comes Osborne. By the way Gobanian, the biggest individual donor to charity last yeat as I understand it was JK Rowling, and she funded  support for multiple sclerosis, not public schools. 

  • Michele

     I’m sorry to disappoint or surprise you but I am happy to pay tax and have it spent wisely by a sensible altruistic Govt.  Naturally I was happier ’97-’10 than I was for the preceding 18yrs or have been for the past two.

    There are lots of countries where tax isn’t efficiently collected or spent, their infrastructures are not improved and there is little planning for future populations.  I’m sure you know the sort of place I mean and I’m equally sure you’d never emigrate to one of them, you’ll just carry on whingeing about Big Govt.

    PS: It’s truly humbling to see that you care about the credibility of this site. 

  • Anonymous

    I don’t know what my opinion is on this!

    I have heard a sound argument from Alastair’s sparring partner Mark Littlewood (who is actually a lib dem when I always thought he was a tory!) saying that tax breaks for charity are good, they incentivise people to spend on charity. He also said it incentivises to spend on charity rather than on yachts. Really? I can’t imagine planning to buy a yacht then deciding to spend on charity instead due to tax breaks. Wouldn’t I just buy a smaller yacht. Likewise if I plan to give 100,000 tax free to charity but then the government tells me they’ll tax 50% of it, don’t I still give the £100,000 but the charity gets £50,000?

    Andrew Neil makes the point that why should we give millionaires tax breaks to maybe spend money on charities when we could just tax them and then definitely spend the money on the poor. Especially when things like Eton, the Royal Opera House and even the IEA (Littlewoods think tank) are all ‘charities’.

    I think we should have a different status for charities that help the poor, the sick and so on, than those which help the likes of Eton, Royal Opera House and the IEA.

  • Michele

     A different take on things from someone that I’m sure is better informed and balanced that yourself L-)

    http://blogs.independent.co.uk/2012/04/05/labours-fine-economic-record/

    .

  • Michele

     

    Some very good info in the link Adam

  • Anonymous

    The only strategy I have seen from Osborne is switching from his sneering “muhahahah” performance at last years budget/conference to this year where he tried to look all caring and reasonable – without a lot of success. I think he is just cursed with an unelectable face! Even if he were good that is, which I don’t think he is. I don’t think Mr Blair, Mr Campbell or Mr Jonathan Powell would be seeking him out for strategy lessons.

    John Redwood was a bit similar, I think Redwood is probably the most intelligent of all the Tories, but he is totally unelectable just because of the way he looks! He just looks like an evil nasty tory! And so does Osborne, minus the intelligence. I’m not saying he is stupid, I just don’t think he is as clever as people think.

    Anyway yeah they reckon it is Osborne vs Johnson for next leader of the Tories don’t they? I would have thought Labour would be quite happy with either choice, then again I think they’d be happy for Cameron to stay in the job. I think David Davis would have been the best candidate.

  • Michele

     You’re just a pair of yobs aren’t you?

  • Michele

     It’s her 60th Ehtch.
    I used to be anti-monarchy but I grew out of it after visiting places and learning about others that are republics.

    I can’t actually think of one that is more democratic than the UK (especially when under Labour) is.
    The monarchy have little sway over what our elected Govts do, except ensure it is all allowable under our Constitution. 
    I’ll be grinning at the flotilla (didn’t bother about any of the weddings).

    I wasn’t happy to hear AC say ‘It’ll never happen’ when someone joshed about him being made a lord.  We need good lords and ladies in the ‘upper house’.

    Marcia Williams is certainly doing her bit …… nearly every day apparently!

  • Dave Simons

    On the subject of the disconnectedness of current Tory ‘thinking’ I can’t fault the article by Matthew Paris in today’s ‘Times’. Matthew Paris was once a Derbyshire MP, and his constituency included the village of Hathersage in north east Derbyshire. Dear old Matty has just discovered that Hathersage has an open air swimming pool, which he now heartily recommends to the rest of us. Thank you very much Matty! Hathersage has had an open air swimming pool since 1936 and I doubt if many people in north east Derbyshire have not heard about it. Some have even used it! When you consider that Matty was once in Thatcher’s government and has a farmhouse in Derbyshire you can’t help thinking about the gob-smacking disconnectedness and naivety of some backwoods Tory MPs. These are our great representatives who really keep their ears to the ground. Read the article – I’m not making it up!  

  • Michele

     Bit of a kneejerk comment from me there, having got back in the middle of this furore and unaware of all the implications.
    I’d not realised some of these ‘charities’ are actually abroad and so are not regulated by our Charities Commission, might be a ‘charity’ in name only.

    There is a big difference in the type of donation Ms Vivian Duffield, a massive donor, has made for decades – mostly to organisations that many of us can’t visit anyway due to their entry prices and location – and the type made by J K Rowling.

  • Richard

    There is absolutely nothing you could say which would surprise or disappoint me.
    However to describe the warmongering Labour regime, who squandered money on PFI and were devoid of housing policy and awarded tax credits to people earning £50k plus, as altruistic is risible.
    Please enlighten us re their infrastructure improvements and planning (sic) for future populations. (c/f estimating 20,000 e Europeans after enlargement.)
    PS If I did not care about the credibility of this site I would not visit it. I am a fan of it’s authors professionalism, and many times have suggested that he enter parliament.

  • Richard

     Rather than your usual rabid abuse, why not address the points I made re Olli’s posting. Go on you can do it.

  • Ehtch

    OOPS – I stand corrected Michele, her sixtieth, and just five more odd years to beat Queen Vicky. Think she will be still around for her hundeth birthday, when she receives a telegram from herself.

  • Michele

     Imagine your post’s first three  paragraphs are numbered; 1 to 3 OK?
    1.  If that’s the case then the last two sentences of your earlier post were pointless.  Not much new there eh?
    2. I’ve never imagined you as a pacifist; blow me down.
    PFI was a means to an end.  We needed new buildings, we needed them right away.  We needed them for all sorts of reasons including pride in using the services housed in them, all of which we all pay for (just a few of us doing so happily) and relied on.
    Tax credits to people earning £50k plus, you must be meaning those with many children?  We do need those families, we had got in to an awful snobby attitude that only the poor, incapable, uneducated have large families … I honestly don’t know where your bile can all be from.
    3.  Hospitals, schools, unis, GP surgeries with Nurse Practitioners, NHS Direct, the ongoing IT programmes, dental practices, efficient equipment.  Are you blind or just blinkered?
    I don ‘t know what that para’s last sentence (with its redundant brackets) is on about …. perhaps you think you’re addressing someone on your own wavelength ….. spit out what you mean.

  • Dave Simons

     You don’t grow out of being anti-monarchy. You just change your mind. It’s not immature to be anti-monarchy. I think we owe it to the ‘Royals’ to liberate them from all this silly sycophancy and let them lead lives more attuned to their own abilities and needs. Having said that  I do think we should grow up into democracy and republicanism and stop believing in fairy tales and father/mother figures with crowns and magic wands.

    • Michele

       Perhaps you just changed your mind, I grew out of what had been the ‘normal’ mindset in my peer group, some friends of that time still are and tend also to be the ones that have not seen the opposite.

      I don’t think that it’s inate for a person that empathises with the Queen’s role (and that of the closest family members) to be sycophantic, your meaning of the word in this context must be wide enough for it to cover all shades of opinion other than anti.

      She does not have freedom of speech which  itself makes her role one that most of us would reject.

      The extended family (or some exes) and its likely future longevity can get on my nerves but even the ‘daft’ girl in the daft hat served a purpose for charity (let’s not ignore that wearing it where she did got it max publicity).

      As for your last sentence are you in cloud cuckoo land?  There are shades of opinion and variations in types of monarchy (ie: my support of ours does not mean support for the principle).

      If there’s a decent republic and republican system I’m sure you can name it, bet you can also name a few that function rather like monarchies with 3rd/4th generation leaders (or dogmatic persistent hereditary wannabes in the case of other/s).

  • Michele

     Points?  Can you explain what was point-like about your bullyboy sneery mockery?
    I don’t happen to be a Liker on many of Olli’s posts but for objective reasons. 
    We all know that every single fact can be presented in very many ways, a percentage or a value of the many fluctuating greater values. 

    Because we all do (or should) know that we should also know that each is just today’s crib sheet and there’s not much point comparing one to another  ….. things shift and that doesn’t make the current or past one wrong.

    The opportunistic sneer about the adjective ‘political’ when I daresay most of us knew it meant ‘ideological’ did the blog a disservice.
    Perhaps you should try replying in Finnish so less of us get to read you?
    You might admire the blog’s owner, some viewers won’t admire some of its contributors (neither me nor you but – thank X – for different reasons).

  • reaguns

    Well Parris has form. He was the one who said he could live on the dole in the 80s then when World In Action challenged him too, he took up the challenge (fair dues) but he ran out of money! He got the sack partly because of it!

    Then he did it a few years back under labour and managed it.

  • reaguns

    I too have often thought Alastair should enter parliament. I can see why he wouldn’t want to, but I think he’d be a potential Obama type figure. I say that because they both have sounds instincts I believe, and are rightly suspicious of many people and ideas, however they both need help with economics.

    I think my dream team to run the UK would consist of the This Week Panel (Alan Johnson, Portillo, Neil) plus Alastair and Peter Oborne. What a thoroughly bloody sensible and balanced government that would be!

  • Dave Simons

     Yes I am in cloud cuckoo land. I believe in leadership on the basis of ability and merit, with majority approval. I don’t believe in leadership on the basis of heredity and without majority approval by democratic means.

  • Michele

     I’m not sure what leadership our monarchy provides, I’m sure our elected Govt does it (and wow, what a pickle that has us in at the moment).  Would you really prefer that the Sham was our Pres?

    I’m sure you can provide as  many contemporary / relevant examples though, just as you have of admirable or enviable republics.

    Hold back on the quippy quips such as ‘believing in fairy tales and father/mother figures with crowns and magic wands’ and you might find your way out of cloud cuckoo land.  😉

  • Michele

     PS:  You don’t need to show your over-sensitive side btw.  There was no offence intended to Ehtch (nor, it would seem any taken) with my ‘grew out of it’.
    As we receive new ‘input’ and wow ….. change our minds as yu put it … we are growing.  Even if we change our minds back again it’s because of something similar.
    Stop being a touchy sod.

  • Dave Simons

     Are we really so limited as a nation that we have to choose between President Sham and HM? Is that a choice?

  • Miche

     It’s where we are now and could be if we were to become a  republic now.
    I still await your examples of good ones btw ( and systems that are better than ours).
    Being monarch must be one of the most frustrating  burdens.  Imagine being that pretty young woman that had just married that hunky bloke and overnight your future is changed.
    We aren’t going to persuade each other; you aren’t being very convincing about the basis of your preference, it sounds more like kneejerk prejudice.