Charities Bill [HL]

– in the House of Lords at 3:18 pm on 12th October 2005.

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Report received.

Clause 2 [Meaning of "charitable purpose"]:

Photo of Baroness Whitaker Baroness Whitaker Labour

moved Amendment No. 1:

Page 2, line 10, at end insert "or belief"

Photo of Baroness Whitaker Baroness Whitaker Labour

My Lords, in moving Amendment No. 1 I shall speak also to Amendments Nos. 2 and 5. I hope that the outflux from the House does not signify the lack of their importance because their purpose is simply to protect European convention Article 9 rights in such a way that religious and non-religious belief is on an equal basis, to reflect the wording on international instruments and all our recent relevant legislation—the Communications Act, the Employment Equality Regulations and the Equality Bill—and implement the recommendations of the Joint Committee on Human Rights.

Amendment No. 2 is simply a more felicitous phrasing of the clause to capture the same point. Amendment No. 5 is there to respond to my noble friend's concern in Committee that the wording then proposed linked charity law too definitely to any future evolution of the convention. In Committee, my noble friend said that the Bill conformed to the Human Rights Act. But putting non-religious belief under the catch-all heading is not only technically discriminatory, but implies that non-religious ethical belief is not equivalent in value to religious belief. It will inevitably lead to the development of different tests for religious and non-religious charities doing similar work and will reinforce the prevalent view that, for instance, humanism—I ought to declare my interest as a vice-president of the British Humanist Association—is not an ethical system on a par with religion but a set of opinions on a par with a political policy. All those are inconsistent with the Human Rights Act.

Of course, one way to resolve this issue, if my noble friend is really claiming that non-religious beliefs do not need explicit inclusion, is to delete religion as well on the ground that it too is covered by Clause 2(2)(l). But surely we need not be so drastic. I beg to move.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, we have been round this point quite a lot before and the Minister gave us an exposé of the Government's position at col. 146 of the report of our proceedings on 28 June, which I have read with care.

The problem that continues to trouble people is as follows. First, the definition now given in subsection (3)(a) is rather secular in nature. A religion is a religion. It does not address the issue in a way in which the definition adopted in Australia and New Zealand appears to do. More importantly, there is a mismatch between what the Government say the legal position is and how the Charity Commission practically applies it. I have a letter from the Association of British Muslims, which in a nutshell states that although the Government have introduced a clause that says that a religion can now include,

"a religion which involves a belief in more than one god"— or a belief in no god—they have simultaneously said that that will not alter the criteria applied by the Charity Commission. Noble Lords will recall that the Charity Commission's criteria are that a religion has to involve a belief in and worship of a supreme being.

If the Minister could unpick and address that issue—which he may say he has unpicked several times before—it will solve some of the concerns that are floating around and which are reflected in the correspondence to which I have just referred.

Photo of Lord Borrie Lord Borrie Labour

My Lords, we have been round this course before, as the noble Lord has just said. My colleague and noble friend Lady Whitaker has given voice to a further interest in this matter, because it seems unsatisfactory that the only belief that the Bill recognises for charitable purposes is one specifically recognised as a religious belief. That is unsatisfactory because there are bodies that are created for the betterment of mankind, for the furtherance of philosophical beliefs and for the furtherance of ethical understanding of the way in which people should behave. Provided those organisations are for the public benefit—of course, one has to establish both those points in order to be charitable under the Bill—they ought to be covered.

My noble friend Lord Bassam, in the passages to which the noble Lord, Lord Hodgson, referred in Committee, referred to the possibility of a belief being furthered which was frivolous or bizarre. If there is an organisation established for frivolous or bizarre beliefs, how on earth could it pass the test of being in the public benefit? That is the substance of my concern about the Bill as it stands. I welcome the amendment that my noble friend Lady Whitaker has proposed.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, a self-denying ordinance at this stage is not a bad one, but I cannot resist reminding the House that Clause 2(2), which sets out the heads of charity, is not supposed to create any new law or extend the existing boundaries of charity, but merely to explain them and set them out in more understandable terms. In his response, the Minister may go some way towards rebutting the perfectly understandable concerns of the noble Lord who has just spoken. If he looks back on reading Hansard tomorrow, he may see that the description of non-religious bodies, which he would suggest might have charitable status, in fact, potentially goes hugely wide and might even include new Labour. I say no more and wait for the Minister's wise words.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I am very grateful for that introduction. While my noble friend Lord Borrie was speaking, I was thinking of one or two occasions when a bit of frivolity and bizarreness might definitely have been in the public interest. Sometimes I think that as I sit here on the Front Bench. However, perhaps I shall not dwell on that.

As the noble Lord, Lord Hodgson, said, we have been around this issue on rather a few occasions. I can do no more than set out where we think we are. I owe it to my noble friend Lady Whitaker to do no less than that.

For decades there have been charities promoting humanist, rationalist and other coherent and serious non-religious belief systems on the register of charities. Non-religious belief systems, such as those I have just mentioned, which promote moral and spiritual welfare are now, and will continue under the Bill, to be charitable. Subsections 2(l) and (4)(a) of Clause 2 secure that state of affairs.

The Government are clear that the Bill has no discriminatory effects as between charities promoting religious belief and charities promoting non-religious belief. Indeed, the Bill further levels the playing field between religious and non-religious belief. At the moment, religious organisations enjoy a presumption that they are for the public benefit while organisations promoting non-religious beliefs do not. The Bill removes that presumption. That will mean that after the Bill is enacted organisations promoting religious beliefs will be in exactly the same position—that of having to demonstrate public benefit in order to qualify for charitable status—as organisations promoting non-religious beliefs.

It has been argued that the Bill leaves non-religious belief at a disadvantage because it is encompassed by the catch-all provision of Clause 2(2)(l) rather than being expressly mentioned. That argument is based on the perception that the purposes within Clause 2(2)(l) are somehow lesser purposes. I do not share that view. They are not. More importantly, there will, once the public benefit presumption is removed, be no respect in which those purposes are treated in law or in practice any differently from any other charitable purpose.

I remind noble Lords of some of the purposes covered by Clause 2(2)(l): preservation of public order; relief of unemployment; rehabilitation of ex-offenders; promotion of industry and commerce; promotion of agriculture, and so on. I would not belittle the promotion of non-religious beliefs to sit alongside those purposes, which are all very important areas of present-day charitable endeavour. But we cannot give everything that is charitable its own specific heading without making the list unmanageably long. Even if we had a very long list, we would still need a final category consisting of purposes that had not been specifically mentioned to avoid the risk of removing charitable status in error from any other recognised purpose which was not mentioned in our long list. Although I understand why my noble friend Lady Whitaker would like to see non-religious belief placed directly alongside religion, I can assure her that it would have no legal or practical effect.

As I have said before in setting out the Government's position, by including the word "belief" in the list in the terms proposed by my noble friend's amendment we would bring in various types of belief system that, however worthy, should have no place in charity. Defining belief by reference to Article 9 of Schedule 1 to the Human Rights Act 1998 would not, in our view, overcome that objection. Article 9 concerns the freedom to hold, manifest and change one's beliefs, whereas our concern is, more narrowly, with beliefs, the advancement of which is likely to result in a public benefit. We do not agree that it is safe to allow all belief systems or philosophies into the list of charitable purposes on the grounds that the public benefit test would act as a backstop to exclude those that had no place in the domain of charity. We disagree with that argument because it is ultimately an argument for a definition of charity which does not have a list of headings of charitable purposes, but simply says that anything for the public benefit is charitable. That is not the route that we, or any commentators on the Bill, favour at all.

Neither is it inconsistent of the Government to argue that non-religious belief need not have a specific reference in the Charities Bill while conceding that it needs a specific reference in some other legislation. In the Charities Bill, non-religious belief is already present in the list of charitable purposes by virtue of subsections (2)(l) and (4)(a) of Clause 2. That subsection brings in everything that has already been recognised as charitable but which does not come under any of the other headings listed in Clause 2(2). So, unlike with some other legislation, non-religious belief does not need to be imported into the Charities Bill; it is already present.

I conclude by re-emphasising that the Bill as currently drafted provides every possible assurance and safeguard that it will remain a charitable purpose to promote moral and spiritual welfare through non-religious belief. It follows that we do not believe either that my noble friend Lady Whitaker's amendment is necessary or, for the reasons I have given, that it is desirable.

I am advised that earlier in my reply I did not make it clear that I was referring to subsection (2)(l). I have a feeling that I have repeated that error. I hope that my noble friend will feel satisfied with that response.

Photo of Lord Wedderburn of Charlton Lord Wedderburn of Charlton Labour 3:30 pm, 12th October 2005

My Lords, that is the same answer that has been given many times now as we go round this course. We quite understand that human beliefs that are non-religious will never be accepted as expressly on a par. The Government are quite obdurate on that in a most remarkable manner. However, it enlarges—I am sure he will agree; he must have thought about this many times as we have met so often on this subject—the importance of the word "religion". I do not want to catch the Minister out on this. If he does not have a note on the matter perhaps he can write to noble Lords. Does religion involve worship?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I am inclined to ask the Bishop to respond.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, that is a pretty good response.

Photo of Baroness Whitaker Baroness Whitaker Labour

My Lords, I am grateful to all noble Lords who have taken part in this commendably short debate. I am grateful to my noble friend for a well intentioned answer, which has given some useful comfort for those who will interpret the Act. I have to say I think that the Government's view is negative, behind the times and does not even keep up with their own legislation. But I have no intention of dividing the House and therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 3:

Page 2, line 20, at end insert—

"( ) the promotion of the efficiency of the armed forces of the Crown;"

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, Amendment No. 3 stands in the name of my noble friend Lady Scotland.

In Committee on 28 June the noble and gallant Lord, Lord Craig of Radley, moved an amendment which would have added the advancement of the effectiveness and welfare of the Armed Forces of the Crown to the list of descriptions of charitable purposes in Clause 2. The amendment attracted support from, among others, the noble Lords, Lord Phillips and Lord Hodgson. In my reply I promised to give further consideration to that matter and the amendment that I now move is a result of that consideration.

In moving his amendment in Committee, the noble and gallant Lord, Lord Craig, explained why he preferred to refer to the effectiveness and welfare rather than to the efficiency of the Armed Forces. Noble Lords will see that we have reverted to "efficiency". The good reason for this is that efficiency of the Armed Forces is the heading under which all Armed Forces charities including service non-public funds are currently recognised as charitable. It is a judicially recognised phrase and expression. By including this phrase in the Bill, then by reason of Clause 2(5) it will continue to have the same meaning as it currently has in charity law. If a different phrase were to be used, the courts may assume that Parliament had intended a different scope for this charitable head such that purposes that are not currently charitable could be held to come within this head.

Any purposes that are currently recognised as charitable but do not fall within our proposed phrase will continue to be charitable by means of Clause 2(2)(l) and Clause 2(4)(a). I beg to move.

Photo of Lord Craig of Radley Lord Craig of Radley Crossbench

My Lords, I thank the Government for the amendment which copies word for word the amendment which I first submitted to your Lordships' Committee in Clause 2 on the Bill that was lost due to dissolution.

I am delighted that the charitable purpose of promoting the efficiency of the Armed Forces of the Crown—and thus of some 15,000 service non-public funds which do so much to promote the well-being of the Armed Forces—is now specifically recognised in the Bill.

Such purposes beneficial to the community, along with the relief of poverty, the advancement of education and the advancement of religion—the four charitable heads which arise from the 1601 statute—merit this explicit inclusion. I welcome that, though it would be interesting to hear the Government's reason for its placement in the list of purposes between Clause 2(2)(j),

"the relief of those in need", and Clause 2(2)(k),

"the advancement of animal welfare".

My own preference had been for it to be up with other heads of charity, the relief of poverty and the advancement of education and religion. When he replies—and I do not wish to sound uncharitable or ungrateful to raise this point—can the Minister enlighten us?

In response to my earlier remarks in Committee on 28 June, the Minister said:

"The Government have ensured that the charitable position of service non-public funds is fully and properly protected by the Bill. There is no doubt about that".—[Hansard, 28/6/05; col.136.]

His amendment is directly helpful to that position. But the Minister is aware of my concern expressed in Committee on 28 June—and I have since written to him about it—that a public benefit test could not become a bar to the charity status of service non-public funds.

The meaning of "charitable purpose" in Clause 2(2)(l) requires two things: that the purpose falls within the list in Clause (2)(2); and is for "the public benefit". Given the Minister's statement, can he assure the House that SNPFs meet in full the meaning of charitable purpose as set out in the Bill? It would greatly reassure me if he would do so.

Photo of Lord Renton Lord Renton Conservative

My Lords, when dealing with charities, we must not become confused about responsibility for the Armed Forces. That responsibility is for those who command them and in particular, of course, the Secretary of State. To insert,

"the promotion of the efficiency of the armed forces of the Crown", into this Bill is to misplace a purpose which deserves support. But whether this is the right place to put it is something which I rather doubt.

Photo of Lord Borrie Lord Borrie Labour

My Lords, the noble Lord, Lord Renton, has touched on an important point. I think that the Government have engaged in something of a volte face on this matter. In our earlier debates on this Bill we discussed the difference between promoting the efficiency of the Armed Forces, which is clearly the responsibility of this or any government, and matters such as the welfare of those serving in the Armed Forces, for which various charities already exist and justifiably are regarded as such. But the wording introduced by the Government seems rather odd and I would be glad if the Minister could explain how they have turned around 180 degrees on this matter.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, the easiest response I can make is to say that we have been convinced by the arguments. We have listened to what has been said. I am grateful to the noble and gallant Lord, Lord Craig of Radley, for his energetic advancement of the cause of these particular charities.

The noble and gallant Lord asked me a perceptive question on the positioning of the new line in the Bill. I have to confess that we shall have to bring forward another amendment because we have probably misplaced it in the list. We shall have to make a further subtle change in the drafting at Third Reading. So I am grateful to him for giving me the opportunity to explain the point to noble Lords. He is probably right to point out that it does not sit well next to animal welfare. However, I shall not dwell on that.

In response to the other point raised by the noble and gallant Lord, I shall say simply that I am grateful to him for his letter, which I had occasion to revisit recently. It is fair to say that service non-public funds are subject to the public benefit requirement and they will continue to be subject to it. That is widely understood. The requirement will go on being applied by the Charity Commission. I hope that that clarifies the position.

I have nothing further to add except to express once more my thanks to the noble and gallant Lord, Lord Craig, for his work on this issue.

On Question, amendment agreed to.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

moved Amendment No. 4:

Page 2, line 22, at end insert—

"( ) A purpose described in subsection (2) is not excluded from that subsection by virtue of campaigning for changes to the law in any part of the world."

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, the Bill says nothing about the extent to which a charity may engage in campaigning activities. I submit that there is some doubt about that because one publication from the Charity Commission states that,

"no organisation can be charitable if . . . it is created for the specific purpose of carrying out political or propagandist activities".

But in another publication the commission states:

"By the very nature of their knowledge and social concern . . . some charities are well placed to play a part in public debate on important issues of the day and to make an important contribution to the development of public policy. Others will invariably be drawn into such debate. It would be wrong to think that this cannot and should not happen: it is open to charities to engage in campaigning activities".

Certainly, as a former council member of the Save the Children Fund, I have accepted briefing from that charity which was intended to make an amendment to the previous Education Bill. I spoke on it and told the House that I was speaking to a brief from the Save the Children Fund so that the Government were quite well aware of where the information came from. I received a rather generous response from the Government on that occasion and it resulted in some changes to the law. However, there is some ambiguity about the matter.

The amendment states,

"by virtue of campaigning for changes to the law in any part of the world".

That would of course include international organisations. We now live, as we are constantly told, in a globalised economy. The amendment would mean that organisations such as Amnesty International—I am not certain whether it is regarded as a charity—would be able to make representations to change the law in any part of the world.

It is desirable to have this provision on the record so that there is no ambiguity about it. Without it, people will not be sure what their entitlement or responsibilities are. It is rather a good idea to have it in the Bill. I beg to move.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs 3:45 pm, 12th October 2005

My Lords, I am sympathetic to what I take to be the intent of the noble Baroness, Lady Turner, but I am afraid I have to express my objection to the amendment because I think it would have consequences which she does not intend.

At present, the crucial distinction in terms of political campaigning is between charities whose purposes, objects and aims in their constitution state that they are for a change in the law, here or elsewhere, which is impermissible and, by contrast, political campaigning as a means of achieving non-political objects or aims. I fear—perhaps the noble Baroness intends this—that the amendment would be construed as allowing as charitable objects, purposes or aims which explicitly charge the organisation with a change in the law, whether here or elsewhere.

I believe—I have had many causes and cases to consider this very carefully—that one of the fundamental and virtuous bases of our whole charity structure is that charities should not be in existence to change the law. The traditional judicial argument against that is: "How are we the judges able to judge between one proposed change in the law and another, or between the status quo and a proposed change in the law?". It would make their role impossible, because by what yardsticks would they be able to double-guess Parliament or public opinion more widely? Therefore, since I believe that public support for the notion of charity is essentially bound up with the non-party-political nature of charity, this amendment would, inadvertently, I know, be an Exocet under the waterline of the charity sector as a whole. I put it as strongly as that.

The only point that I would add which should be of solace to the noble Baroness—and I think she knows it—is that the guidelines for campaigning by charities are now extremely wide and generous. For example, if a piece of legislation comes up, a charity can campaign strongly in respect of that legislation and claim that an aspect of it would be inimical to its charitable purposes. For example, Shelter has in times past gone very public and very political—non-party political—in resisting or supporting change in housing law. That is permissible so long as it fulfils very sensible guidelines.

The scope for charities to engage in strong political action is already with us. For the reasons I have attempted briefly to explain, the amendment would inadvertently create evils that would be really serious.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, under the existing legal framework charities may engage in campaigning so long as it is in furtherance of their charitable purposes. Of course, organisations that exist solely to pursue political purposes cannot be given charitable status. We think that that is right; the words uttered by the noble Lord, Lord Phillips, coincide with our views.

The extent of charities' freedom to campaign has been strongly supported by government. In 2002 the Strategy Unit published its report, Private Action, Public Benefit, which recommended that the Charity Commission's guidance on the subject be updated and revised in order to place greater emphasis on the campaigning and political activities that charities can engage in. When the commission subsequently published revised guidance in 2004 it was widely promoted and welcomed extensively across the charitable sector. Its enabling approach highlighted the freedoms of the existing legal framework.

On the issue of charities campaigning specifically for a change in the law, they are already free to support or oppose the passage of parliamentary Bills if such support or opposition is in furtherance of their charitable purpose. Daily we receive missives from charitably funded organisations doing exactly that. Charities working internationally may seek to promote a change in legislation or public policy on the same principle: that the change is in furtherance of their charitable purposes.

As I said, the commission's guidance, which set out the current legal position on campaigning and political activities by charities, was welcomed and the commission is not aware of any strength of feeling from the charitable sector on any need to alter or change it at this stage. For those reasons, although I am sure that the amendment was moved with good spirit, and attractive as it is, we cannot give any support to it.

Photo of Lord Wedderburn of Charlton Lord Wedderburn of Charlton Labour

My Lords, my noble friend has clearly and explicitly explained the Government's position. I am sure that he will tell me if I am wrong, but as I understood him, if one has objects that fall within Clause 2 in the necessary list and can therefore advance to the public benefit test, the fact that one is campaigning on issues that relate to that object does not prevent one from being a charity. If that is so, why does he not accept the amendment? It says that a purpose in subsection (2), which is what first has to be met,

"is not excluded from that subsection by virtue of campaigning for changes in the law".

I thought that that was more or less what I had said in the first proposition. The noble Lord, Lord Phillips, raised political campaigning: as soon as we put that in there are problems. If a charity is founded for the object of whatever the noble Lord means by political campaigning, it will not meet—

Photo of Lord Evans of Temple Guiting Lord Evans of Temple Guiting Government Whip, Government Whip

My Lords, I must remind my noble friend that we are on Report, and once the Minister has sat down there is no more discussion.

Photo of Lord Wedderburn of Charlton Lord Wedderburn of Charlton Labour

My Lords, I commend my noble friend's assiduous looking at the rules, but this is an important point. There are dozens of charities that campaign and they want to know the answer. I want to know why I have misunderstood the Government's position when they are rejecting what they appear to approve of.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, I thank the Minister for his response and also the noble Lord, Lord Phillips of Sudbury, for his helpful intervention. He said that he sympathised with the objectives and I am sure that most people do. I gave an instance of one case with which I had personally been involved, where I had spoken on a brief for a charity that was anxious to change the law in an area where it obviously had an interest: Save the Children was interested in the Education Bill and the Government were prepared to accept what I had to say as a result of its campaigning.

I was simply seeking to ensure that that kind of lobbying and campaigning was clearly something that a charity could do because it was in line with its objectives. As my noble friend Lord Wedderburn said, I sought to encompass that by referring to,

"A purpose described in subsection (2)", which would bring it within the public benefit test. If a charity passes the public benefit test, it should be granted in law—in the Bill, which will eventually become an Act—the status to campaign for changes in the law within its own remit. That is all that we sought to do—to ensure that a charity that had a particular area of activity was able to campaign for changes in the law within its own remit. That is all we were after. I am sorry that it has not been possible for the amendment to be accepted. I shall perhaps think of a different wording with which I can return before the Bill finally leaves this House. However, in the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 5 not moved.]

Photo of Lord MacGregor of Pulham Market Lord MacGregor of Pulham Market Conservative

moved Amendment No. 6:

After Clause 3, insert the following new clause—

"ORGANISATIONS CHARITABLE UNDER EXISTING LAW WHICH CEASE TO BE CHARITABLE

(1) This section applies to a body or trust charitable under existing law which ceases to be treated as charitable owing to the practical difficulties of complying with section 3.

(2) A body or trust referred to in subsection (1) shall be called a "former charity".

(3) The Commission shall ensure that all the assets and liabilities of a former charity shall be vested in a community interest company as defined in the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c. 27)."

Photo of Lord MacGregor of Pulham Market Lord MacGregor of Pulham Market Conservative

In moving Amendment No. 6, I declare an interest as the deputy chairman of the Association of Governing Bodies of Independent Schools. I do so because the point that I am about to raise concerns independent schools—normally it applies only to a very small number; in fact, it applies only to a few—but it could apply also to other charitable trusts, institutions or charitable companies.

I say straight away to the Minister that no doubt he will find defects in the drafting. There could well be wider repercussions from the proposed new clause. Therefore, I do not intend to press it. However, it is a convenient way of raising an issue that arose in our Committee debates during the previous Parliament. On that occasion, the Minister, although sympathetic to the point, was unable to give a firm response. Today, I seek a fuller and, I hope, more reassuring response or a promise of a better answer to the problem than my proposed new clause contains, either on Report or when the Bill goes to the other place.

I shall explain the point and give the independent school situation as an example of the problem. In Committee both before and after the election, we had considerable discussion on independent schools, and I do not intend to go over that ground today. Suffice it to say that there is full acceptance among independent schools of the public benefit test, and it has been met on an increasing scale in many ways over the past 10 years—for example, through the provision of bursaries to help pupils from lower income families attend independent schools. About 30 per cent of all places now have a bursary of one sort or another. There is also the sharing of facilities in the wider community; a considerable amount of that is taking place. There is movement between the maintained and independent sectors as regards teachers, employment and recruitment and in many other ways. The Government are encouraging private/public partnerships between the two. So there has been full acceptance of the public benefit test, but some schools—as I say, it will probably be very few—will have overwhelming difficulty in meeting the test. I think in particular of small schools in isolated rural areas with fairly slender financial resources that can neither share their facilities because there is no one to share them with or have real difficulty in providing bursaries on any scale.

If schools in that situation lose their charitable status because they cannot satisfy the public benefit test, they lose the tax benefits that go with charitable status. That is fully accepted. However, it seems extremely unfortunate that if the assets cannot be used for a similar charitable purpose, the school or hospital will have to close down. It is unlikely that another charitable trust or company would be willing or able to take it over as a school because it, too, would have difficulty meeting the public benefit test for the same reasons.

Before the election, the noble Lord, Lord Goodhart, tabled an amendment in Grand Committee on 3 February 2005—the reference is col. GC7 of Hansard—to deal with the point. In so doing, he referred to his experience as a lawyer in advising schools on the problems that arise when an organisation ceases to be a charity. Similar concerns arising from this Bill have been expressed to me.

The Charity Commission's document on public benefit contains this passage:

"However, in extreme cases,"—

I have already referred to their being extreme, but there will be some—

"where the trustees are co-operating with us but the organisation simply cannot in all the circumstances provide public benefit"— precisely the situation that I am describing—

"our action might include removing the charity from the register and making a legal scheme where necessary to ensure that any charitable assets of the organisation will in the future be applied for other charitable purposes close to any purposes that have ceased to be charitable. This would only happen where it was not possible for an organisation to meet the public benefit requirement".

That sounds sympathetic and is obviously intended to be helpful, without entirely meeting the point.

There are three ways in which the point can be met. The first is by use of the cy-près doctrine, which I presume is what that passage in the Charity Commission document really refers to. I am no lawyer, but the problem with it is in not properly dealing with this issue: what are the "charitable purposes close to"? If they are educational, and they have to provide those wider public benefits to meet the test, they will probably be providing educational services of a different sort, but not as a school. Therein lies the problem that is not actually dealt with; that of closing the school as such.

Secondly, my new clause would be a way of dealing with it. It would mean that the school would continue to pursue its original charitable purpose and would become essentially a not-for-profit company. There is a connection, because, under the Companies (Audit, Investigations and Community Enterprise) Act 2004, in Clause 26(3),

"A community interest company established for charitable purposes is to be treated as not being so established and accordingly—

(a) is not a charity".

That is clearly a reference to the point that they may have been charitable but have become a community interest company. It would mean not having the tax benefits, but they would be able to continue.

Thirdly, could the Charity Commission give a commitment—the Minister could confirm this—that the use of the phrase "treating proportionately", which is now added to the Bill, would mean that different considerations would apply to a school—for example, one in a remote rural area—unable either to provide bursaries or make facilities available to the wider community because, by definition, there is no demand? Such schools would be treated differently from a Winchester or the many schools that can make their facilities widely available to other organisations and provide a lot of bursaries. That would enable the former schools to satisfy the test and continue in existence.

A school of that sort would obviously have to provide sufficient proof that it had used every endeavour to meet the public benefit test. That is the point of the new clause. I hope that the Minister will make some sort of constructive response to reassure schools that might find themselves in that situation. I beg to move.

Photo of Lord Shutt of Greetland Lord Shutt of Greetland Chief Whip 4:00 pm, 12th October 2005

My Lords, I am having great difficulty with the amendment. It has always been the case that turning assets into charitable assets is a one-way track. There is no way back. Therefore it seems to me, if this were to be a right clause, that in the first instance a very substantial clause would be needed, explaining how a charity could become a non-charity. What is in front of us applies if it "ceases to be charitable". I do not believe that can possibly happen under what we understand as charitable law. If it were passed as such, I do not understand how that fundamental would come along at all.

I do not believe there is such a thing as a former charity. In the examples given, it seems to me that if somebody took the view that they have an asset that now has charitable status but felt that the asset could not be operated under charity law, it would be their duty to sell that asset. They could sell a school and, provided it was sold at proper value, no doubt the original charity could dispense bursaries and do all sorts of charitable activity. I would like it to be explained to me, if possible, whether there is a route back from charitable status. If there is a route back, it is not just about this; it is about the whole complex of charities.

Once you have taken a five pound note out of your pocket and handed it over, that is charitable money. As I understand it, there is no route back. If there is a route back, I would like to have it explained to me. If there is an intention that there should be a route back, it will need a lot of clauses beyond this and a heck of a lot of thinking about.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

My Lords, I support the amendment proposed by my noble friend, which seems very sensible. I say to the noble Lord who has just sat down that it is a bit rich to talk about how charitable assets can become non-charitable and how once you have gone one way that is the end of it. The Government are seeking to change the rules of the game. Up until now, certainly for most of my life, it has been understood and assumed that education in itself was a charitable purpose.

I do not wish to go back over the arguments that have taken place already on the Bill. However, some people are earnestly trying to provide—sometimes for many hundreds of years—a charitable, educational purpose, and the changes that this legislation will bring about, depending on the attitude of the commissioners, will put them in considerable difficulty. My noble friend has pointed—if I may say so, in his typical, reasonable way—to a way forward without embarking on what might be a rather more partisan view of what exactly is going on behind the Bill and the hardships that will be caused to organisations that are, to my mind, fulfilling a worthy purpose and that are being threatened by a change in the rules brought about by the Government and by narrow prejudice.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, like my noble friend, I have not had the problems that the noble Lord, Lord Shutt, has with the amendment. It may be defective in its precise drafting but not in the purpose behind it.

As has been said, we debated the matter extensively in February on an amendment proposed by the noble Lord, Lord Goodhart. I have a couple of points to add. First, recommendation 105 from the joint scrutiny committee, which the noble Lord, Lord Goodhart, quoted extensively in January, urged the Government to provide an answer to the conundrum that the amendment proposed by my noble friend now has to pick up on. It is not as though the Government have not had notification of the problem going back to the joint scrutiny committee's report, which was published over 12 months ago.

The issue for the noble Lord, Lord Shutt, as pointed out by my noble friend Lord Forsyth, is that we have removed the presumption. When you remove the presumption for charitable purposes, the charitable status of some schools and hospitals will be thrown into sharp relief and a few, as my noble friend has said, may fail the public benefit test. There will be a gap that we must address. My noble friend has made a reasonable proposition on how it could be done. The asset lock on the CIC, the community interest company, provides the sort of protection that the noble Lord, Lord Shutt, was looking for.

I hope that, if the Government are not prepared to accept the amendment, they will come forward with a proposal to address that gap. Whatever the rights and wrongs of it, there is a gap, and how many individual charities will be affected by it we cannot tell yet. It would be wrong for us to let the Bill leave this House without having put forward some coherent method of treating it, as the joint scrutiny committee recommended in its recommendation 105. I support the approach proposed by my noble friend.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, one cannot fail to understand what the noble Lord, Lord MacGregor of Pulham Market, is getting at. As the noble Lord, Lord Hodgson, has just said, the joint scrutiny committee report referred to this difficulty, and left it a bit in the air.

The answer to the dilemma described by the noble Lord, Lord MacGregor, is in the present law, which broadly says that once assets are charitable, they remain so. It is common enough for charities to find themselves in difficulties for one reason or another, and not uncommon for the trustees of a charity to decide that they will in effect cease to function as a charity, and function thereafter as a non-charity—maybe as a non-profit company, occasionally as a profit company. The charity's net assets are then ring-fenced, and are usually acquired by the profit-making or non-profit-making entity at a market price, so their value remains within the charity net, and can be used, in this instance, for educational purposes.

I do not, therefore, see why we need the amendment at all. There is a danger in the amendment. First, the noble Lord, Lord MacGregor, said that he is looking only at rare cases.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, I am sorry to interrupt the noble Lord's persuasive train of thought, but he was a member of the joint scrutiny committee. Paragraph 105 of its report states:

"We recommend that the real Bill should include provisions to clarify the effect of the loss of charitable status on the assets of a charity".

He thinks that is not necessary, despite the recommendation of the joint scrutiny committee of which he was a member.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, the noble Lord has got me with my trousers down. Basically, though, if the Bill were to clarify in the words of that recommendation, it would reiterate the present law. I believe that the present law is capable of dealing with this point.

To come back to what was put to us by the noble Lord, Lord MacGregor, he referred to very rare cases. I do not see how his assurance that every endeavour would have been made to try to run the school as a charitable school is in any way protected in the amendment. There is no reference whatever to that. It does not even say who decides whether the charity shall cease to be charitable, and who is going to judge when the practical difficulties are such that it is to be treated as no longer charitable.

Photo of Lord MacGregor of Pulham Market Lord MacGregor of Pulham Market Conservative

My Lords, I made clear that I recognised that this way of getting the issue debated on the Floor of the House was not the ideal way of solving the problem. I remind the noble Lord that his own colleague, the noble Lord, Lord Goodhart, did not agree with him that the present law would deal with the situation. What I had in mind when talking about every reasonable endeavour was that the Charity Commission would take that into account in allowing it to pass the public benefit test—my third option.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I still have to say that the situation is not sufficiently covered in the amendment, although I accept what the noble Lord said, that this is to get the issue into play, perhaps for Third Reading.

Although the charity interest company—the so-called "CIC"—puts a lock on the assets, it has a huge hole in it, which was raised when the Bill was passed, but the Government refused to do anything about it: there is no limit at all under that format for the remuneration that can paid, and the bonuses drawn out, by the directors of the entity.

The London Clinic, for example, is a charity, but I am not aware other than that it charges top whack for services it renders its patients, and that it remunerates top whack to consultants who perform operations there. I am not sure where the London Clinic would go under the noble Lord's formulation. At the moment, the only charitable endeavour that it seems to me to fulfil is based upon the assumption that anything done of a medical nature is ipso facto charitable. Indeed, the noble Lord, Lord Forsyth, was criticising the Government for moving to a public benefit test for education, although I do not agree with him.

I am trying to help the House and to get the noble Lord, Lord MacGregor, if and when he comes back with this, to take account of some of the points I have made. The provision could provide a coach and horses to drive through the net of charity assets, which is hugely important. I am sure he will agree that the public, if they have been donating regularly to a charity out of their own pockets, will not be impressed when after five years the trustees decide that it is no longer practicable to run the charity in the way they want and then shove the lot into a non-charitable entity and become paid trustees. There is no limit with a CIC on the payment of trustees so they could then remunerate themselves and do so handsomely.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 4:15 pm, 12th October 2005

My Lords, I am grateful to the noble Lord, Lord MacGregor, for bringing this amendment back after such a long gap. It has provided a useful opportunity for Members who took part in debates in Committee to re-examine it. I hope that my comments will be helpful and will offer some reassurance to the noble Lord, Lord MacGregor. As the noble Lord, Lord Phillips, said, this is a tricky area and the law of unintended consequences may well be at work if we interfere with a fair settlement of the legislative position.

It will continue to be for the Charity Commission to ensure that organisations claiming charitable status satisfy the public benefit requirement as well as having purposes which are charitable. The commission—and the law—recognises that charities cover a diverse range of purposes. While every charity must be set up for the benefit of the public, the law does not adopt the same practical measures to assess public benefit in every type of case. This means that the ways in which public benefit can be demonstrated can differ for different charitable purposes, so there is flexibility.

The commission will of course be under a statutory duty, in performing its functions, to have regard to the principles of better regulation; that is, the principles under which the regulatory activities must be proportionate, accountable, consistent, transparent and properly and effectively targeted. Its functions to which these principles apply include consulting on public benefit guidance and determining whether the public benefit that particular organisations deliver is enough to satisfy the public benefit requirement.

There might, however, be some charities which the Charity Commission, in carrying out public benefit checks, finds are not meeting the public benefit requirements. That is what the amendment identifies and what the noble Lord, Lord Shutt, was thinking through in his contribution.

The clear majorities of charities found not to be meeting the public benefit requirement would be likely to be capable of meeting that requirement if they changed the way they operated. We all understand that. The Charity Commission would, to the extent of its powers, facilitate the making of such changes by the charity's trustees. But other charities—and a small number, we believe—might be, as it were, institutionally incapable of meeting the public benefit requirement however they sought to operate. It is these few cases with which the noble Lord, Lord MacGregor, is concerned.

What happens to a charity's assets if it ceases to be a charity? The current law is based on the notion that, once assets have entered the domain of charity, it is desirable to keep them there so that they can be used in perpetuity for charitable purposes. The rule that gives effect to this position is the cy-près rule and we have discussed that on a number of occasions. It allows the court or the Charity Commission to alter the purposes for which assets are held once those purposes have ceased to be charitable. In altering purposes in those circumstances, the court or the commission would ensure that the altered purposes were charitable ones very similar to the original ones that had ceased to be charitable. I stress "very similar" to reassure the noble Lord that the assets of an educational charity would always have to be used for educational purposes. Therefore it would have that necessary and important constraint.

So in those few cases the Charity Commission could make a legal scheme changing the charity's purposes in the way that I have described. The assets would remain within the realm of the charity, either in the hands of the same trustees or, if the scheme transferred the property to another charity, in the hands of different trustees. That would be the preferable outcome. The effect of the amendment of the noble Lord, Lord MacGregor, would, by contrast, be to remove the assets from the realm of charity, since a community interest company can—even if its purposes are wholly charitable and it meets the public benefit requirement—never be a charity. A community interest company does not receive the favourable tax treatment that a charity receives, so there would be a real financial disadvantage as well.

It is for those reasons that we believe that the amendment of the noble Lord, Lord MacGregor, would be counter-productive. That is not to say that it has not been useful in enabling us to flesh out some of our thinking and raising some of the awkward issues that might arise if—

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

My Lords, I would like to ask a question. In the case, say, of a school which could not meet the public interest test for reasons that we understand, he is saying that the assets could be transferred for an educational purpose. I understand that. But what I find very difficult is, if the trustees who are running a school cannot make it work because they have lost their charitable status, how on earth could someone else come along and use these assets? If the answer is that they have to buy the buildings, given that these schools are run marginally, surely the effect would be that we will end up with a black hole, with nobody able to deal with it. Could he explain to us what he meant when he said that this transfer would be possible because I cannot see in practical terms how that could come about?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, the noble Lord is right. Of course it would be possible for the trustees to sell the school as a going concern to a private company, and one's expectation would be that that would be done in the knowledge that adjacent charitable purposes would take effect. Otherwise the disposal of the assets would not work. That is how we see it in operation. One would expect that anybody taking on those assets would do so in the knowledge that they had a workable scheme. I am sure it is not unknown—the noble Lord, Lord Phillips, will know more about this than I—for such situations to arise and for there to be have been a useful transfer of assets and a continuing and effective charitable purpose.

I think instances of this sort will be very few in number, but the noble Lord, Lord MacGregor, and the Committee session in particular made a very persuasive case for some consideration to be given to this point, and we have given it very careful consideration. The noble Lord, Lord Phillips, is right that the law as it is should work and should be effective, and should enable the continuation of a useful and valuable charitable purpose even where an organisation can no longer operate in the way it was originally intended, but with the adoption of a new scheme can give effect to the broad thrust of the original charitable intent.

Photo of Lord MacGregor of Pulham Market Lord MacGregor of Pulham Market Conservative

My Lords, I thank my noble friends Lord Hodgson and Lord Forsyth for their support. I would say to the noble Lord, Lord Phillips, that I think that we are in agreement that the solution that I have put forward for the purposes of the debate today has a lot of defects. Indeed, I say so myself and I fully recognise the wider consequences. I tabled the amendment in order to have the debate. I am not completely satisfied that the Minister's answer, that it can be dealt with under the existing law, is correct to deal with those situations. But I am most grateful to the Minister for the further explanation he gave.

I briefly referred to the point that my noble friend Lord Forsyth raised in his question to the Minister. That is the nub of the problem and it is a question of seeing whether his answer deals with the problem adequately. It has been helpful to have this debate. We will study the Minister's words with great care. I am grateful to him for the sympathetic way in which he is approaching the problem. I beg leave to withdraw the amendment.

Amendment by leave withdrawn.

Clause 4 [Guidance as to operation of public benefit requirement]:

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

moved Amendment No. 7:

Page 3, line 40, at end insert—

"( ) In carrying out consultation under subsection (4), the Commission shall, inter alia, consider the effect on public benefit of the charging policy of any charity."

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I hesitate to bring this amendment back again. I do so because I believe it is very important. I promise that, although I need to speak at some length on this, I shall curtail my contributions henceforward. But there are Members present today who were not present on 9 February or 28 June when we last discussed the amendment. It is therefore necessary to run through the reasons why I put the amendment forward and the justification for it. The noble Lord, Lord Best, and the noble Baroness, Lady Pitkeathley, added their names to the amendment previously, but, given the holiday we have so recently finished, it was not possible to organise their addition to it today, but they still support the amendment.

The point is that public benefit reform is at the heart of the Bill. I suppose that one could say that with the charity tribunal it is the most important reform—one is the reform of law, public interest, and the other is a reform of mechanics, the tribunal. They are both hugely important. I have persisted with this amendment in the face of what I must call "government prevarication" because I think that it is essential to make good sense and good purpose of their own trumpeted reform; namely, that of public benefit. I would add, if it needs adding, that the National Council for Voluntary Organisations, as part of a consortium, has also persistently and to this moment supported a reform on the lines I am suggesting.

If there is to be meaningful advance and change in relation to public benefit then we need something of this sort. The problem is that the existing common law in relation to public benefit is so confused and sparse. That was vividly demonstrated before the joint scrutiny committee when the Home Office differed markedly from the Charity Commission in what it thought the present law was. The chairman of our committee was fairly fierce about that and told them to go away and to get their acts together. They came up with a joint statement.

That joint statement hung its hat, so to speak, on the case of Re: Resch. I hate to get into specific cases but I am afraid that public benefit under common law as it stands—as this Bill would be dependent upon—rests on the shoulders of that case of Re: Resch, which was a 1967 Privy Council case. Noble Lords will know that Privy Counsellors are made up of the House of Lords judicial bench. The case came to it from Australia and concerned a private hospital. I shall try briefly to demonstrate why the case of Re: Resch is, as I call it, a judicial blancmange and why the amendment is necessary.

The sole judgment for the whole court was given by Lord Wilberforce. First, he said:

"It would be a wrong conclusion . . . to state that a trust for the provision of medical facilities"— and it could be a trust for any charitable purpose—

"would necessarily fail to be charitable merely because by reason of expense they could only be made use of by persons of some means".

So that is quite clear. On that basis, a school which is very expensive and can be accessed only by people of some means is not by reason of that not to be charitable. He went on in another section to say:

"The general benefit to the community [at large] of such facilities"— and that was a case, do not forget, of a private hospital run by nuns which was adjacent to a public hospital run by the same nuns—

"results from the relief to the beds and the medical staff of the general hospital, the availability of a particular type of nursing and treatment which supplements that provided by the general hospital and the benefit to the standard of medical care in the general hospital which arises from the juxtaposition of the two institutions".

So the general hospital was plainly charitable and the private hospital charged high fees next door. The judge was saying that the benefit to the community, the public benefit in this circumstance, was sufficiently present because the private hospital, as he put it, relieved beds and medical staff in the general hospital; that is, it took the pressure off. Secondly, he said that the interchange of staff was of benefit to both."

Again, if one takes the case of an extremely antediluvian public school—one which has no interest in public benefit as we conceive it; no interest in extending its facilities to the state school system; no interest in sharing teachers, or anything else—it can say on the benefit of Re: Resch., "It is quite enough old boy, because we are taking pressure off the local comprehensive, saving you trouble". In the case of the antediluvian school, it cannot even say, as was said here, that there is of course the interchange of teachers between the two institutions, which is of benefit to both.

The third excerpt that I will read is this. The judge said, "Another reason" for setting up the private hospital alongside the public one,

"was that there were many persons who needed hospital nursing and attention who were not willing to enter a public hospital but were willing and desirous of having hospital accommodation with more privacy and comfort than would be possible in the general hospital."

Again, that is what would be said of many public school parents. They are certainly not willing to send little Johnny to the local comprehensive, but by Jove they are ready to send them to the independent school where, to use the language of Lord Wilberforce, it would not be accommodation and facilities that were better, but it would be the facilities and class sizes.

If we leave this Bill on the basis of the decision in Re: Resch. we are not implementing the Government's own stated intentions for this Bill and the intentions with which we, on this side of the House, firmly agree. In case noble Lords think that I am being partisan—I am sorry that the noble Lord, Lord Forsyth of Drumlean, has left the Chamber, because he made the point—I do not make this point in a partisan spirit at all. Indeed, I take the witnesses who came before the joint scrutiny committee at their word. We had evidence from the High Master of Manchester Grammar School and from Jonathan Shepherd, the general secretary of the Independent Schools Council. Both said, again and again and quite adamantly, that the independent school sector wishes to provide public benefit, is seeking to find ways of working with state schools, is making facilities available, and so on. Their thesis was that independent schools have changed, are changing and want to change and want to provide public benefit.

I do not for a minute accept that this amendment is remotely partisan—it should be supported by the vast bulk of the independent schools which are of this mind and which want public benefit to be available to the public at large, beyond the small circle of their own paying pupils.

I am content to rest my case on that basis. There is need for some bracing and some degree of certainty about what we mean in relation to public benefit. Somebody has said—I will not name names—that this amendment upsets the delicate balance. I would call what we have at the moment an indelicate fudge. If this Bill gets to the Commons without my very modest amendment in they will make mincemeat of it because there are gentlemen down the other end who are a great deal more partisan than I would ever dream of being. So I hope that this amendment will commend itself to the Government, even at this late stage, and to the House at large. I beg to move.

Photo of Lord Best Lord Best Crossbench

My Lords, I support the amendment. The link between the Bill's public benefit requirement and the charging policy of any charity is most notable in respect of fees charged by independent schools that are charities, as we debated earlier. The amendment tabled by the noble Lord, Lord Phillips, requires the Charity Commission to look closely at those cases. I believe that the outcome after consultation would be a more robust defence of the charitable status of those schools. In effect, the result of the Charity Commission addressing head-on this tricky issue would be that schools that charge fees—they are likely to be quite significant fees, affordable only by the relatively affluent—would be clear on the requirements that the public-benefit test would bring, and, having satisfied those, clear that their status as a charity was secure.

I have made the point at earlier stages that independent schools that are charities are different—have different and extra responsibilities—from those run purely as commercial enterprises seeking to make profits for shareholders. By accepting those responsibilities, which will have been defined by the public benefit criteria, those schools will deserve the concessions, principally in relation to taxation, that society bestows on charities.

There are now private companies promoting purely profit-making, fee-charging independent schools. The previous inspector of schools, Chris Woodhead, is promoting the Cognita company, for example, backed by a £475 million fund from venture capital investors. Such schools will take their fees and do not accept a responsibility toward the wider community—no bursaries for those from less affluent households, no support from specialist teachers for the comprehensive school down the road, no opening up of facilities for pupils of state schools, no underlying tradition and ethos of educational service to the educational community. There is a difference between an independent school that is there to make money for its backers and shareholders, and one that has charitable objectives and must recycle surpluses—profits, if you like—for charitable purposes.

I strongly suspect that, when confronted with the phenomenon of private education, the public would much rather it were provided by charitable bodies, motivated by a philosophy of goodwill toward the wider community in which they exist, than by profit-making companies that turn their backs on the maintained sector and wish to operate in a way that polarises society between the rich and the rest.

As Jonathan Shephard of the Independent Schools Council said:

"There is the very serious point that charitable status underpins the social purpose of our schools and integrates them into society. There is a real risk that purely commercial schools will concentrate on fee-paying parents and ignore the local community".

Charitable status, with the public benefit requirement, implies something special. The Charity Commission must consult on exactly what that will mean. I hope that there will be quite lengthy consultation, both about public benefit generally and about the specific sectors, which will lead to benchmarks that can be applied flexibly to each individual case. I guess that the commission would want to take a proportionate approach in looking at the size and resources of each charity, that it will not take a one-size-fits-all approach, and that there will therefore be no universal expectation of a set number or percentage of bursaries, for example. No doubt there will be some comparison of the fiscal benefits to the school with what that school gives back. Probably, if a school returns more than it receives, that is evidence that would tend to support the contention that it provides sufficient public benefit. But the commission needs to consult on all that.

I can see a possible danger of overloading the requirements. If the requirement were to return substantially more than the fiscal benefits gained, that would negate the advantages of charitable status and give a competitive advantage to the commercial operators. That would be a logical nonsense and bad for society. The aim must be to ensure that the public benefit requirement is real. The noble Lord, Lord MacGregor of Pulham Market, suggested that some will fail the test, but we should not make that a large number of the schools in question. In other words, the Charity Commission will need to spell it out with a great deal of care. Those are the very issues that would be put into play in a consultation process of the kind that the amendment would require. It is an important ingredient and I support the amendment.

Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour

My Lords, I rise briefly to speak to the amendment, which would require the Charity Commission to,

"consider the effect on public benefit of the charging policy of any charity", when consulting on guidance. That makes a lot of sense and I am sure that the Charity Commission will do so in the normal course of issuing guidance.

However, I want to raise a point that I have made in earlier debates on the Bill in the previous Parliament. It relates to the university sector. I declare an interest as chief executive of Universities UK. It bears repeating that many universities are fee-charging charities, and it is clear that charging fees per se is not inimical to the principle of public benefit. Of course, the public benefit conferred by our universities is not narrowly related to the provision of tuition to students. In broadening research horizons, transferring the knowledge that they create, providing cultural and other facilities for the communities in which they are situated, they must all be considered to be providing public benefit. I hope that the universities' contribution to public benefit is not in any doubt.

Universities are complex organisations that are unlike any other charity. I urge caution when considering the question before us. I hope that the Minister will acknowledge the complexities of the university world in relation to charitable status. If the Charity Commission is to consider fees policies when consulting on new and revised guidance, it must also take a steer from the Higher Education Funding Council as the principal regulator for the higher education sector, about the impact of any such guidance on universities. I hope that my noble friend will confirm that that will be the case.

Photo of Lord Borrie Lord Borrie Labour

My Lords, the point made by the noble Lord, Lord Best, is probably one that can be broadly accepted. A purely commercial profit-making organisation should not be regarded as charitable. I do not believe that the Charity Commission would regard such an organisation as charitable even with the Bill in its present state.

The noble Lord, Lord Phillips, has gone further in emphasising the case of Re: Resch, which is part of the common law. The Bill accepts that common law as determining what is in the public interest, unless there is some definition that goes to the contrary. In analysing Lord Wilberforce's judgment, the noble Lord made the point, for example—I shall not quote all his points—that a fee-paying school is beneficial to the public because it enables the state sector to be relieved of the task of educating those who go to fee-paying schools. That is an unsatisfactory argument to carry forward from this Bill into the indefinite future. The noble Lord is right to say that the Bill in its present state will be regarded in another place as rather astonishing for 2005 and that one wants some more guidance.—I would say more statutory guidance.

He has made an attempt to provide some by saying that in consultation the Charity Commission should have regard to the charging policy. Certainly, I do not disagree with that. The charging policy is important because it would indicate to what extent the fee-paying school is catering for a very tiny portion of the population rather than a larger portion, and whether the charges were sometimes reduced for certain numbers of students by bursaries, and so forth.

But there are other factors that the Charity Commission or, indeed, the Bill ought to take into account, including the matters on which the noble Lord, Lord MacGregor, touched earlier; namely, the extent to which fee-paying schools provide some of their facilities to be available for others in the community and the state sector, including, of course, staff and laboratory facilities, and so forth.

So, while I accord with what the noble Lord, Lord Phillips, has said in his argument, I am not sure that it goes far enough. However, if it would attract wide support here, it is better than nothing. It is better than the very limited way in which the Bill currently deals with public interest, which is to rely entirely on the Charity Commission and, above all, on existing common law, which, as the noble Lord has explained very clearly, is so inadequate.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet) 4:45 pm, 12th October 2005

My Lords, this amendment addresses an issue that we have already debated several times during the various stages of the two Bills brought forward during this and the previous Parliaments. Therefore, I briefly will restate the position of these Benches. Nothing that I have heard causes me to change my view. As I have said several times in the past as regards public benefit, the Government should be congratulated on managing to achieve a delicate balance—not a fudge but a delicate balance—reconciling the various issues and interests involved.

As we have already said several times today, this Bill abolishes the old charitable presumption, so we create a level playing field in which all charities have to meet a public benefit test, no matter what their purposes are, and must do so on a continuing basis. We have ensured that the responsibility for that is passed to the Charity Commission under Clause 4(1). We have made the Charity Commission independent of the government in new subsection (1)(a). It may not be independent enough, but we will discuss that again when we come to Amendments Nos. 9 and 10. However, we have made a big step forward and the Government are to be congratulated on what they have done in taking us forward and increasing independence in that clause. In Clause 4(3), we require the Charity Commission to revise the public benefit objectives from time to time.

I therefore have no problem with what the noble Lord, Lord Best, said—that there needs to be consultation and benchmarks. That seems entirely appropriate. But it is the Charity Commission which carries it out. I hesitate to tangle with the noble Lord, Lord Phillips, over Re: Resch., because if he finds it dense, as a non-lawyer he may realise that I find it even denser. This, as an historic case, will presumably be moved forward by the effluxion of time as the Charity Commission carries out those public benefit consultations.

Having set the Charity Commission the task of revising public benefit from time to time, we should surely now leave the commission to get on with its new responsibilities. Surely, it is inappropriate that having set the Charity Commission free—I think that we all agree on how important that independence is—it is ridiculous immediately to turn around and restrict that freedom by the sort of amendment that the noble Lord puts forward.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am most grateful to the noble Lord for giving way. Is he aware that the Charity Commission would like this amendment?

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, I am not aware of whether the Charity Commission wish to have this amendment. But I am saying that I do not think that it should have it; I think that it should be operating. Its responsibility is to interpret the public benefit test on a level playing field which this Bill currently provides. I do not think that tilting the playing field to pick out one particular aspect is the right way forward. The Government have got it right. They should stick with it. I hope that they will continue to reject the amendment.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, in Committee on 28 June, I undertook to study and to reflect very carefully on the contributions made by many noble Lords to the debate on that occasion and at previous stages. We have debated this on several occasions. Although we approached this in a fairly rigorous and open-minded way, our views remain the same as ever. That may be of some comfort to the noble Lord, Lord Hodgson. I want to go over our thinking on this because it is right for me to put it on the record. It is a matter of central importance to the Bill.

The Charity Commission will be required to consult on and to issue guidance on the operation of the public benefit requirement. The requirement is that a purpose falling within the list of purposes in Clause 2(2) must be for the public benefit if it is to qualify as a charitable purpose. We all understand that; we have had that discussion on many occasions.

It will, as now, be for the commission to apply the public benefit requirement in determining whether a particular organisation is a charity. There is, rightly, a great deal of interest in the commission's proposed approach to its task of judging public benefit, and in the legal basis of the public benefit requirement. The commission has issued a publication, called Public Benefit—the Charity Commission's Approach, to illustrate how it would be likely to approach the task of ensuring that charities meet the public benefit requirement. That publication also describes the legal basis for the commission's task.

The adequacy of the legal basis is very important, as it will enable the commission to carry out credible and effective checks on the public benefit of charities. We remain confident of the adequacy of that legal basis. The commission is clear in its publication that it will apply the general overarching principles derived from the legal basis to carry out public benefit checks. Those checks will be applicable both to new organisations applying to register as charities and to charities that already exist, and which may have been on the register since it started in 1960.

The commission says that it will be able to carry out public benefit checks under the Bill as drafted. If the commission carries out a check that exposes an apparent lack of public benefit in a charity, one of two consequences could follow. First, if the charity is not delivering public benefit but is able to, the commission's action might include helping the charity to change its stated purposes or its activities so that in future it is benefiting enough of the public to meet the public benefit requirement. The commission might also use its regulatory powers to enforce change if the trustees are failing to co-operate in introducing change themselves. The commission does not expect to have to resort to such action in more than a few cases.

Secondly, in cases—these are likely to be pretty rare—where the trustees are co-operating with the commission but the charity simply cannot in all the circumstances provide public benefit, the commission's action might include removing the charity from the register and making a legal scheme. The scheme would ensure that any charitable assets of the organisation were in the future applied for other charitable purposes close to any purposes that have ceased to be charitable—something we discussed earlier. That would happen only where it was not possible for an organisation to meet the public benefit requirement. I emphasise that the new purposes would be close to the original ones so that, for example, the assets of a charity whose original purposes were educational would be applied for new purposes which were educational. Those two sets of consequences will follow both in the case of fee-charging charities and in the case of charities that do not charge fees.

The noble Lord, Lord Phillips, has described his amendment in the past—he has repeated this today—as a modest one and, in the best sense of the word, I agree. It is modest to the extent that we do not believe it would change anything. That is because, in setting out the legal principles by which it will apply the public benefit requirement, the Charity Commission says that it can already, and without the need for the amendment, take into account the effect of fee-charging on an organisation's ability to meet the public benefit requirement. Our reflection over the summer has confirmed us in our belief that Part I as drafted will give charity law a proper foundation for many years in the future. It will also allow the commission to discriminate effectively in practice between organisations that provide a true public benefit and those that do not.

In conclusion, I am drawn to the comments made by the noble Lord, Lord Hodgson. We have struck a balance. It has been arrived at through careful consideration of the issues. There has been consultation. The Charity Commission itself has undertaken very careful assessment and consultation with stakeholders in the past. The position that we have reached is reasonable and fair. The point raised by the amendment may already be taken into account by the commission if it believes it to be relevant, which no doubt it will.

Photo of Lord Wedderburn of Charlton Lord Wedderburn of Charlton Labour

My Lords, will my noble friend say a brief word about the policy of the Government in this area? Certain approvals by the Minister are required for staff appointed by the commission—for example, their terms and conditions of employment. Do the Government envisage that they will encourage the commission to appoint sufficient research staff to undertake the enquiries and consultations needed in this very difficult area?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I am reluctant to respond to my noble friend because of the conventions of the House.

It is not for the Government to interfere in the employment policies and practices of the commission—it is an independent body. Noble Lords have said on a number of occasions that they greatly value that independence. The noble Lord, Lord Hodgson, has argued that we should go further and the noble Lord, Lord Phillips, has agreed with him in the past. If the commission feels that it is right to review its staffing arrangements to meet the requirements of exercising more broadly the public benefit test, no doubt it will be for the commission to make that qualification and determination.

I would like to respond to the point made by the noble Baroness, Lady Warwick. She asked if the commission would be consulting with the Higher Education Funding Council on the public benefit test for universities. The answer is an unequivocal yes, of course it will.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am grateful to all noble Lords who contributed to this mini-debate and particularly to the noble Lords, Lord Best and Lord Borrie, and the noble Baroness, Lady Warwick, for supporting the amendment.

If the Minister thinks that the Bill strikes a balance on this central and important issue, I would not like to depend upon it. There are difficult conventions about the role and view of the Charity Commission which I do not wish to transgress. But I reassert what I said when I intervened a few moments ago: the Charity Commission would wish for the amendment for the reasons that I endeavoured to explain which have their basis in the common law and the case of Re: Resch. It was notable that the Minister—although he said much—said absolutely nothing about those key arguments that are not novel, but ones I have addressed to the House on two previous occasions. I suggest that the reason he did not address them was that what I said is incontrovertible. It is not only my view but that of distinguished charity lawyers and academics.

It is the job of this House to legislate in a manner which is "seaworthy"—which will achieve on the ground that which we want it to achieve and which will give support to those who have to implement it. This central issue in the Bill is not seaworthy. There is no partisanship in the amendment. It follows the best practice which is already the norm in the independent school sector. I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 7) shall be agreed to?

Their Lordships divided: Contents, 60; Not-Contents, 139

Division number 1 Private Parking: Ports and Trading Estates — Charities Bill [HL]

Aye: 58 Members of the House of Lords

No: 137 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the negative, and amendment disagreed to accordingly.

Clause 5 [Special provisions about recreational charities, sports clubs, etc.]:

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

moved Amendment No. 8:

Page 4, line 24, at end insert "unless and until it registers as such, in which event it shall cease automatically to be a registered sports club"

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, the amendment seeks to make life easy for a registered sports club that wishes to convert to a charity. The addition of the words in Amendment No. 8 would allow that to happen in the simplest and most direct way and simply provides that a registered sports club remains a registered sports club unless and until it registers as a charity,

"in which event it shall cease automatically to be a registered sports club".

That sounds a little arcane, but registered sports clubs are a relatively new class of quasi charity. They have all the benefits of a charity except one particular tax advantage, but they are not charities. That is important in terms of them not coming under the purview of the Charity Commission, which is the point of subsection (4).

A small number of registered sports clubs want to become charities and this is the simplest way of allowing that; it makes everything automatic. Although in Committee the Minister said that there could be tax disadvantages, there would be no tax disadvantages in a registered sports club becoming a charity. Any deemed transfer of its assets to the charity would attract no capital gains tax or other taxes. I beg to move.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I am grateful again to the noble Lord, Lord Phillips, for his careful explanation. In Committee we agreed to consider the amendment, as we have some sympathy with its thrust, which aims to simplify transition from a CASC to charity.

As it is drafted the Bill provides for an existing or new amateur sports club to choose between either CASC or charitable status. The process is not automatic, but it is fairly straightforward. In the event that a CASC wanted to convert to a charity—which is considered to be unlikely—the CASC would create a new club in charitable form, pass all the CASC's assets to it and then wind up the CASC. It would also be straightforward for a charitable club to convert to CASC status, since registration as a CASC would have the effect of the club ceasing to be treated as a charity, as Clause 5(4) provides that any club that has charitable purposes and is registered as a CASC is not a charity. Although the charity would trigger a deemed disposal of its assets when it ceased to be a charity, relief would be granted under the CASC legislation.

The CASC to charity transition would be smoother with this amendment, but it would create difficulties for a charitable amateur sports club that wished to become a CASC. Under the amendment a club registered with the Charity Commission cannot be a CASC. So in order for a charity to become one it would need to cease to be a registered charity first. On ceasing to be a charity there would be a deemed disposal of the assets. Any gain arising would not be sheltered by charitable tax reliefs, or the tax reliefs available to CASCs.

I hope that the noble Lord, Lord Phillips, will accept that while we support the intention behind his amendment it would create practical difficulties for a charity that seeks to become a CASC. As there is already a mechanism for an amateur sports club to convert from CASC to charity status, I invite the noble Lord to withdraw his amendment.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am grateful to the noble Lord for his response to my amendment. I did not agree with a passage at the end of it, because my amendment is not about converting from a charity to a CASC, as he calls it, but the reverse. I shall read what he says and, if I still think he is wrong, we shall have to deal with the matter at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Boston of Faversham Lord Boston of Faversham Crossbench

My Lords, in calling Amendment No. 9, I have to tell your Lordships that if it is agreed to I cannot call Amendment No. 10.

Schedule 1 [The Charity Commission]:

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, with this amendment we return to a familiar topic that we presaged a few moments ago in the debate on the amendment of the noble Lord, Lord Phillips; that is, the independence of the Charity Commission. In moving this amendment I do not wish to appear to be looking a gift horse in the mouth, so I wish to place firmly on record my appreciation for the changes that the Government have already made on this issue, in particular the insertion of the new subsection (4) in new Section 1A (in Clause 6), which reads:

"In the exercise of its functions the Commission shall not be subject to the direction or control of any Minister of the Crown or other government department".

However, notwithstanding that, the provisions of paragraph 5 of Schedule 1 on page 77 continue to give me cause for concern, in particular subparagraph (3) which reads:

"The appointment of other staff requires the approval of that Minister as to their terms and conditions of service".

It does not take a genius to work out that a future government of whatever political colour could use this measure to shape the staffing of the commission, and thus influence the commission's attitude and approach on key charitable and perhaps political issues.

When we debated this matter previously in Committee on 28 June the Minister said,

"Senior Civil Service pay and grade structures are determined by the Cabinet Office, but departments including the Charity Commission have flexibility to make their own arrangements for determining individuals' pay by reference to performance. Therefore, except for a small number of its most senior staff, the Charity Commission already effectively has control over the terms and conditions of service of staff within it . . . The commission has discretion in how its total pay budget is divided up. It also agrees its arrangements annually with the Treasury to ensure that they are broadly in line with other departments. Paragraph 5(2) and (3) of Schedule 1 does not mean that the Minister for the Civil Service or officials at the Cabinet Office acting on his behalf have to approve the detailed terms and conditions of service of either the chief executive or Charity Commission staff in general. In practice, for the Charity Commission as for other departments, they approve only the broad framework within which detailed decisions on terms and conditions are taken by departments themselves".—[Hansard, 28/6/05; col. 174.]

Those words are all very fine although the use of the qualifications "effectively" and "in practice" leave me with a slight concern. However, the Bill as presently drafted simply does not tally with what the Minister says. It states:

"The appointment of other staff requires the approval of that Minister as to their terms and conditions of service".

In my previous amendments on this topic which we discussed in Committee on 28 June, I sought to leave out the whole of paragraph 5—the "staff" paragraph of Schedule 1. I accept that that was too blunt an instrument. Therefore, today I ask the Government to accept this amendment, which tackles only the pay and rations of staff other than the chief executive—the latter's terms of service will still require direct approval as provided for in the Bill as presently drafted.

I note that the noble Lord, Lord Phillips, has a perhaps more silkily phrased amendment addressing this point, which was no doubt drawn up as a result of his legal experience. I should be happy to support that but I am convinced that unless we amend paragraph 5 of Schedule 1 along the lines that both the noble Lord, Lord Phillips, and I have in mind, we run the risk of fatally compromising the independence of the Charity Commission—something which I believe no one in this House wishes to see happen. I beg to move.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, Amendment No. 10 is grouped with the amendment just moved with irresistibility by the noble Lord, Lord Hodgson. We are in a real "Yes, Minister" situation—one of something approaching gobbledegook. I may be a lawyer, but I really do jib at a Minister of the Crown saying, during the last consideration of this,

"Paragraph 5 . . . (3) of Schedule 1 does not mean that the Minister for the Civil Service or officials at the Cabinet Office acting on his behalf have to approve the detailed terms and conditions of service of either the chief executive or Charity Commission staff in general".—[Hansard, 28/6/05; col. 174.]

Paragraph 5(3) says that:

"The appointment of other staff"— that is to say, staff other than the chief executive—

"requires the approval of that Minister as to their terms and conditions of service".

I would not for a second accuse the Minister of seeking to mislead the House, but he inadvertently misled the House. If his answer is, "Don't worry, old chap. We don't actually look at the terms and conditions of service of other members of staff", that is not good enough. My amendment, which the noble Lord, Lord Hodgson, called a little silkier, seeks to be a little more accommodating by stating that the appointment,

"and retention of other staff must as regards remuneration be within the total remuneration budget agreed annually with the Treasury".

I lifted that from what the Minister said when we discussed this on 28 June.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I would briefly like to support the amendment moved by my noble friend Lord Hodgson of Astley Abbots. Lines 41 and 42 of page 77 bring a non-governmental body directly under the political control of the government of the day. That is wrong and I strongly support what my noble friend said.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, I want to say a word about the Minister's response on the last occasion. Either it means that the Minister for the Civil Service is not going to implement what this Bill proposes, if it is passed in its present form, or it means that the words of the proposed statute have no meaning at all. It says in plain terms that it,

"requires the approval of that Minister as to their terms and conditions of service", so all the terms and conditions of service must be approved by the Minister for the Civil Service. If words mean anything, that is what these words mean. The Minister's explanation is as clearly inconsistent with that as can be demonstrated. Therefore either this should be amended, or the Minister is telling us that the Government in future intend to ignore the terms of their own legislation.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, we have had some healthy debates about the independence of the Charity Commission. As was made clear a few minutes ago, we had debate on that very provision in Committee, but our thinking has not changed. The Bill preserves the Charity Commission's status as a non-ministerial government department, and this provision flows from that.

The Charity Commission already has delegated authority on behalf of the Minister for the Civil Service to determine the number and grading of posts—with the exception of senior civil servants—and the terms and conditions of employment. That is in so far as they relate to the classification of staff—with the exception of those in the senior Civil Service—and remuneration, with the same exception, although here there is very broad scope for discretion. It also relates to allowances, expenses, holidays, hours of work and attendance, part-time and other working arrangements, performance, promotions, retirement age—again, with the exception of the senior Civil Service—redundancy, and the re-deployment of staff within the Home Civil Service.

All those things are delegated in terms of authority to the Charity Commission. The commission, along with other non-ministerial government departments, has already delegated authority to determine the terms and conditions of its staff without referral to the Minister. That means that the commission is required only to agree the overall pay remit with the Treasury and to employ the right mix of staff to deliver its objectives. As with other departments, the commission would require approval of the broad framework within which it can take detailed decisions on terms and conditions of service. It is a broad approval. That has worked extremely well, and the commission has made good use of that significant flexibility and independence to recruit and retain good-quality staff.

Paragraph 5(3) of Schedule 1 brings members of staff of the commission within the Home Civil Service. It is a common provision in other legislation that establishes non-ministerial government departments, and works well with, for example, the Commissioners for Revenue and Customs Act 2005, the Food Standards Act 1999 or the Land Registration Act 2002. They all do the same for their staff.

The amendment would require the staff of the commission to be reclassified outside the Home Civil Service. That is the effect of the amendments in this group. I ask noble Lords opposite to think about that extremely carefully. That would create problems with such staff transferring to and from other departments, and it could affect their career options. It could also seriously affect the pension position of staff. The Government have decided that the most appropriate status for the commission remains that of a non-ministerial department—not least because no suitable alternative had been identified from other quarters. It works well for the Revenue, and in food standards and land registration.

However, as I said in Committee, Clause 70 gives us the opportunity for the commission's status to be considered as part of a review of the impact of the legislation. I made that clear the last time we debated this. A person must be appointed to carry out the review within five years of the Bill receiving Royal Assent, and a copy of the report produced as a result of the review must be laid before Parliament. It may well be that as a result of that review some alternative status for the Charity Commission can be identified. We remain of the view that, for as long as it remains a non-ministerial department staffed by civil servants, it is essential that the Government retain some broad control of staff terms and conditions of service. That is exactly what I set out earlier in my explanation.

If noble Lords opposite are tempted to press the amendment, they need to take careful cognisance of what I said, particularly about the impact on staff and their classification and career opportunities. They also need to take careful account of the impact that it would have more broadly. This is a dangerous amendment; we cannot support it. I urge noble Lords who are tempted to support it to rethink their position.

I ask this important question—have noble Lords who are considering pressing the amendment given any thought at all to consulting with those it might affect? If they did, they would find that those staff might find it increasingly difficult to live with. It is not the purpose for which they entered their current employment. To be transferred in a way that the amendment might suggest could have very serious consequences indeed.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, I am grateful to the Minister. As ever, he put his case forcefully. I am grateful to my noble friend Lord Swinfen for his support, and in particular to my noble and learned friend Lord Mackay of Clashfern. He put his finger on it directly. The Minister talks about a broad approach and broad control, but paragraph 5(3) of Schedule 1 is not about broad approach and broad control. It is about specific approach and specific control. It is about other staff requiring,

"the approval of that Minister as to their terms and conditions of service".

I do not accept that that is the proper argument or an argument with foundation.

The Minister also raised the question of pensions, and we have been around that track before. One of our early amendments, with which the Government were equally unhappy, dealt with pensions. The Government were not happy about that then, and certainly that provision could easily be reinserted to address the pension issue. We should not allow the pension position to drag us away from the central issue this afternoon, which is that we want to see the Charity Commission properly independent. The Minister accepts that this is important—we were agreeing on it in the earlier amendment—but he has not provided us with an adequate answer.

I understand that my amendment is too direct. What the noble Lord, Lord Phillips, has tabled is considerably more silky, and attacks the one remaining plank in the Minister's argument. I will therefore withdraw my amendment, but I hope the noble Lord will have a more robust approach. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs 5:30 pm, 12th October 2005

moved Amendment No. 10:

Page 77, line 41, leave out from "appointment" to end of line 42 and insert "and retention of other staff must as regards remuneration be within the total remuneration budget agreed annually with the Treasury"

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I thank the Minister. The key to what he said was that the state of affairs both these amendments want to bring about— the independence of the Charity Commission with regard to terms and conditions of staff below commissioner and very senior level—is, at the moment, by grace and favour of a delegation made by the Minister. That delegation could be withdrawn at any time. The Minister may pucker his handsome face, but that will not do, because things change. Ministers change, policies changes, and the relationship between the Minister and the commission may get extremely raggedy in the future.

The Minister made a serious point, with a degree of tentativeness, about what this would do to the status of the employees. I am sure I speak for the noble Lord, Lord Hodgson, as well as myself in saying that, if that is the case, we would accept without demur an amendment at the final stage of this Bill that made it clear that the status of employees was unchanged by this amendment. That could easily be done. I beg to move.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I am loath to get up, but the amendment covers more than just the pension issue. I thought the noble Lord, Lord Hodgson, was rather skirting around the broader issue. We have accepted in earlier debates that we have established a great measure of independence here, and it is wrong of the noble Lord, Lord Phillips, to suggest that this is by grace and favour of a Minister. It is established practice, not just with the Charity Commission, but with the other non-ministerial government bodies. This is a tried and tested mode of operation. The noble Lord seeks to upset that and a lot more, relating to staff terms and conditions, pensions and so on. Before taking that step, he should retreat and think seriously about what he is achieving here.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, is there any reason of which the Minister can think why the position as he describes it should not be put in clear terms in the Bill?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, there is a good reason when one considers the material impact of what these amendments would achieve. There has been no opportunity for any discussion outside your Lordships' House about what this would mean and imply for those currently employed within the Home Civil Service, and no doubt they will have powerful views to be expressed on those subjects. We need to know and understand how they might feel about that.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

With respect, my Lords, I do not think the Minister answered the question of the noble and learned Lord, Lord Mackay of Clashfern. He asked why the status quo, under the delegation described by the Minister, could not be put in the Bill. If there is retention in the hands of the Minister of the power to revoke that delegation, as there is, it is all very well saying that it is present custom and practice; those can change at the decision of the Minister. That is what we are not willing to see in the Bill.

If the Minister is saying that we should have consulted on this arcane issue before, it would have been helpful had he given us some warning of it. He knows how strongly we feel, because this is not a new amendment. I put back to him the fact that, if my amendment would change the status of the employees of the Charity Commission to their disadvantage, it is a straightforward matter for the Minister to bring back an amendment at Third Reading to say, quite simply, that their status is unchanged by this amendment. On the basis of past debates on this issue and debate today, I believe that the issue should be put to the House for determination.

On Question, Whether the said amendment (No. 10) shall be agreed to?

Their Lordships divided: Contents, 166; Not-Contents, 134

Division number 2 Private Parking: Ports and Trading Estates — Charities Bill [HL]

Aye: 164 Members of the House of Lords

No: 132 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the affirmative, and amendment agreed to accordingly.

Schedule 2 [Establishment of the Charity Commission: supplementary]:

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 5:47 pm, 12th October 2005

moved Amendment No. 11:

Page 81, line 8, leave out "for England and Wales"

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, this is a minor tidying-up amendment which has been recommended by the draftsman. I could give further explanation, but I hope that that will not be necessary. If noble Lords want to question me on it, of course they are entitled to. I beg to move.

Photo of Lord Craig of Radley Lord Craig of Radley Crossbench

My Lords, perhaps the Minister will explain why Clause 6 contains so many references to the Charity Commission for England and Wales, yet we are removing it from this schedule.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, it is merely a tidying-up issue. It is for simplicity and ease of understanding.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 12:

Page 82, line 18, at end insert—

:TITLE3:"Resource accounts of Commission

(1) The new Commission and the old Commission shall be treated as being the same government department for the purposes of section 5 of the Government Resources and Accounts Act 2000 (c. 20).

(2) Resource accounts sent to the Comptroller and Auditor General by the new Commission in respect of any period before commencement shall be resource accounts in the name of the new Commission.

(3) In this paragraph—

"the new Commission" means the Charity Commission established by section 6, and

"the old Commission" means the government department known as the Charity Commission and existing immediately before commencement."

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, the Bill abolishes the office of the Charity Commissioners—an unincorporated body—and establishes a corporate body, the Charity Commission. The Charity Commissioners would be regarded as a different government department from the Charity Commission, although in practice what would have taken place is essentially a change of form of a single department. This amendment will enable the commission to prepare a single set of accounts for the financial year in which the Charity Commission is established. I beg to move.

On Question, amendment agreed to.

Clause 7 [The Commission's objectives, general functions and duties]:

Photo of Lord Swinfen Lord Swinfen Conservative

moved Amendment No. 13:

Page 7, line 20, after "its" insert "regulatory"

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, in moving Amendment No. 13 I shall speak also to Amendment Nos. 14 and 15. The purpose of these amendments is to require the commission to act fairly and reasonably, as well as in accordance with the best principles of regulatory practice, by placing a specific statutory duty upon the commission so to act, in order to provide clarity in charity law for the benefit of charity people, the charity appeal tribunal and the courts.

The requirement for the insertion of,

"and shall be fair and reasonable", on page 7, line 25, had much support in previous stages of the Bill in the House, and follows the recommendation of the joint parliamentary committee reporting on the draft Bill last year. Many noble Lords, like me, believe these words need to be placed on the face of the Bill because the commission has not always behaved in that way. I have given numerous examples of these in past stages of the Bill, which I hope it is not necessary to repeat.

The Minister's objection to the insertion of these words appears to be that administrative law already requires all government bodies to behave fairly and reasonably. But, in the Little Gidding Trust case, the high court specifically refused to consider whether the commission had behaved fairly and reasonably in making orders that were the subject of trustee appeals brought on grounds that the commission had not acted fairly and reasonably, but with bias, in the making of these orders. They are now case law and so will be followed in future cases.

Had there been a statutory duty on the commission to exercise its powers fairly and reasonably the courts would have been compelled to have full regard to such duty. This ruling now forms part of charity case law and is therefore of the greatest importance. I believe that, so far as charity law is concerned, the phrase "fair and reasonable" should appear on the Bill. The charity sector is founded on a bedrock of decency and morality, and surely has reason to expect a standard of regulation enshrined in statute, which places a specific requirement upon the commission, as regulator, to act fairly and reasonably.

In Committee, the noble Lord, Lord Dahrendorf, said:

"If there is the slightest reason to believe that charities would be encouraged by including the words 'fair and reasonable' in the Bill, it is a good enough reason to do so. I therefore hope that it is still possible to include these words".—[Official Report, 28/6/05; col. GC 187.]

I am grateful to him for those words on that occasion; I hope that he will repeat them this evening. I beg to move.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, I support my noble friend's amendments in part. Amendment No. 14 with the proposal to leave out the words "so far as relevant" in new Section 1D(2)4 of Clause 7 seems appropriate. These words—I describe them as weasel words—seem unnecessary and provide an opportunity for people to avoid the principles laid out in that new section, so I have a great deal of sympathy with my noble friend's amendment.

The issue of Amendment No. 13 in inserting the word "regulatory" in the first line of new Section 1D(2)4 before the word "functions" seems less strong as the commission ought to have regard to the principles of best practice in all its functions, not just the regulatory ones. There are a number of functions it carries out, in particular the provision of advice, which it ought to consider, and in the light of the provisions of new Section 1D(2)4. So I am less happy about that.

As regards Amendment No. 15, I was interested to hear my noble friend's comments that the court was not able to take into account the fairness and reasonableness of the actions of the commission and that he believes that inserting these words would strengthen the position vis-à-vis the court. It originally occurred to me that maybe this was redundant given the pretty extensive provisions of new Section 1D(2)4, which contains the phrase:

"proportionate, accountable, consistent, transparent and targeted".

Therefore the addition of the words "fair and reasonable" was maybe superfluous. However, I feel that Amendment No. 14 has a great deal to commend it and I am pleased to support it.

Photo of Lord Dahrendorf Lord Dahrendorf Crossbench

My Lords, it is almost embarrassing to rise again in defence of two little words. I say "almost embarrassing"; I would find it truly embarrassing if I had to rise and attack these two little words, or not accept them, in the Bill. Fortunately that is not my position. I shall speak only to Amendment No. 15.

My position is that I find it perfectly possible to accept the Government's arguments as set out in a letter which the Minister sent to me and others on 11 July 2005, and yet believe that it would make sense to include the words "fair and reasonable", because I ask myself one simple question: whose perception matters most in this regard? In my view what matters most is the perception of charities and their trustees and supporters, and notably of smaller charities. If they feel—and they do feel—that it would help them to have the support of the law by the inclusion of the words "fair and reasonable" then I cannot see any overriding argument not to do so. I would regret it very much if we did not manage or make it possible at this late hour—late not in terms of the day today, but in terms of the debate of this legislation—to make this step towards the understandable perceptions of especially smaller charities. I support the amendment.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench

My Lords, I rise also fairly briefly to support the amendment of the noble Lord, Lord Swinfen. I did so on at least two other occasions, I think, when this Bill was previously before us, and I failed to understand the reason why "fair and reasonable" could not have been added earlier. There are real concerns which have been enumerated on many occasions by the Association for Charities about some of their members and the way they were dealt with. The amendment would be in everybody's interest.

We have just agreed to Amendment No. 10 which assures greater independence for charities, which is absolutely fair. We want greater independence; we want to stress that they are independent, but with independence comes perhaps a greater degree of accountability as well. We know that the NCVO also supports this amendment. It would be perfectly fair now for the Minister to agree that the words "fair and reasonable" be added.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I would like to add a few words. The noble Baroness, Lady Scotland of Asthal, said—I think on 28 June last, at col. 189—that, perfectly reasonably, the Government had made all sorts of amendments and improvements to the Bill, which is true, and she drew attention—which is quite fair—to the addition of the words,

"proportionate, accountable, consistent, transparent and targeted", and then said that she did not think that adding "fair and reasonable" was necessary. One point that seems to be different is that made by the noble Lord, Lord Dahrendorf—and indeed by myself last time—that one does not want to be too legalistic when looking at the adjectives which have already been added to a very important clause. One thinks of the vast number of non-lawyers in the voluntary sector who will from time to time have cause to try to understand this Bill. "Fair and reasonable" is a time-honoured phrase that has a resonance in a way that some of these others do not. I should be comforted if in answering the debate the Minister could give an absolute assertion that the words "fair and reasonable" add nothing whatever to the words "proportionate, accountable, consistent, transparent and targeted"; and, secondly, that in the context in which the noble Lord, Lord Swinfen, wants them inserted, which is in the commission's regulatory duties—because new Section 1D(2)(4) refers to the principles of best regulatory practice—he is quite sure that the need for those words and for the words "fair and reasonable" does not crop up in any of the five other general duties of the commission; for example, in the fifth general duty, which is not that of regulation or performing its functions as regulator but managing its affairs, and so on.

If the Minister could give an absolute assertion that the words are literally redundant in all circumstances that would at least be in Hansard on the record, although I still think, for reasons mentioned previously, that there is no reason on earth why the Government should not agree to these additions, given the nature of the voluntary sector.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 6:00 pm, 12th October 2005

My Lords, I shall take the amendments in sequence. I shall start with Amendments Nos. 13 and 14 and then spend a little more time on Amendment No. 15. I think that the noble Lord and I seek to achieve the same end with Amendments Nos. 13 and 14. We have, as has been said, debated the second of the amendments previously. The noble Lord, Lord Phillips, reminded me that it was my noble friend Lady Scotland who dealt with this matter on an earlier occasion.

Both we and the noble Lord, Lord Swinfen, want to ensure that the commission must has regard to the principles of best regulatory practice when regulating. There can be no difference between us on that. It would not make sense for the commission to have regard to these principles when performing functions which are not regulatory; for example, when it lays its annual report before Parliament.

I can see the argument that the inclusion of the words "so far as relevant" means that it must be determined when it is relevant and when it is not relevant to have regard to the principles of best regulatory practice, but it is clear that the occasion on which the commission must have regard to best regulatory practice is when it is performing regulatory functions. I do not see how it could be argued that there could be a situation involving regulation where the commission should not have regard to the principles of best regulatory practice.

The draftsman has achieved our aim by stating that,

"the Commission must, so far as relevant, have regard to the principles of best regulatory practice", when performing its functions. We are clear that this qualifier means that the commission must have regard to these principles when performing regulatory functions and must not have regard to these principles when performing non-regulatory functions. The example I gave was that of laying an annual report before Parliament.

I argue that the noble Lord, Lord Swinfen, seeks to achieve the same end simply through different drafting. We have been guided by the expertise of parliamentary counsel when considering drafting. I think that he has produced drafting which achieves our overall aim and purposes. Sometimes noble Lords are critical of parliamentary counsel and draftsmen—and I can understand why that might be the case. But I think that on this occasion they have carefully weaved their way around a little difficulty. So I do not think that it is necessary therefore to accept the noble Lord's amendment. But I hope that I have reassured him sufficiently to enable him to withdraw it.

I turn to Amendment No. 15. We have now debated the amendment on four occasions. The Government's view was most recently set out on 28 June by my noble friend Lady Scotland. I reaffirm that we agree that the commission should act fairly and reasonably. There is no difference between us on that. We were sufficiently persuaded by Members of your Lordships' House to include a duty on the commission to have regard to the principles of best regulatory practice when performing its functions, so far as relevant; and, we have spelt these principles out in the Bill. The noble Lord, Lord Phillips, has referred to them. Regulatory activity should be proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed.

We have chosen those specific words because they are the principles which the Better Regulation Task Force chose as the principles of best regulatory practice after very careful thought and careful work. We feel that these words adequately express the concept of fairness and demonstrate clearly to trustees and others the way in which they can expect the commission to act.

The noble Lord, Lord Phillips, invites me to give an absolute assurance. I give an absolute assurance that they add nothing to the legal duties which the commission is already under. We have no doubt that the commission is under a duty in administrative law to use its powers reasonably. In our debates I think that there has been a consensus that that is the case.

We have also said that if Parliament thought it necessary to give the Charity Commission that duty, the implication would be that the commission did not have that duty at present. That could present us with some difficulties. That is not the case. If the noble Lord feels that the addition of those words would press the commission to consider this existing duty more profoundly, then I fear that he may well be mistaken. In fact, I go further and say that he is mistaken.

The commission does not doubt that it has this duty already. It would not change its behaviour as a result of the addition of these words, and so the amendment would have no practical effect. Although I think that there is a lot of common ground between us—I have explained how I see that common ground—I think there are good reasons why the amendment is not necessary. And there are positive reasons, which I have just outlined, why it would be undesirable. For those reasons, although I am sympathetic and understand the case which has been very carefully made by the noble Lord, Lord Swinfen, and supported in your Lordships' House this afternoon, I cannot accept Amendment No. 15.

I have addressed this issue very carefully. I have tried to be as helpful as I can in dealing with all three amendments. I hope that my explanation has provided some useful clarity.

The noble Lord, Lord Swinfen, raised the issue of the Little Gidding Trust case and the failure of the judge to consider fair and reasonable conduct so far as the commission was concerned in making the order removing trustees. The advice I have been given is that the judge took this approach to shorten the hearing and that he reconsidered whether the order the commission made should stand. The judge decided that it should as it was made in the best interests of the charity. He did not feel that it was necessary in those circumstances to consider the commission's conduct. I can make no other comment on that case. I hope that that point of explanation assists the noble Lord, and I hope that noble Lords have listened very carefully to the explanation that I have given this evening.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I thank all noble Lords who have spoken in this short debate. I understand what my noble friend Lord Hodgson of Astley Abbotts and the noble Lord, Lord Bassam of Brighton, have said about Amendment No. 13. Therefore, I will not move Amendment No. 13.

I have not been persuaded on my Amendments Nos. 14 and 15, in particular on Amendment No. 15—fair and reasonable. I understand that that amendment is supported by the NCVO and that it has written to a number of your Lordships on the subject. I am not aware that I have ever received a copy of the letter myself; perhaps it is still in the post.

Since I spoke on this subject at Second Reading, I have heard from a charity that I think has not had fair and reasonable treatment by the Charity Commission. It may well be a case of one bad apple in a barrel. But, that being the case, these words in the Bill would be able to allow the commissioners to persuade their own employees that they should behave fairly and reasonably.

I am advised that in the case of the charity that was being looked at by the commission, someone from the commission e-mailed a national newspaper with what I am told are false allegations. Why they should have e-mailed a national newspaper in any case, I do not know—it strikes me as being thoroughly unprofessional. I am also told that rumours were spread that the person running the charity was under investigation by the police. When they went to the police to find out if they were under investigation they were told that it was not the case. Those instances do not represent fair and reasonable behaviour and it would be of considerable assistance to those at the head of the Charity Commission if these words were in the Bill. I beg leave to withdraw Amendment No. 13.

Amendment, by leave, withdrawn.

Photo of Lord Swinfen Lord Swinfen Conservative

moved Amendment No. 14:

Page 7, line 20, leave out ", so far as relevant,"

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I beg to move.

On Question, Whether the said amendment (No. 14) shall be agreed to?

Their Lordships divided: Contents, 79; Not-Contents, 130

Division number 3 Private Parking: Ports and Trading Estates — Charities Bill [HL]

Aye: 77 Members of the House of Lords

No: 128 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the negative, and amendment disagreed to accordingly.

Photo of Lord Swinfen Lord Swinfen Conservative 6:22 pm, 12th October 2005

had given notice of his intention to move Amendment No. 15:

Page 7, line 25, at end insert "and shall be fair and reasonable"

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, in view of the vote on the previous amendment, I shall not move this one.

[Amendment No. 15 not moved.]

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 16:

Page 7, line 25, at end insert—

". In performing its functions the Commission must have regard to the desirability of facilitating innovation by or on behalf of charities."

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, the noble Lord, Lord Phillips, has tabled Amendment No. 17 as an amendment to the Government's amendment. On 28 June, the noble Lord, Lord Hodgson, moved an amendment that would have given the Charity Commission the general function of facilitating development and innovation in the charitable sector. On a Division, your Lordships' House produced a tied vote, which meant that, by the narrowest margin, the amendment was not carried.

Since then, we have reflected further on the matter. We see merit in the proposition of the noble Lord, Lord Hodgson, which, I understand, is supported by the Charity Commission, so we have devised an amendment to give effect to it. Rather than give the Charity Commission a new general function of facilitating innovation, our amendment would give it a new duty that would apply to it in carrying out all its functions. The wording of the duty is very closely based on that of the equivalent duty applying to the Financial Services Authority, which the noble Lord, Lord Hodgson, has commended to your Lordships' House in the past.

I have also reflected further on the amendment tabled by the noble Lord, Lord Phillips of Sudbury. There may be a way in which we can incorporate it into the government amendment. In view of that, I hope that we now have unanimity on the issue across your Lordships' House. I beg to move.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

moved, as an amendment to Amendment No. 16, Amendment No. 17:

Line 2, after "must" insert ", where appropriate,"

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am grateful for the undertaking that the noble Lord, Lord Bassam, gave at the end of his introduction of Amendment No. 16. It leaves me with little to say beyond the fact that NCVO, among many charities, was anxious about the effect of placing just a bare duty on the commission to have regard to the desirability of facilitating innovation. Just adding the words "where appropriate" or something like that would dispel its anxiety that an intervening commission could thunder around requiring innovation on all occasions by all charities—although that is highly unlikely, one must allow for the possibility. Many charities are not in the business of innovation at all; for example, almshouses are in the business of anything but that. I beg to move.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet)

My Lords, I thank the Government and the Minister for taking on board the result of the score draw on 28 June. I accept that the Charity Commission is at root a regulator and therefore needs to keep an eye on the road immediately in front of it, but from time to time it should raise its eyes to the hills and think more strategically and dynamically about the sector that it regulates. I am extremely grateful that the Government have taken our proposal on board. I am delighted with the amendment and thank the Minister very much.

Amendment No. 17, as an amendment to Amendment No. 16, by leave, withdrawn.

On Question, Amendment No. 16 agreed to.

Photo of Lord Swinfen Lord Swinfen Conservative 6:30 pm, 12th October 2005

moved Amendment No. 18:

Page 7, line 28, at end insert—

"6. In performing its regulatory functions the Commission must have regard to the reasonable interests of trustees, charity staff, volunteers, donors, beneficiaries and other stakeholders in charities."

Photo of Lord Swinfen Lord Swinfen Conservative

The amendment would require the Charity Commission to have regard to the interests of the people involved in charities as well as a charity's material assets. Those people include especially charity beneficiaries, who are often singularly unable to defend their own interests.

The commission has sometimes acted in a cavalier fashion towards a charity's people. Such behaviour has occurred and has been the subject both of Independent Complaints Reviewer findings and of admission, in retrospect, by the commission itself. The effects of such regulatory behaviour in certain cases have been deeply damaging to charity—to charities, trustees, volunteers and, most importantly, their beneficiaries.

In moving this amendment, designed to have particular regard to the interests of people involved in charities, I am aware that my earlier reference to some effects of Charity Commission regulatory conduct in the past may have given offence in certain quarters. I believe, however, that the absence of any mention of beneficiaries in the Charities Act 1993—and of their needs and interests—may have been a contributory cause of the failure of the commission as regulator to consider the possible effects of its actions and orders upon beneficiaries, who are among the most vulnerable and poorly protected members of society. Perhaps I should have looked at the matter when I took part in the debates on the Bill when it went through the House. Sadly, it stands to reason that if charity funds are summarily frozen and trustees and volunteers prevented from carrying on their humanitarian work, beneficiaries who may be partly or wholly reliant on such help, support and protection for their subsistence or safety may be seriously disadvantaged and damaged, at the very least. Think what would happen today if Oxfam's funds were all suddenly frozen and it could not help those in Pakistan, Kashmir and north-west India.

A careful reading of the Charities Act 1993 and the sections relating to the regulatory powers of the commissioners, and the circumstances under which those powers can be exercised will demonstrate beyond question that it is the material assets of a charity—its property and funds—that are to govern the exercise of regulatory powers. Important though it must be to protect such material assets, current charity law does not appear to place a sufficient emphasis or duty on the commission to pay particular regard to the reasonable interests of charity people.

Surely in this century this Charities Bill should strive to redress the balance between the proper and necessary protection of a charity's property and the need to protect the interests and needs of the people who deliver or depend on such services. When we last debated the issue in Committee on 28 June, the Minister said that the amendment was not necessary. At col. 193 she said that that was because the Bill required the Commission to be "accountable and transparent" and that it "takes customer service seriously. She continued:

"Last year, it established a group called the Customer Network for people from across the sector . . . to give feedback".—[Hansard, 28/6/05; col. 193.]

Even when the commission takes customer service seriously, and has established a feedback group, it is still possible that it may not have at the forefront of its mind a prime requirement to protect a charity's beneficiaries when exercising its regulatory powers.

The amendment would put on the face of the Bill a specific duty on the commission when exercising its regulatory powers to take full account of the reasonable needs and interests of charity people before it acts. After 400 years of charity law and regulation, with its heavy emphasis on the protection of the material assets of charities, would it not be right, fair, helpful and encouraging to all involved in the sector to see a specific duty placed on the commission to have regard to the interests of charity people? Surely the Government and the House should be prepared to accept a helpful and useful amendment. I beg to move.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, as the noble Lord, Lord Swinfen, said, we discussed this at Second Reading and in Committee on 28 June. The noble Lord is concerned about the issue. In Committee he said:

"There is a significant gap in the regulation of charities which has historically been concerned only with the material assets of a charity".

He also said:

"As charities exist for their beneficiaries, it is rather odd that charity law allows the regulator to ignore their interests".—[Hansard, 28/6/05; col. 193.]

I take issue with the assertion that there is a gap either now or when the Bill is passed. Section 1(4) of the Charities Act 1993 states:

"It shall be the general object of the Commissioners so to act in the case of any charity . . . as best to promote and make effective the work of the charity in meeting the needs designated by its trusts".

I repeat the phrase,

"the needs designated by its trusts".

Whose needs? It is the beneficiaries' needs. The commission's new objectives in the Bill also have the interests of beneficiaries.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, did the Minister say "Section one four"?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I did indeed say Section 1(4).

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, Section one, four—Section 14—refers to

"cy-près of gifts of donors unknown or disclaiming", according to my copy of the Act.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I think that the noble Lord is right about Section 14. I shall check that point.

The commission's new objectives in the Bill also have the interests of beneficiaries running through them. Let us take, for example, the charitable resources objective, inserted by Clause 7 with new Section 1B. That objective is that the commission must promote the effective use of charitable resources. We can only judge how effective a charity is in using its resources with reference to whether the needs of the beneficiaries are being met effectively. The commission cannot meet this objective without considering the needs of beneficiaries.

The noble Lord's amendment goes further than the interests of beneficiaries, to include the interests of trustees, charity staff, volunteers, donors and other stakeholders in charities. Again the objectives and duties in the Bill clearly encompass the commission giving consideration to such other interested parties. One example is that the commission's first objective will be to increase public trust and confidence in charities.

Another example is that the commission is proactively seeking the views of those groups through the Customer Network, as my noble friend Lady Scotland mentioned in Committee. This is a formal channel through which those affected by the commission can have their say, and which will influence directly the commission's work.

A final example is the commission's accountability objective in the Bill. The commission must enhance the accountability of charities to donors, beneficiaries and the general public. The commission, in performing its own function, so far as is reasonably practicable, must act in a way which is compatible with its objectives and which it considers most appropriate for the purpose of meeting those objectives. In terms of the specific interests of donors and volunteers, the Bill gives the commission the duty to,

"act in a way which is compatible with the encouragement of . . . all forms of charitable giving, and . . . voluntary participation in charity work".

I hope that I have demonstrated that we can see that the intention behind the amendment is good, but there are many ways in which the Bill meets the needs identified by the noble Lord, Lord Swinfen. It is for those reasons that it is unnecessary for us to accept the amendment.

The noble Lord, Lord Swinfen, was right in his earlier assertion about Section 14.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I did not hear which section the noble Lord referred to. Will he repeat it?

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I thought that was what he said the first time, but as I said, Section 14 refers to:

"Application cy-près of gifts of donors unknown or disclaiming".

I am not sure that "one, four"—14—is the right section for the Minister to be quoting. Perhaps he will write to me to tell me the right section so that we do not delay matters. I shall read with care what the noble Lord said, and will then come back to the matter before the next stage of the Bill.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, would it help if I suggested that we are discussing Section 1 subsection 4—1(4)?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I am sorry, I misread my note.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I am grateful to both noble Lords for that clarification. Obviously something got left out of the Minister's notes. We all do it. My handwriting is so bad that my wife tells me that she is still unable to read the letters I wrote to her before she was unwise enough to accept my offer of marriage. Had she been able to read them, she might not have accepted. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [The Charity Appeal Tribunal]:

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, in moving Amendment No. 19 I shall speak to the large number of amendments grouped with it.

Noble Lords will remember that in Committee on 28 June I undertook to give further consideration to an amendment tabled by the noble Lord, Lord Hodgson, that would have extended the functions of the Charity Appeal Tribunal. The noble Lord's amendment would have given the tribunal the additional function of considering matters referred to it by the Attorney-General or, with the Attorney-General's consent, by the Charity Commission, the reference being made before the commission had made any decision on the matter.

This group of amendments is the result of our considerations. Because it is a rather fearsome-looking group, I shall explain with some care what effect it would have. As drafted, the Bill would give the tribunal two functions. In summary, these are, first, considering appeals against specific decisions, directions or orders made by the commission; and, secondly, reviewing decisions by the commission to open statutory inquiries and decisions by the commission not to do other specified things.

The amendments will give the tribunal a third function; namely, determining a matter referred to it, before the commission has made any decision on the matter, by the Attorney-General or the commission. The commission's power to refer a matter to the tribunal will be excisable only with the Attorney-General's consent. Both the attorney and the commission will be able to refer to the tribunal questions involving the operation or the application of charity law. In addition, the commission will be able to refer questions about the exercise of its own functions.

The attorney or the commission will always be party to proceedings on its own references and will be entitled to join itself as a party to proceedings on references by the other. The tribunal may allow any charity or other person who is likely to be affected by its decision to be party to the proceedings.

As with proceedings under the tribunal's two other functions—appeals and reviews—we propose that each party should generally bear its own costs. The exception to that will, as in the other two cases, be that the tribunal may order a party who has acted vexatiously, frivolously or unreasonably to pay other party's costs. The noble Lord, Lord Phillips, would give the tribunal an extra power to order the Attorney-General or the commission, as the case may be, to pay other parties' costs, but we do not think that that is necessary or desirable.

Proceedings on references to the tribunal will generally not be adversarial since the purpose will essentially be to help clarify the law where the commission has not yet made a decision. An affected person or charity wanting to have their own view of the law taken into account by the tribunal may join himself as a party and should pay his own costs if he decides to do that. But he need not join himself as a party, since the attorney or the commission will be able to ensure that his view is put across to the tribunal. By choosing that route the person or charity will not have to be represented, will not incur any costs at the proceedings, but will have their view taken into consideration.

Where the reference is about the application of charity law to any particular state of affairs, the commission will be prevented from taking any action based on its own view of the law until the tribunal has made its decision. The exception to that will be that the commission can act before the tribunal has made its decision if all of the parties to the proceedings, and any charities likely to be affected by the commission's action, agree that the commission can act.

After the tribunal has made a decision on a reference about the application of charity law to any particular state of affairs, the commission will have to give effect to the tribunal's decision. There will be no appeal allowed to the tribunal against a commission decision which gives effect to the tribunal's earlier decision.

With that extra function of determining references, the tribunal will become more than an appeal tribunal. The name Charity Appeal Tribunal will no longer, we think, therefore be appropriate. We therefore propose to change it to Charity Tribunal, and to make the same change for the Welsh equivalent of the name. The amendments in this group achieve that change of name. I beg to move.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Spokespersons In the Lords, (Assisted By Shadow Law Officers), Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet) 6:45 pm, 12th October 2005

My Lords, I am grateful to the Minister and the Government for having tabled this group of amendments to deal with the points that we discussed in Committee. Perhaps I may ask one question. I have not had a chance to check this, because I read this only just before we came in here. Under Amendment No. 50, new paragraph 1(2), headed, References by Commission, states:

"The Commission may make such a reference only with the consent of the Attorney General".

When the Minister introduced this, he said that he was following the amendment that I proposed on 28 June. I was not aware that I had cross-referenced in that way. Fortunately, I have a copy of Hansard to hand. The amendment read:

"In addition to the appeals and applications which may be made to the Tribunal pursuant to the provisions of Schedule 4 to this Act, the Attorney General or the Commission may of their own volition refer to the Tribunal such issues relating to the application of the charity law as they may consider should be reviewed and determined by the Tribunal".—[Hansard, 28/06/05; col. 216.]

I am extremely grateful to the Government for having made those steps, but I am not quite sure why the commission should have to clear everything with the Attorney-General. That was not in my original amendment, which I have just read out. I was slightly disturbed, because the commission seems to be freestanding and we want it to be able to go to the tribunal, as we now call it, without having to get clearance.

It may be that I have missed an extraordinarily specialist, detailed point of administrative law and that this is how it always works. Can the Government explain that, because I am slightly concerned by it?

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I commend the Government on Amendment No. 50, which is a significant improvement to the Bill. I apologise for not giving notice of my question, but it occurred to me only on the Bench, so to speak. It relates to the fact, as the noble Lord said in moving the amendment, that there can be a reference by the commission to the tribunal at any time in connection with the exercise by the commission of any of its functions before a decision is made by the commission. I see the point of that perfectly.

Under Amendment No. 50, new paragraph 1(4) sets out those who are,

"entitled to be parties to proceedings before the tribunal on a reference".

As well as including the Attorney-General, it states that with the permission of the tribunal,

"the charity trustees of any charity which is likely to be affected . . .

(ii) any such charity which is a body corporate, and

(iii) any other person who is likely to be so affected".

It may be that I have missed it, but I do not see in this amendment any duty on the part of the commission in making such a reference to so advertise the reference and the point and purpose of the reference that any person likely to be affected by it would know in time to make application to the tribunal to be admitted a party to those proceedings.

I apologise if I am raising a matter for which there is an answer. I am not expecting the Minister to respond here and now, but I would like him to comment on the reasonableness of my question and that, if it proved the case that there is no mechanism for public notification of such a reference, there will be something in the Bill at Third Reading.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I do not have an answer to the point made by the noble Lord, Lord Phillips. It is certainly a reasonable question. I await advice. It seems to me quite reasonable that people should be put on notice.

In response to the question asked by the noble Lord, Lord Hodgson, the reason for the amendment being in the terms in which it is is simply because it has the effect of reducing the costs. The purpose is to ensure that the attorney and the commission do not simply duplicate work and that the commission does not inadvertently act without the attorney's knowledge. It is simply to ensure that there is a common understanding behind the approach that is being adopted.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 20:

Page 8, line 8, leave out "Appeal"

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 21:

Page 8, line 12, leave out "Tribunal" and insert "constitution of the Tribunal and other matters relating to it"

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, this is a drafting amendment suggested by parliamentary counsel. Essentially, its effect is to improve the clarity of the Bill's wording. I beg to move.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendments Nos. 22 to 25:

Page 8, leave out lines 13 and 14 and insert—

"(4) The Tribunal shall have jurisdiction to hear and determine—

(a) such appeals and applications as may be made to the Tribunal in accordance with Schedule 1C to this Act, or any other enactment, in respect of decisions, orders or directions of the Commission, and

(b) such matters as may be referred to the Tribunal in accordance with Schedule 1D to this Act by the Commission or the Attorney General.

(5) Such appeals, applications and matters shall be heard and determined by the Tribunal in accordance with those Schedules, or any such enactment, taken with section 2B below and rules made under that section."

Page 8, leave out lines 16 to 18.

Page 8, line 21, at end insert "and matters relating to the making of references to it"

Page 8, line 26, leave out from "which" to "to" in line 27 and insert "must be taken before appeals, applications or references are made"

On Question, amendments agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 26:

Page 8, line 27, leave out "those" and insert "any such"

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, this is a minor drafting amendment suggested by parliamentary draftsmen. Our intention is that where rules made by the Lord Chancellor require a person to take particular steps before appealing or applying to the tribunal, the rules may also specify the period within which any steps are to be taken. We thought the current wording might be read as requiring a period to be specified, rather than allowing a period to be specified. This amendment simply puts that issue beyond doubt. A period can be, but need not be, specified. I beg to move.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 27:

Page 8, line 35, leave out "or applications" and insert ", applications or references"

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 28:

Page 8, line 41, at end insert—

"( ) for matters to be determined without an oral hearing in specified circumstances;"

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, in most proceedings before the tribunal the parties will present their own cases in an oral hearing, but there may be some circumstances—for example, where there is extreme urgency for a decision, or where all parties feel that they have nothing to add to what they have said in the papers they have put before the tribunal—where an oral hearing is not at all necessary. Therefore, we think it is sensible to enable the Lord Chancellor's rules to provide for a matter before the tribunal to be determined without an oral hearing in specified circumstances. This amendment achieves that simple objective. I beg to move.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I see the point of Amendment No. 28, but it is quite open-ended, allowing matters to be determined without a hearing in specified circumstances. Will it be open to the Government to specify, within the rules, what the specified circumstances are without limit? These are difficult issues to take on the hoof, but will the Minister also give a reassurance that the rules that may be made in that regard will be common-sensical, as I would call them, and not take advantage of the breadth of the allowance?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, the noble Lord asks a perfectly reasonable question. Clearly, the Lord Chancellor's rules need to be drafted very carefully. This is a common-sense issue, enabling matters to be considered on paper rather than having the formality of an oral hearing. I have no doubt that we shall want to consult very carefully on the drafting of those rules. I know that consultation takes place on drafting matters. I hear what the noble Lord says and I seek to reassure him on that. Clearly, we are trying to be facilitative and helpful rather than sneaking something in that has some wily or secondary purpose. That is not the intent at all and I cannot think of any circumstances when it would be the intent of the Government.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 29:

Page 9, line 6, leave out "and applications" and insert ", applications or references"

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 30:

Page 9, line 8, leave out "(see subsection (5))"

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, Amendment No. 30 is grouped with an amendment in the name of the noble Lord, Lord Phillips. Our amendment is designed to do no more than remove an uncertainty that might otherwise exist in the provisions that the amendment replaces. Our intention has always been that the tribunal should have power to award costs against any party to proceedings that the tribunal believed had acted vexatiously or frivolously or in some way unreasonably. As the present provisions are drafted, we believe that they may be capable of being read as though the tribunal's power in that respect did not extend to the Charity Commission. We do not want there to be any doubt that the tribunal has the power to award costs against the commission where, as a party to proceedings, it has acted vexatiously, frivolously or unreasonably. We do not want the commission to be put in a special place. Accordingly, we have tabled this amendment to remove any doubt.

The amendment tabled by the noble Lord, Lord Phillips, distinguishes between the reasonableness of a Charity Commission decision, direction or order and the reasonableness of the commission's conduct in reaching that decision. Of course, making a judgment on the former falls squarely within the tribunal's remit, but on the latter it does not and should not, because essentially it is about whether the commission has properly handled the casework leading up to the decision. As I have said before, that is for the commission's independent complaints reviewer and/or the Parliamentary Ombudsman to judge. It is a matter of administrative competence, not of law.

Even if in a particular case the tribunal found a decision reasonable, it would be perfectly possible for the ombudsman to find the commission guilty of poor administration in reaching that decision—if, say, long delays by the commission in reaching the decision had caused a charity some loss or harm.

I believe that the noble Lord will accept that these are two quite separate considerations. I cannot see any merit in extending the tribunal's remit into the ombudsman's territory in this duplicative way. I beg to move.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am slightly lost. I am not sure that I have not acted with undue patience in having the Minister answer an amendment before I have moved it. He took a liberty at seven o'clock at night on the 353rd hour of consideration of this Bill, and I cannot blame him. He put the counterargument rather well and I am inclined to withdraw my Amendment No. 33 because I see that, if the tribunal were given the power to consider the conduct of the commission in reaching a decision, direction or order, that could allow a huge enlargement of cases and there may never be an end to them. Later, under Amendment No. 34, I shall have an opportunity to urge on the House the need for some kind of suitors' fund, but for the moment I am content not to move Amendment No. 33.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 31:

Page 9, line 8, at end insert—

"( ) Rules under subsection (2)(a) or (b) above may confer a discretion on—

(a) the Tribunal,

(b) a member of the Tribunal, or

(c) any other person."

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, noble Lords will be aware of the principle that delegated legislation, such as rules or regulations made by a Secretary of State under a power conferred by Parliament, may not, unless the primary legislation specifically allows it to do so, further delegate a discretion to any other persons. This amendment is to authorise the Lord Chancellor to sub-delegate in his rules regulating the exercise of appeal rights and his rules about practice and procedure in tribunal proceedings.

That would, for example, allow the tribunal or its members discretion to adapt the prescribed procedures to the needs of parties in particular cases. It would also allow the rules to require the Attorney-General or the Charity Commission to take reasonable steps to notify a charity of the intention to refer to the tribunal a matter affecting the charity. Without the amendment, neither would be possible. I beg to move.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs 7:00 pm, 12th October 2005

My Lords, what is meant in Amendment No. 31 by "any other person"? The amendment allows rules to be promulgated conferring discretion on,

"(a) the Tribunal, . . . (b) a member of the Tribunal, or . . . (c) any other person".

That cannot mean the man in the moon. What does it mean?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I take it to mean those who are relevant to the proceedings. The noble Lord has a point and I will reflect on that.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendment No. 32:

Page 9, leave out lines 9 to 17 and insert—

"(5) The Tribunal may award costs only in accordance with subsections (5A) and (5B) below.

(5A) If the Tribunal considers that any party to proceedings before it has acted vexatiously, frivolously or unreasonably, the Tribunal may order that party to pay to any other party to the proceedings the whole or part of the costs incurred by that other party in connection with the proceedings.

(5B) If the Tribunal considers that a decision, direction or order of the Commission which is the subject of proceedings before it was unreasonable, the Tribunal may order the Commission to pay to any other party to the proceedings the whole or part of the costs incurred by that other party in connection with the proceedings."

[Amendment No. 33, as an amendment to Amendment No. 32, not moved.]

On Question, amendment agreed to.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

moved Amendment No. 34:

Page 9, line 17, at end insert—

"( ) The Lord Chancellor may, after such consultations as he shall think fit, establish a suitors' fund to widen access to the Tribunal by assisting with payments of applicants' costs and may make rules for the purpose."

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, a comparable amendment tabled by the noble Lord, Lord Swinfen, is grouped with this amendment. I return to the issue of a suitors' fund without any embarrassment or reluctance, because one of the great flaws of the Bill is to have no prospect of legal assistance for those seeking to take advantage of the charity tribunal.

Our law is cluttered with tribunals that afford theoretical remedy to agreed citizens but are inaccessible because they are so expensive to access. I spoke to the noble and learned Lord, Lord Mackay of Clashfern, on this matter before he had to leave. He concurred in the number of such tribunals that suffered that crippling defect. As the National Council for Voluntary Organisations said in its briefing, the very evolution of charity law itself—and particularly the definition of what is charity—has been thwarted over decades because of the cost of getting proceedings before the High Court.

As I have said before, it is very important to understand that the costs of going to the charity tribunal are not likely to be significantly less than going to the High Court when dealing with an issue such as charity status. Non-access to the legal remedies that the state provides is now commonplace across the board. I passionately believe that we need to introduce into the Bill at least the prospect of some assistance with applicants' costs with respect to the tribunal.

Amendment No. 34 is permissive in allowing the Lord Chancellor after consultation to establish a suitors' fund,

"to widen access to the Tribunal by assisting with payments of applicants' costs and . . . make rules for the purpose."

I do not see how the Government can or should object to a permissive power. It will be in the hands of the Government and the Lord Chancellor whether or not they exercise it. I do not want to walk away from the Bill leaving it in a state where to get a suitors' fund off the ground would require primary legislation. Since the need for the suitors' fund will be quickly apparent, I urge this matter on the House tonight with all the strength I can muster. I beg to move.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I agree with all that has been said by the noble Lord, Lord Phillips, regarding the amendment which deals with a suitors' fund designed to provide access to the tribunal. My amendment, Amendment No. 39, provides for a suitors' fund to enable charities to take their case to the High Court. I prefer the wording of the amendment tabled by the noble Lord, Lord Phillips. If he were prepared to include the issue of the courts in addition to the tribunal, it would be a better amendment and both cases would be covered. Far fewer cases would go to the High Court than to the tribunal.

In Committee, the amendment that I moved was opposed by the Minister. That is always the case when I move an amendment but I get over that. He opposed it on the grounds that the Legal Services Commission will be able to grant exceptional funding in certain cases, usually public interest or test cases. However, the noble Lord, Lord Phillips, who is an extremely eminent charity lawyer, replied that he was unaware of the legal authority of the Legal Services Commission and that the general position has been that legal aid is unavailable to charities. The noble Lord is not alone in that belief. I failed to find any charity lawyer who has ever heard of the idea of legal aid for charities. If it is available in practice they might be expected to know about it. However, the Minister says that the Legal Services Commission is able to grant it. Will he give chapter and verse when replying?

The Minister also argued at col. 216 of the report of our proceedings on 28 June that the Attorney-General has power to intervene on behalf of charities and test cases and that that, coupled with legal aid, is sufficient. I do not believe that total reliance on the Attorney-General or the Legal Services Commission helping poor charities is either sensible or adequate.

I reiterate that the creation of a suitors' fund was a recommendation of the Prime Minster's Strategy Unit and has received the strongest possible support from the charity sector, including the NCVO and a number of other representative voluntary bodies. From their knowledge and experience of the sector and its needs, they do not believe that the further development of charity law should depend on the willingness or ability of charities, trustees and others to pay for appeals to the tribunal or the court. Nor do they, or I, believe that the Attorney-General can invariably be relied on to take such appeals forward.

I approve of the amendment moved by the noble Lord, Lord Phillips. Going to the High Court and the tribunal should be amalgamated into one amendment. Perhaps we can look at that together at the next stage if he does not press the amendment to a Division this evening.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, we have debated already the possibility of establishing a suitors' fund. Indeed, we debated identical amendments in Committee. It is a pity that noble Lords did not put their amendments together for this debate. Essentially our position remains the same, but I shall restate the salient points.

In establishing the Charity Appeal Tribunal, the Government's intention is to widen access to charity law, a move which has been broadly welcomed. If it is to be a success, the tribunal must be accessible to charities both large and small, and we intend it to be so. We have already accepted that there might be a small number of cases of clear public interest where the issues are complex and the appellant might need legal advice and representation, but does not have the resources to engage them.

In our view, there are two safeguards in such circumstances. First, the Attorney-General will have a power to intervene as a party to proceedings, which may well be exercised in complex cases, and could relieve the appellant of much of the cost of engaging legal representation. Secondly, legal aid may be available in certain circumstances to individuals appealing to the tribunal, which could include the trustees of unincorporated charities. Where the individual meets the criteria for financial eligibility, legal advice and assistance may be available before the tribunal begins. This may extend to obtaining counsel's opinion or submitting a written case to the tribunal. While legal aid does not normally fund full representation by way of an advocate before most tribunals, funding can be made available to individuals in exceptional circumstances.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am sorry to interrupt the noble Lord. I am grateful to the noble Lord, Lord Swinfen, for raising a matter on which I myself pressed the Minister on the last occasion. He did say that he would write to me about it. I have told his officials that I have not received that letter and I am still unaware of it. I am also unaware of the authority that he refers to. Perhaps there is a problem in communication, but he is again asserting something which I am not aware is the case. But I take it that he has his facts right and I shall sit down.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, I can recall signing the letter and I am told that it was handed to the noble Lord, Lord Phillips, on Monday this week. So I am somewhat puzzled that the noble Lord has not received it.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, we had better check on that, but I think not. The noble Lord, Lord Phillips, is far too well known for us to make such an error.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am sorry; I have just nodded to the Minister's officials in the Box. I now recollect that I was handed a letter, and I also recollect that I never read it. So I am altogether covered in confusion and I withdraw the point.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, the noble Lord has been very gracious in admitting his failed recollection.

Where appropriate, exceptional funding may be available in cases of significant wider public interest or where the issues are so complex that it would be impossible for applicants to represent themselves in person. In summary, the Government therefore continue to believe that the case for a suitors' fund has not been made. However, Clause 71 provides for a report on the operation of the legislation to be made within five years of Royal Assent. This will give us an opportunity to look at the impact of the tribunal and whether access to it is being frustrated by the costs of bringing a case before it. With that in mind, I hope that the noble Lord will feel able to withdraw his amendment.

When considering letters, I think that the noble Lord, Lord Swinfen, ought also to receive a copy of the letter to the noble Lord, Lord Phillips. I shall ensure that he receives one as a courtesy, and of course I will share that with the noble Lord, Lord Hodgson of Astley Abbotts.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I thank the noble Lord for that last remark. However, he has said that there will be a review of the workings of the legislation five years after it is enacted. That is quite a long time. Does he not appreciate that justice delayed is justice denied?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

My Lords, that aphorism is a common one, but I do not think that this will be a case of justice delayed being justice denied. We have been widely praised for bringing forward the notion of the tribunal and, as I have explained, we think that access will be facilitated to it. Moreover, there is the further benefit that the Attorney-General can bring forward public interest cases and so forth. But, should a serious issue arise which can be seen to frustrate those who wish to bring cases before the tribunal, any review of the legislation would look at that. However, we think that a period of five years is appropriate in terms of review. It is not an uncommon period to adopt for legislative review and we believe that we have the balance about right.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs

My Lords, I am grateful to the Minister for that response, but I am afraid that I remain unswayed in my conviction that this tribunal will be stillborn without effective legal advice and assistance. It really does no good to say that the Attorney-General will take the occasional case. Indeed, it was my own correspondence with the Attorney-General that opened the door to his agreeing to take occasional cases. In correspondence we talked about one or two cases a year. Nor is it any response to the lacuna I am drawing attention to that the Minister has ascertained that, in exceptional cases involving the wider public interest, the taking of counsel's opinion will be allowed or, in even more exceptional circumstances, representation. I know the workings of the Legal Services Commission very well and I can assure the House that, given its general way of working, the number of cases that will fit those two categories will be minuscule. We are talking about perhaps two or three cases a year. But we are expecting the traffic brought before the tribunals to be hundreds of cases a year, not two or three. So I repeat that this central part of the Bill will not be just impeded, but wholly undermined by the absence of a fund of this sort.

Even at this late hour, I am afraid that I do wish to test the opinion of the House.

On Question, Whether the said amendment (No. 34) shall be agreed to?

Their Lordships divided: Contents, 54; Not-Contents, 102

Division number 4 Private Parking: Ports and Trading Estates — Charities Bill [HL]

Aye: 52 Members of the House of Lords

No: 100 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the negative, and amendment disagreed to accordingly.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip

moved Amendments Nos. 35 to 36:

Page 9, line 27, leave out "on a point of law"

Page 9, line 27, at end insert—

"(1A) Subject to subsection (1B) below, an appeal may be brought under this section against a decision of the Tribunal only on a point of law.

(1B) In the case of an appeal under this section against a decision of the Tribunal which determines a question referred to it by the Commission or the Attorney General, the High Court

(a) shall consider afresh the question referred to the Tribunal, and

(b) may take into account evidence which was not available to the Tribunal."

On Question, amendments agreed to.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, I suggest that the Report stage begin again not before 8.30 pm.

Moved accordingly, and, On Question, Motion agreed to.