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Stephen Timms MPPayroll Giving Event |
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Let me begin by bidding everybody a very warm welcome to the DTI's conference centre. We are very pleased to be hosting this important event, and it is a particular pleasure for me to be sharing a platform again with the Giving Campaign because I was a Treasury Minister when the campaign was launched and worked with Joel as Chairman and Amanda Delew as Director, serving on the steering group when it was established, and I am very pleased to see the success the campaign has had under their leadership over the past couple of years. It may appear curious at first sight that the Prime Minister has placed the brief for corporate social responsibility within the portfolio which I hold for competitiveness. But its not a mistake. There is growing evidence that grappling with the challenges of corporate responsibility stimulates exactly the kind of innovation which contributes so powerfully to mainstream business success. A growing range of innovative companies are addressing challenges like:
And what all those companies are finding is that these projects are not a distraction from their business imperatives. Rather they are contributing to them. CSR is adding to their competitiveness, not undermining it. And that is a very important lesson for managing a modern business. Our understanding of how these processes work is still developing and it is something we are following very closely in the DTI, but some of the benefits of responsible corporate behaviour are very clear. The most able young people today, looking to embark on corporate employment, want of course to know that they will enjoy a rewarding career. But they want also to feel that they will be making a contribution to tackling the big social and environmental challenges that the world faces. That is a very admirable quality in young people today. I don't think this was the case ten or even five years ago. They don't think much of politicians, unfortunately, but they do feel very committed on the issues. So organisations which want to recruit such people need increasingly to be able to give them convincing answers about their own programmes. And it is clear also that CSR makes an important contribution more widely to employee motivation, and to employees' commitment to the organisation which employs them. And payroll giving is an example where those benefits are particularly compelling – and where the costs to the employer may be very small indeed. And so in the Government's CSR Report, which we published in May, we highlighted Payroll Giving as one of the fiscal instruments to stimulate social investment. We reported there that payroll giving had increased to £55m in the year ending March 2001 up from £37m in the previous year, and at that time was expected to exceed the campaign target of £60m by March 2002. I am very pleased that the total last year was in fact £72m, and that the current target towards which today's event is a contribution is for £150m per year to be raised through payroll giving. I think the Toolkit being launched today will make an important contribution, by making the process easier for both employers and employees. The tax benefits that have been introduced to encourage Payroll Giving reflects the Government's view that it has a very important role to play in the way that charities can best be supported in the modern economy. We do want to establish in Britain a new culture of giving, and it is the role of the Giving Campaign to help build it. We have got a long way to go – despite encouraging recent progress, only 2% of employees are enrolled in payroll giving in the UK, compared with over a third of all employees in the United States. And the campaign is right to encourage further promotion of giving through the payroll, and to encourage companies to aim for at least 10% employee participation. That is something I strongly support. As well as being tax efficient for employees, Payroll Giving has the enormous benefit for the recipient charities, a very low administrative overhead. Help the Aged has made the point that Payroll Giving is the most attractive of all the tax effective methods of giving in terms of administration. The gift is deducted before tax, so there isn't a need for the charity's administration team to claim the tax back on each donation. And Payroll Givers are also loyal donors. On average, they sustain their gift for three to five years, providing regular, committed income, that the charity can depend on. Too often charities exist on a hand-to-mouth basis from ad hoc donations. Regular income through payroll giving offers a much more secure basis to build on. The Financial Times last week drew attention to some outstanding good practice on payroll giving. St James Place the financial services provider has 80% of its staff contributing through payroll giving, and matches donations pound for pound. The Royal Bank of Scotland goes even further, it "double matches" its employees' contributions. That means that, for each pound donated by an employee, the nominated charity receives £3.10, when you add on the supplements from the Bank and from the Government. It is not surprising that their staff participation in the scheme has increased by a third since "double matching". Not surprisingly the Royal Bank of Scotland tops the FTSE 100 payroll giving league with donations of £4.4 million last year, followed by BT in second place with £3 million. So between them, those two companies accounted for over a tenth of all the payroll giving in the UK last year. I am sure that others can do more to match their achievement – and there are many other examples of good practice, with for example 3i, Schroders, Gallaher and Rolls Royce being FTSE 100 companies with at least 20% of their employees involved in payroll giving. And what, you may well ask, are we doing for our own employees in this department? I am very pleased to be able to report that Amanda and her team will be coming in for two lunchtime seminars to present the benefits of Payroll Giving to DTI staff which we want to take very seriously as well. The Government has also taken steps to improve the tax position further. From April next year, Gift Aid Donors will be able to claim tax relief for charitable giving in the same financial tax year, rather than as at present in the following tax year. From 2004, taxpayers will be able to donate any tax rebates direct to a charity. In the last financial year, charities used Gift Aid to reclaim tax worth £437m from the Inland Revenue on donations worth an estimated £2bn. If every donor had given tax-effectively, the charities could have received an extra £550m from the Inland Revenue. There are also many other ways of donating to charity: share giving for example. By donating shares you automatically receive tax relief, and on top of that are not liable for Capital Gains Tax. You can donate through a will. You can set up a personal charitable trust whose benefits will extend beyond your own lifetime. We are seeing a great deal of innovation in this area, and the UK is leading the international debate. We have a unique coming together in Britain of world-leading international organisations and effective, well-supported, imaginative NGOs. I hope that I might be able to claim that a supportive Government has something to do with it as well! At any rate, we certainly do have a great deal happening, including in this area of fiscal support for charities. We do have as a Government a very ambitious plan for the CSR agenda. Payroll Giving is an important strand in the overall tapestry of Corporate Social Responsibility. It is simple but effective, and it can be set up in an organisation with the minimum of fuss. It is also a rather unusual example of the Inland Revenue – which funds the Giving Campaign – urging people to pay less tax. So let me close by quoting from the excellent Inland Revenue website for Payroll Giving which I recommend to you. An employee of Marks and Spencer is quoted saying this: "Last year my daughter was diagnosed with epilepsy so I decided to start donating to the British Epilepsy Association. All I had to do was let the payroll department know to include this additional charity, and then fill in a form to tell the Payroll Giving agency nominated by our payroll department where to send the money. As I'm also setting up a local branch for parents of children with epilepsy, I know the money I'm donating can make a real difference as it's regular and reliable." I hope that today's launch of "The Business of Giving", will encourage many more employees to be able to write similar testimonies in the future. |
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Other speeches by Stephen Timms MP
(the following are available from the archive) |
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