Stop throwing money at people's ludicrous pet charity projects
The government is to spend £120m matching charity donations. But it already throws absurd amounts of money at charities. It shouldn’t spend any more supporting people’s pet projects.
It is hard to keep up with the endless idiocy pouring out of party conference season. But one idea that hasn't had much attention yet comes from the sometimes perfectly sensible Justine Greening. She has announced plans to provide "match funding" for various aid projects.
This means, as the Independent puts it, that in the "run up to the next election" some £120m will be spent by the government on contributing to charity appeals. But that is to be only the beginning: "eventually Dfid expects to roll out the scheme to much smaller charity appeals including for instance those run by local churches and Rotary Clubs".
The idea here, says Greening, is that the government will be "taking the aid priorities of the public" and making them theirs too. That sounds nice. But it is, of course, ludicrous.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
For starters, the government already chucks absurd amounts of money into the charity pie every year. Gift aid already costs the UK Treasury over £1bn every year. That's £1bn that the average taxpayer didn't ask to contribute to other people's pet projects, and £1bn that the average taxpayer also has to come up with via the payment of yet more ludicrous taxes.
It's also not all the exchequer loses to charity don't forget that charities pay no income tax or CGT on their investment gains. That adds up too. Every penny that goes out in tax relief or match funding for charity is a penny that isn't available to pay for the core services we like to think we pay our taxes for (schools, infrastructure, the health service, etc). So why on earth put more in?
There are lots of fabulous charities in the UK. There are also lots of truly terrible and utterly pointless ones. We'd be much better off if, as a nation, we want to contribute to the likes of the World Food Programme if we skipped the nonsense and complications of gift aid and matching, cancel all relief to most charities, and have the state directly support the programmes it prioritises. You can read my past blogs on this matter here, here, and here.
PS As I have said before, if we must have tax relief on charity giving (and I really don't think we should) it is, I think, time to distinguish between what is a charity that fits into the brief of the state, and should therefore be considered a deserving charity, and what is not.
Soup kitchens? Yes. Cancer research? Mostly. Literary festivals? No. Opera? No. Theatre? No. The Brownies? No. Youth clubs in deprived inner cities? Yes. Donkeys? No. Red Squirrels? No. Think tanks? No. Save the Rhino? No. Private schools? No (a voucher scheme would be better). Personal/family foundations? No. Horse Sancturies? No. You get the idea.
-
Energy, healthcare and utilities: how to tap into AI in the real economyAI promises to add to the productivity and profitability of much of the economy beyond tech. Here’s two themes to tap into AI in the real economy.
-
How Junior ISAs could help with inheritance tax planningLooming inheritance tax changes will limit how much pension wealth can be passed on but more people may be maxing out their loved ones’ JISA allowance instead
-
Our pension system, little-changed since Roman times, needs updatingOpinion The Romans introduced pensions, and we still have a similar system now. But there is one vital difference between Roman times and now that means the system needs updating, says Merryn Somerset Webb.
-
We’re doing well on pensions – but we still need to do betterOpinion Pensions auto-enrolment has vastly increased the number of people in the UK with retirement savings. But we’re still not engaged enough, says Merryn Somerset Webb.
-
Older people may own their own home, but the young have better pensionsOpinion UK house prices mean owning a home remains a pipe dream for many young people, but they should have a comfortable retirement, says Merryn Somerset Webb.
-
How to avoid a miserable retirementOpinion The trouble with the UK’s private pension system, says Merryn Somerset Webb, is that it leaves most of us at the mercy of the markets. And the outlook for the markets is miserable.
-
Young investors could bet on NFTs over traditional investmentsOpinion The first batch of child trust funds and Junior Isas are maturing. But young investors could be tempted to bet their proceeds on digital baubles such as NFTs rather than rolling their money over into traditional investments
-
Negative interest rates and the end of free bank accountsOpinion Negative interest rates are likely to mean the introduction of fees for current accounts and other banking products. But that might make the UK banking system slightly less awful, says Merryn Somerset Webb.
-
Pandemics, politicians and gold-plated pensionsAdvice As more and more people lose their jobs to the pandemic and the lockdowns imposed to deal with it, there’s one bunch of people who won’t have to worry about their future: politicians, with their generous defined-benefits pensions.
-
How the stamp duty holiday is pushing up house pricesOpinion Stamp duty is an awful tax and should be replaced by something better. But its temporary removal is driving up house prices, says Merryn Somerset Webb.
