People give donations for cyclone victims in Myanmar, 2008. Photo: Roslan Rahman, AFP
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Historically a nation of givers, we must protect Britain's charitable status

Donate and volunteer.

The UK has a proud history of charitable giving, and each year is ranked amongst the most generous countries in the world. This generosity serves as the backbone for so much of the good that goes on in communities across the country.

But we cannot rest on our laurels. Recent trends have shown that fewer households are participating in regular giving, and charities are increasingly reliant on the support of older people to fund their work. Indeed, nine per cent of Britons are responsible for two-thirds of all charitable giving, and there is a real need to broaden participation so that more people make a contribution.

Promoting a sense of citizenship, a sense of common action to tackle the great issues that face the world today, has always been one of my aims in politics. That is why I was really pleased to chair the cross-party Growing Giving Parliamentary Inquiry, supported by the Charities Aid Foundation, in order to  examine how we can remove the barriers to giving and build on the extraordinary generosity that has been a feature of British life for generations.

Over the past year I have, with my co-chairs – Baroness Tyler of Enfield and Andrew Percy MP –been pleased to see that attitudes towards charities are extremely positive. People want to support good causes. Generosity is alive and well in this country, and there is a real desire amongst all age groups to  give both their time and, where they can, a little of their cash, to ensure that charities are able to pursue their social missions..

This is not about nineteenth century charity compensating for the impact of austerity. It is about reinforcing the glue that sustains civil society and a sense of mutuality and reciprocity, which makes the world a better place. Not solely by asking us to do things but by facilitating what we can do by working together.

Today, the Growing Giving Inquiry produces a number of recommendations designed to increase participation in giving. We recognise that no single sector of society can unleash the charitable potential that exists within the UK, and we call on charities, business and government to work in partnership to make contributing to social good the norm.

The report calls for a change in business culture, urging businesses to include a commitment to social good within the very fabric of their organisation. From directors to new starters, employees should be given the opportunity to support charity whilst at work. Younger generations are increasingly committed to working for businesses that they see as making a positive contribution, and businesses should be encouraged to follow the lead of the many British companies, like BT and ASOS, who already make an outstanding commitment to community life.

We also acknowledge the challenges posed by retirement, with many people eager to put the skills they have developed over their working life to use, but lacking information about how to do so. We argue for the introduction of a Post Careers Advice Service, explaining to older people how they can effectively give their time to make a difference and emphasising the health and well-being benefits derived from volunteering. Just as youngsters often gain enormously from raising money for vital causes, so older people (particularly those fortunate enough to have financial security) can work to raise funding as well as providing friendship and a little of their time.

Finally, we propose a number of steps to give young people a commitment to volunteering and social action at an early age. Crucially, young people who generously give their time and money should be rewarded for their contribution, and we call for the reform of UCAS forms at the time of applying to university, so that young people are given an explicit way of demonstrating their commitment to social action.

We are positive about the future of giving in the UK, but realise that action must be taken to ensure that donating and volunteering become social norms. The proposals we make are all practical in their own right, but together represent a far reaching attempt to remove barriers to giving and build a stronger, and better society. It is absolutely vital that opportunities to contribute are accessible and relevant to everyone. We must build on our giving heritage and ensure that future generations are able to match and surpass the generosity of previous donors – now is the time to act.

David Blunkett is the Labour MP for Sheffield Brightside and Hillsborough

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.