Giving evidence to the Parliamentary Scrutiny Committee on the Charities Bill yesterday, the CFDG expressed support for most of the provisions, but said that it regretted that proposals contained in the Private Action, Public Benefit consultation document to relax the laws on charities trading were not included in the Bill.

According to the group, its members were in favour of the proposals that would enable charities to trade without having to set up a separate trading company. The reduction in red tape would be of significant benefit to their charities, it said.

The group argues that having to operate trading activities under a separate company causes administrative and financial difficulties, and makes it almost impossible for trading subsidiaries to build up capital. CFDG also refutes the suggestion that the proposals originally contained in Private Action, Public Benefit would pose a threat to small businesses.

CFDG deputy chairman Helen Verney, speaking to the committee, said: "We feel that the Government could be wasting a valuable opportunity here to reduce a regulatory burden that is unnecessary and wasting the precious resources of many charities.

"We appreciate the argument that small businesses see trading as competition, but the reality is that charities that want to trade already do so through a subsidiary and avoid paying tax by transferring profits to the charity. We see no reason why competition to small businesses would increase if charities were allowed to trade through the charity."