Monday, 9 September 2013

Charitable relief

Many local and national charities breathed a sigh of relief last week when Local Government and Communities Secretary of State Eric Pickles lost his legal fight to scrap the collection of union subscriptions through salaries. Actually, this court case didn’t involve charities at all, the outcome was important for them because of that other important law – the law of unintended consequences. Let me explain.

About thirty years ago, various charities approached both public and private employers to see whether they would implement a scheme which allowed an employee to make a donation to a charity of their choice by direct deduction from their wages. This proposal was modelled on the already existing scheme which enabled employees to pay their trade union dues by direct deduction (check off), which had been implemented by the vast majority of private and public employers. As a result, millions of pounds each year have been donated to national and local charities.

Fast forward to this year. Eric Pickles, as part of his strategy to undermine trade unions but presented under the guise of ‘saving money’, first told councils that they must end check-off and then announced that he would end check-off for civil servants in the Department for Communities and Local Government (DCLG). Logically, if check-off for trade union dues – which relate to both individual and collective agreements between employees, their representatives and employers, often under-pinned by law – could not be allowed, how could a scheme for charitable donations – with no relationship to the employer’s functions at all – possibly be justified?

Bluntly, if check-off schemes were stopped, it seems inevitable that the charitable donations’ schemes would quickly follow. The result would be a dramatic loss of income for many charities, which would then face a massive task of approaching each of the individual employees to get them to set up individual direct debits as an alternative.

Fortunately, the PCS trade union took Mr Pickles to the High Court. The judges said the move was a breach of contract and has ordered DCLG to reverse the decision and pay all legal costs. During the proceedings, it was revealed the ‘check off’ system costs DCLG just £300 a year to administer. So the £90,000 legal bill, which will now have to be picked up by the taxpayer on behalf of Mr Pickles, could have paid for the scheme for the next 300 years.