Cut this ludicrous state-funded do-goodery

It’s time to cut the size of the charitable sector, abolish gift aid and take a good hard look at what we think should be funded by the taxpayer at all, says Merryn Somerset Webb.


Anyone who wants to finance donkey sanctuaries can do so. Just out of their post-tax income.

I've written here pretty relentlessly over the last few years about the great financial scandal that is the charity sector. You can read my thoughts here, here and here. You might also watch this video with Alex Perry which explains what happens to much of the money you give to aid charities abroad.

I'm not going to repeat all that here, but I do want to point to a report in the Times today which stresses just how badly much of the £17bn-odd that flows from the coffers of HMRC (and hence of the taxpayer) into those of the charitable sector is used.

It turns out that more than 1,000 charity chiefs earn six-figure salaries. This includes "a director of a regional theatre who received more than £340,000 last year; the head of a government-funded think tank earning more than £500,000; and 11 executives at a planned-parenthood charity paid an average salary of £144,090." All a bit nuts isn't it?

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It makes complete sense that people who are doing excellent jobs for any organisation should be paid well. But when that organisation is largely taxpayer-funded (which via exemptions, rebates and grants, most are) and is therefore effectively part of the public sector, well-paid should not mean "paid double or triple the PM's salary".

It's time to cut the size of the sector (having 80,000 charities is beyond stupid); to abolish gift aid (and probably some other reliefs too); and to keep a much closer eye on the organisations we allow to keep operating as charities.

As I said in August this year, some charities are absolutely brilliant and vital to the successful and compassionate operation of the state; some are awful; others are just pointless. So we need to decide what is a taxpayer priority and what is not.

Anything that is a taxpayer priority can keep being government-financed, but it can also be treated more like a government department (subject to the Freedom of Information Act and all the usual transparency, for starters). Think cancer research, good hospices and the like.

Anything that is not, cannot. Anyone who wants to keep financing donkeys, literary festivals, political lobbyists, art projects and the apparently endless UK squirrel crisis can continue to do so. Just out of their post-tax income.

There is no need for the levels of do-goodery in society to fall, just for the state financing of that do-goodery to fall. That should cut the sector down to a manageable size, remove much of the potential for corruption and inefficiency and give the government another £4bn or so to spend on the basics of good government rather than on the non-core business of other people's passions.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.