Clause 8
Charities Bill [Lords]
2:00 pm
Martin Horwood (Shadow Minister (Environment), Environment, Food & Rural Affairs; Cheltenham, Liberal Democrat)
I am particularly grateful to the Minister for that intervention, which is exactly right.
I was discussing how it might work in practice. We will consider amendments Nos. 81 and 82 later, but I shall refer to them briefly, because they explain how it might work and how what appears to be a broad, sweeping permission to bring cases to the tribunal will actually be a very practical one—for instance, a decision to continue with the appointment of a receiver and manager on the basis that the activities of the current receiver and manager consequent on the decision to appoint another might be brought before the charity tribunal. The displaced trustees of the charity in question might feel that the receiver and manager was running up excessive costs or was not administering the charity in the best interests of its stakeholders. I cannot see in the table in schedule 4 the decision to appoint that receiver and manager in the first place. That is an example of how a general amendment might enable people to bring appropriate complaints before the tribunal.
The issues are serious for the charities concerned; they are not legal minutiae. One case in the booklet issued by the Association for Charities particularly alarmed me and illustrated the need for such amendments. PALS, or the Protection of Animal Life Society, was a small animal welfare charity established near Salisbury in 1984. It grew during 15 years to become a significant local charity, but it did something that in an ideal world it would have been advised not to; it based the charitable premises on the founder’s private land.
That attracted the interest of the Charity Commission, and a process was set in train. As far as I can tell from this document—I understand that its factual accuracy has not been significantly challenged by the commission or anyone else—no serious breach of charity law was ever found. Nevertheless, a process was instigated that led to the removal of the founder as a trustee, the freezing of the charity’s bank account and ultimately the winding up of PALS as an independent charity. The consequences were extremely serious for the charity concerned. It happened despite a petition from 1,000 local supporters of the charity and the involvement of the local MP.
The Association for Charities’ conclusion is pretty strongly worded:
“it is clear that the Commission found no substantial breaches or any intent to breach charity law or regulation. The fact is that charity law as interpreted by the Commission is so complex there can hardly be a charity in the land which does not occasionally commit minor technical breaches. The Commission could not find even a half decent excuse to destroy this charity. But it sacked the key person at the centre of PALS’ success, ‘supervised’ the appointment of incompetent replacement trustees who destroyed it, and then connived in disposing of the remnants to a big charity.”
The wording is extremely strong, and I am sure that the commission and its representatives might contest it. One might think that it is an over-excited response to an administrative issue.
On the other hand, the founder of the charity was represented by Bates, Wells and Braithwaite, which in my view is the country’s leading charity law firm. It includes such eminent and learned Friends as Lord Phillips of Sudbury. The firm wrote to the Charity Commission in September 1998 to say that the PALS case had been handled in a way that it considered
“to have been profoundly unsatisfactory.”
A few days later it wrote to the hon. Member for New Forest, West (Mr. Swayne), saying:
“Under the Charities Act 1993, the Charity Commission had an extraordinary latitude and draconian powers which...are not checked or qualified by any prescribed due procedure or meaningful accountability. This has led to heavy-handedness, unfairness and serious miscalculation on the part of the Commission in this case...We very definitely think it is a case which may be used to illustrate the need to ensure that the Commission is statutorily obliged to act in accordance with the general principles of fairness and natural justice in accordance with a prescribed and open procedure and that there is an effective, independent and affordable appeal procedure.”
In some ways, the Bill already takes account of that matter. The establishment of the charity tribunal is a welcome step. It is one of the ways that it seeks to address the general rule of having some kind of transparent court of appeal against charity commission decisions. It is one of the reasons that we support the Bill in general. Nevertheless, that particular case would not have been easy to refer to the tribunal, unless the Bill is amended in the way that I suggest. The sense of injustice that permeates that report—and which is present in some smaller charities, some of which have been subject to Charity Commission decisions and their consequences—is something that it is in the commission’s interests to address.
If the commission were to have a proper process which resulted in consequences or the actions being challenged and gives the commission the opportunity to justify them in some way—what Bates, Wellsand Braithwaite called a “prescribed and open procedure”—that would enable them to avoid ever having to be presented with a document like this ever again. They would have that open and prescribed procedure and would be able to justify and hopefully be almost acquitted by the tribunal, if they were acting in the right. I am therefore keen to promote amendment No.86 for that reason.
Amendment No. 69 repeats the principle of amendment No. 85. Therefore, I will not spend a great deal of time on it. However, the significant phrase within it is:
“decisions, orders or directions not made by the Commission which could reasonably have been made by the Commission.”
Amendment No. 87 closes what might be a loophole. I would be interested to hear the Minister’s views on that. There are large numbers of provisions in the Bill which address, or give the right of appeal against, Charity Commission decisions. However, the commission is not the only body corporate that can act under the Bill. The Secretary of State himself has powers, some of which are by order and regulation and which could presumably be challenged in this place and elsewhere. There are some powers, for example, the decision to appoint, set remuneration for and even sack, a member of the Charity Commission itself.
I cannot see anywhere in the Bill—but perhaps the Minister may enlighten me if I am wrong—where that type of decision could be challenged on any of the bases that we have discussed in the debate so far. It would be good if the Secretary of State’s decisions were also subject to the Bill’s appeal procedure and the processes of the charity tribunal. I beg leave to move the amendment in my name.