Tory MP says charity plans in budget were conceived on ‘back of envelope’ as chancellor unveils pasty tax U-turn
A Conservative MP has said budget plans to cap tax relief for charitable donations were conceived “on the back of an envelope” and claims ministers are now preparing the ground for a rethink to avoid hurting the voluntary sector.
David Ruffley, MP for Bury St Edmunds, signalled the move just a day after the chancellor, George Osborne, was forced to make two climbdowns over his budget, including the controversial pasty tax.
Osborne’s decision prompted Labour to describe the U-turns as a “total shambles” and signs of the government’s flawed approach to policymaking.
Ruffley later signalled that a rethink on the tax relief cap was next in line, insisting that “one man’s U-turn is another man’s listening, caring government, being prepared to look at the evidence”.
“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.”
Ruffley conceded that while VAT on pasties and caravans involved “relatively small amounts of money”, rowing back on the cap would be “trickier” because it involved hundreds of millions of pounds. But he suggested Osborne should find the money to fund the U-turn.
“It was only an idea that Nick Clegg came up with to hit tycoons, that’s how it was conceived, on the back of an envelope. It’s not a very good tax change,” he said. “Some of us would say: ‘Find the money on public spending, go further on public spending.'”
The MP made his comments a day after it emerged Osborne had decided to reverse plans to charge VAT on food that is designed to cool down, such as sausage rolls and pasties, following weeks of protest, including by Tory MPs. Osborne will also reduce the new VAT charge on static caravans from the standard 20% rate to 5%.
Rachel Reeves, shadow chief secretary to the Treasury, seized on the decision by to accuse the government of being engaged in “policymaking on the hoof”.
She told BBC Radio 5 Live: “The government should never have put this in the budget without consultation and I think it goes to a wider point in the way in which this government is making policy, it’s policy making on the hoof. There’s VAT on caravans, on pasties, the church repairs, a tax on charitable donations. All of these things show a government in a total mess.”
She urged ministers to “rethink the bigger picture”.
“It would have been good to have consulted before for these plans in the budget but it’s good that they have finally listened. But they need to U-turn on more than just pasties and caravans. The biggest part of the budget was a tax cut … worth £40,000 for 14,000 millionaires. The government need to think that change as well and put in a plan urgently for jobs and growth. They’ve done some U-turns today, now let’s hope they now rethink the bigger picture too.”
The budget concessions, announced by the chancellor in a letter to the Treasury select committee, were deferred until the Commons was no longer sitting. The climbdowns will cost the Treasury as much as £70m annually.
The move coincided with separate concessions made over “secret trials” by the justice secretary, Ken Clarke, following intense lobbying by the deputy prime minister, Nick Clegg.