Merryn's Blog

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.

151217-donkeys

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.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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?

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".

Advertisement
Advertisement - Article continues below

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.

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/economy/600667/money-minute-wednesday-22-january-uk-public-borrowing
Economy

Money Minute Wednesday 22 January: UK public borrowing

Today's Money Minute looks ahead to the latest on of the UK's public finances, with the Office for Budget Responsibility’s forecasts for borrowing thi…
22 Jan 2020
Visit/economy/600666/money-minute-tuesday-21-january-uk-labour-market-data
Economy

Money Minute Tuesday 21 January: UK labour market data

In today's Money Minute we get the latest unemployment figures for the UK, plus wage growth data and a host of company updates.
21 Jan 2020
Visit/economy/600662/money-minute-monday-20-january-another-busy-week-for-the-uk-economy
Economy

Money Minute Monday 20 January: another busy week for the UK economy

In today's Money Minute, we look forward to another busy week for UK economic data.
20 Jan 2020

Most Popular

Visit/investments/commodities/gold/600686/gold-and-silver-bull-market-2020
Gold

Want to make money in 2020? Gold and silver are looking like a good bet

If you want to make money from investing, says Dominic Frisby, it’s simple: find a bull market and go long. And in 2020 gold and silver are in a bull …
22 Jan 2020
Visit/economy/600667/money-minute-wednesday-22-january-uk-public-borrowing
Economy

Money Minute Wednesday 22 January: UK public borrowing

Today's Money Minute looks ahead to the latest on of the UK's public finances, with the Office for Budget Responsibility’s forecasts for borrowing thi…
22 Jan 2020
Visit/investments/stocks-and-shares/share-tips/600653/indias-small-and-mid-cap-stocks-are-set-for-big
Share tips

India’s small and mid-cap stocks are set for big gains – here are three to buy now

Each week, a professional investor tells us where he’d put his money. This week: David Cornell of the India Capital Growth Fund highlights three favou…
20 Jan 2020
Visit/investments/stocks-and-shares/share-tips/600636/class-acts-going-cheap-buy-into-europes-best
Share tips

Class acts going cheap: buy into Europe’s best bargains

Value investing appears to be making a comeback, while shares on this side of the Atlantic are more appealing on metrics such as price/earnings ratios…
16 Jan 2020