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Saturday, 26 July 2014

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‘I will have to give more or charities will receive less’ says ex-Greggs boss

Ian Gregg is a worried man. You would not expect it of the man who took over the pies and cakes firm in 1964 and developed it into a national company and household name.

Ian Gregg photo
Ian Gregg

As a retired millionaire, he should be spending his time relaxing, indulging in his passions for fishing, gardening, the environment and helping charities.

But it’s that part of his life that is the cause for concern.

Like many others involved in giving to good causes and charity work, he is alarmed at the harm Government plans to cap financial gifts could do to Cumbria.

As a result of this, Mr Gregg says he is reviewing his donations to charity.

The businessman, who lives near Penrith, has donated millions of pounds to community and conservation charities in Cumbria and nationally over the past 20 years.

As well as his personal donations, he set up the Greggs Trust (now the Greggs Foundation) as a registered charity in 1987 with the aim of putting something back into the communities where Greggs trade and where their customers and employees live.

The former executive chairman and managing director of Greggs the Bakers says: “I find it rather surprising that at the very time when the Government is trying to get the Big Society going and the charitable sector going, that it significantly reduces the tax allowance.

“That will mean the charitable scene will suffer and the Big Society will suffer.

“I support quite a number of charities and the amount of tax I pay will increase. I’m having to review exactly what I can do.

“I will continue to support them, I will either have to give more or they will receive less.

“In the scheme of some of the big donors, what I do is modest, but it is considerable over a period of time.”

Mr Gregg, 72, is chairman of the Rivers Trust and a former trustee of the Eden Rivers Trust.

He also donates through the Cumbria Community Foundation.

Andy Beeforth is director of the organisation which co-ordinates the distribution of funds to a range of organisations across the county.

The Foundation raises money from donors and awards grants to community groups and organisations to help the county’s needy.

Since it was formed in 1999, it has distributed more than £16m in grants.

He says the Government is making it seem as if anyone who donates through Gift Aid is a tax dodger and that could put many donors off.

“Our role is to encourage philanthropy and we do have donors who will be impacted by this,” he warns.

Mr Beeforth says the Government is sending out mixed messages.

On the one hand, it wants us all to be part of a Big Society, where we donate time and money to community works and it has just issued a £100,000 grant to the Foundation to set up an endowment creation scheme to encourage donors to help local charities.

“We are being asked to incentivise people to give, but at the same time, they are saying that if you are going to give a substantial amount, you can only get tax relief on £50,000.”

Charles Woodhouse is and has been a trustee of numerous national and Cumbria-based charities including the Cumbria Community Foundation and Hospice at Home Carlisle and North Lakeland.

He was chairman of Rural Regeneration Cumbria from 2002-2006 and has established his own charitable trust, the Quarry Hill Grassroots Fund to help sports groups for the young.

The former solicitor to the Duke of Edinburgh says: “It is the message this proposal is giving out.

“It categorises everyone who gives to charity as tax avoiders.

“The Government has confused philanthropy with tax avoidance.

“They are two completely separate issues, they are only interlinked in extreme cases of abuse.

“Of course you should prevent tax abuse and evasion, but this is a sledgehammer to crack a nut.

“There are a lot of philanthropists about who could find this a disincentive.”

Mr Woodhouse, who lives near Wigton, is particularly keen on supporting amateur sports clubs and he says they could be hit by any changes.

“In recent years it has been increasingly the charitable sector that has supported so much as local and central government funding has reduced.”

The idea to reduce the amount philanthropists can claim back on gifts over £200,000 was announced by Chancellor George Osborne in his budget a month ago.

From next April, the total an individual can claim in tax relief on charitable donations will be capped at £50,000 a year, or 25 per cent of income, whichever is greater.

Mr Osborne’s reasoning is to close a tax avoidance loophole involving charitable giving that some companies and individuals have abused.

The Budget announcement comes at a time when many charities are already struggling to cope with a drop in funds as government and local authority grants are axed and reduced.

Cumbria CVS which supports and advises voluntary organisations across the county, has warned that it could lose up to as third of its staff as a result of cuts to funding.

It could be forced to pull out of offices in Carlisle, Maryport and Kendal.

The move by Mr Osborne will affect the work done by charities far beyond Cumbria’s borders, warns Rae McGrath, senior programme manager for Save the Children.

Mr McGrath, who lives in Langrigg, near Aspatria, won a Nobel Peace Prize for his work to ban landmines – a campaign started from offices in Cockermouth.

He is currently in Jordan organising Save the Children’s response to the needs of Syrian children affected by the current conflict.

He says: “Obviously when a very wealthy person, millionaire or billionaire, gives to charity they are able to help charities make a very big difference and, most importantly, allow those organisations an important flexibility of response and the tax relief substantially increases that potential.

“I can best explain this in the context of my own work, as an emergency team leader for Save the Children.

“When you open your newspaper or turn on the TV and see that an earthquake, flood, or as we see in Syria, a conflict that is causing unimaginable suffering for children, I am likely to be already on a plane heading to help those communities with a team of specialists.

“How are we able to respond so quickly? The answer lies in our access to funds that can be deployed at very short notice to ensure we get to the people in greatest need as quickly as humanly possible.

“Those flexible funds come from the public, and because those kinds of responses are costly, the contribution of rich entrepreneurs is a vital element of our emergency response capacity.

“That’s one of the reasons that Save the Children is concerned that the plans to limit tax relief on charitable donations will deter philanthropists, those who have the financial capacity to help us respond to the needs of vulnerable children most effectively and quickly, from supporting our work.

“It is difficult to see where this approach matches the Big Society concept and I can only hope the Chancellor accepts that the planned changes would seriously undermine our humanitarian work.”

Cumbria Wildlife Trust fears it could suffer from any changes by the Government. In a statement, the organisation says: “Cumbria Wildlife Trust will not be directly affected by the proposed tax relief plans on charitable giving.

“However it is likely to affect the value of donations made to charitable trusts and foundations, which we apply to for funding, meaning there will be less money available and increased competition for funds.”

But the Government proposals don’t spell disaster for every charity.

Sheila Thompson, director of Hospice at Home Carlisle and north Lakeland says any changes to charity giving will not affect her organisation.

“We don’t have any big donors, we get a lot of our support from local communities and small donations,” she explains.

“We are very grateful for any donations, but we are lucky in that we don’t rely on any one person.

“We don’t get much more than £1,000 in personal donations.

“Our big donations tend to be from people who have organised fundraising events, which are not taxed.

“We can get up to £100,000 from legacies, but they are not taxed either.”

A Government summit on giving is due to be staged next month.

Both Mr Gregg and Mr Woodhouse believe there will be a U-turn, possibly before then.

Mr Gregg is baffled by the Government’s lack of consultation with philanthropists and charities before announcing its planned tax changes – and also by the reasoning behind the move (to crack down on organisations using some charities to dodge tax payments).

“If there are people doing that, then the Government should go at them, don’t damage the whole sector,” he reasons.

“I think they may well backtrack on this.”

Mr Woodhouse adds: “I think it will be reversed. It is an own-goal against the Big Society.

“It is a contradiction for David Cameron to talk about the Big Society, which we all agree with, then introduce something like this.”

Some commentators have said that the millionaires who do contribute to charities should have enough money and should care enough about their chosen causes not to worry about the Government’s plan.

Mr Gregg says: “I would not discard that point of view.

“There are needs in the country that have to be met and collecting taxes is important to that, I just think there should have been proper consultation, proper debate over this first.

“All the people I have spoken to who donate to charity have found it difficult to understand and are particularly annoyed it has been done without consultation or apparent thought of what the consequences could involve.

“I cannot see it having any other effect other than reducing the amount given to the charitable sector.”

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