Martin Horwood (Shadow Minister (Environment), Environment, Food & Rural Affairs; Cheltenham, Liberal Democrat)

I beg to move, That the clause be read a Second time.

The purpose behind the new clause is to deal with what might be a slight gap in charity law—[Interruption.] The Minister is already nodding his head vigorously. Sorry, I meant that he is shaking his head vigorously. The new clause was the result of discussions with a learned and noble Friend who had debated the Charity Bill at length in another place. When discussing the public benefit test, he had realised the possible implications of the loss of charitable status. The assumption of many people would be that an institution that lost its charitable status for whatever reason would simply carry on in a non-charitable form. However, that would not be the case because the assets that it had employed as a charity were given for a charitable purpose and must in law be applied to a charitable purpose. They would not be available to the non-charitable institution. In the case of fixed assets, such as a significant building, that would be a major issue.

The purpose behind the amendment is to clarify what is already the intent—and is certainly the commission’s intent—to avoid the loss of charitable status, that continuity and the interests of the beneficiary were ideal and that every step should be taken to avoid this happening.

In the event of loss of charitable status happening, the clause makes clear that the desirable outcome is not the collapse of the institution and the redeployment of its assets to another charitable purpose, whether cy-prÃ(c)s or not, but the continuity of the institution—its name, public reputation and the interests of its beneficiaries.

Those responsible for the charitable assets would have a duty to try and recreate the charity within the terms of charity law and passing whatever public benefit test or whatever other reason it was that they had failed in their charitable status in the first place. My noble and learned Friend was convinced that this is a gap in charity law. However, if the Minister can reassure me, I would happily withdraw the new clause.

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