Charities Bill [HL]

– in the House of Lords at 7:42 pm on 8 November 2005.

Alert me about debates like this

Proceedings after Third Reading resumed.

Photo of Lord Swinfen Lord Swinfen Conservative

moved Amendment No. 7:

After Clause 26, insert the following new clause—

"RECEIVER AND MANAGER TO BE PAID BY COMMISSION

In section 19(6)(b) of the 1993 Act, for "the income of the charities concerned" substitute "the Charity Commission for England and Wales"."

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, the purpose of the amendment is to make the Charity Commission responsible for paying its own receivers and managers and not the charity on which they are imposed. There are cases, such as the Little Gidding Trust case, where the commission initially refused to appoint a receiver and manager when the trustees requested it because it was believed that the charity did not have sufficient liquid funds to pay. The amendment runs counter to the arrangements for commercial companies, but the situation in charities is very different.

First, funds to be used are not private commercial money of companies whose management has been incompetent. In charities, the funds are donations given by the public for charitable purposes. As I understand it—perhaps the Minister will confirm it—by law those donations must be used for the purposes for which they were given, not for spending on receivers and managers. Secondly, the commission has too often shown itself to be grossly irresponsible with charity funds in appointing receivers and managers.

I shall give only one example today as I have given several in the past. That is the recently published case of the Kings Ministry Trust, also known as the Kingsway International Christian Church or KICC. This unincorporated trust has for some years been remunerating its trustees for various services and doing so quite openly. It made the mistake of not realising that it should have altered its constitution explicitly to allow that to be done. If something needs the commission's permission, that is routine and not a large hurdle.

I am told that the commission's inquiry lasted nearly three years and has cost the charity £1.2 million for the receiver and manager and his eight consultants as well as considerable damage to its charitable work. The practical result is that this trust has been turned into a charitable company. Token restitution is to be paid by one of the trustees and some new trustees have been brought on to the board. With some advice from the commission and the use of the charity lawyer, the trustees of this charity could have affected these changes for some £12,000—one-hundredth of the sum the commission has already spent. Even if the trustees had been wildly extravagant, they could not conceivably have spent more than £120,000—one-tenth of the sum squandered by the Charity Commission.

On 18 October, at col. 688 of Hansard, the Minister, the noble Lord, Lord Bassam, said that the Charity Commission had secured charity assets to the tune of almost £20 million for the seven cases which concluded in 2004–05. However, he did not mention, and probably does not know, that nearly the whole of the seven charities' £20 million was the assets of the KICC, much of which I am told was quite safe in the form of the church's buildings and land in Hackney. The Charity Commission did not therefore secure or protect £20 million of charitable assets—most of it was not under any discernable threat. Or at least it was not until the commission decided to blow £1.2 million of charity funds on some expensive City consultants.

When we last met, the Minister also told us,

"Such appointments are made only after careful consideration . . . and generally after a tender exercise".

He later said:

"The commission has a statutory responsibility to supervise all receiver and manager appointments, which it discharges in all cases".—[Hansard, 10/10/05; cols. 687-88.]

Noble Lords may be interested to learn that the commission gave such careful consideration and supervision that under the receiver and manager it appointed to the Little Gidding Trust the quoted price rose from £10,000 to £25,000 by the time the inquiry closed. At the Cancer and Leukaemia in Childhood charity the receiver and manager was appointed for the price of £22,000, which had risen to £65,000 by the end of his investigation. At Iran Aid the contract price was £97,000, but when the receiver and manager left the charity was poorer by £470,000. In the KICC case, the quoted and contracted price was £140,000, which, as we have heard, rose to £1.2 million under the careful supervision of the Charity Commission—nine times the original price.

The Minister invited the House to agree with the basic principle that it should not fall to public funds to pay for the cost of a receiver and manager. I put it to noble Lords that there is an overriding principle that funds donated for charitable purposes should not be made available to a regulator which has demonstrated time and again its ability to lose control of its own consultants and squander funds held in trust by charities for their beneficiaries.

The amendment will have the practical effect of encouraging the commission to take considerably more care in its use of consultants than has hitherto been the case. I suggest that it will cause an immediate fall in the sums paid to receivers and managers and that this can only have a beneficial effect for the charities.

When considering the remuneration of receivers and managers, Section 19(6)(b) of the 1993 Act states that the regulations made by the Secretary of State may make provision with respect to,

"the remuneration of such persons out of the income of the charities concerned".

Can the Minister confirm that in the cases I have mentioned—and in all cases—the remuneration of receivers and managers is paid out of the income of charities and not out of their capital assets? I beg to move.

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

My Lords, it will be best if I repeat the key points that I made on Report, when the noble Lord moved an identical amendment. I say that because they still represent the Government's view.

In practice, the appointment of an interim manager is usually a last resort for the commission when it considers that it is essential to secure the assets of a charity where it has found evidence of serious misconduct or mismanagement in the administration of a charity, or where it is clear that assets are at risk. A formal inquiry into the charity must also be under way under Section 8 of the Charities Act 1993.

Before taking the serious step of appointing an interim manager the commission will have considered all other options. In the majority of cases appointments are made after a tender exercise to get the right person for the job at value for money. We still believe that in these circumstances it is usually appropriate that the charity pays for the cost of the interim manager. Charities must be responsible for their own affairs and responsible for the consequences of their decisions and actions. This includes the consequences of mismanagement. In most cases public funds should not be used to pay the costs of an interim manager appointed to a charity because of the actions of the trustees.

I also mentioned on the previous occasion that the cost of the appointment of an interim manager should be weighed up against the benefits to charities. In the seven cases which concluded in 2004–05, as the noble Lord, Lord Swinfen, acknowledged, £20 million-worth of charity assets were secured.

The commission has the power, where appropriate, to meet the fees and expenses of an interim manager from public funds. In its recent letter to Peers who spoke on Report, the commission gave details of two occasions during the past two years when this happened. The first was in the case of Lincoln Council for Voluntary Service, where a receiver and manager was appointed from July 2003 until November of that year. The cost was £3,500 plus VAT. The second case is a case in progress. The commission's letter states that this is where,

"a receiver and manager was appointed on a contingency basis on 13 December 2003. As the charity had no cash assets at that time an indemnity was offered but the costs were eventually met by the charity. Because this case is still in progress the name of the charity has not been made public".

However, we would expect the use of public funds to be in exceptional cases.

The commission has a statutory responsibility to supervise all receiver and manager appointments, which it discharges in all cases. In some cases, the costs of professional advice incurred by the interim manager would be incurred by the trustees were the interim manager not in place. The commission is very aware of the sensitivities involved in appointing an interim manager, and particularly of the resultant costs to the charity. It has recently started publishing the costs of interim managers.

In July this year it published the costs of receiver cases concluded in 2004–05, and the details are still available on its website. The commission, when publishing the details, said:

"Details of individual appointments are provided in the Inquiry Report which is published after the conclusion of each Inquiry. These reports are available on the Commission's website. However to further increase transparency the Commission has decided that at least once each year it will publish together certain details of all R & M appointments closed in the financial year and the number of such appointments remaining in operation".

I will also add that the new powers to give directions to be conferred on the commission under Clauses 20 and 21 may lead to a reduction in such appointments as they will provide an alternative and simpler route to dealing with some of the concerns that currently give rise to appointments.

The noble Lord, Lord Swinfen, referred to the Kingsway International Christian Centres appointment and receiver managers. A recently published report of an interim manager appointment related to the Kings Ministries, where the actions of the interim managers appointed by the commission secured charitable funds of more than £19 million. KICC took over the running and management of it on 23 March, having been appointed sole corporate trustee of the Kings Ministries. The Kings Ministries' financial performance during the period of the appointment was very impressive. The charity's income grew to more than £8.5 million in its financial year ending March 2004, and the interim managers made gift aid claims to the value of £3.3 million for the financial years 2000–2004. The commission believes, understandably, that the future success of this charity is assured by the charity having new trustees, a new senior management team, an extremely strong financial performance and a new incorporated structure. That demonstrates the benefits of such appointments.

The noble Lord, Lord Swinfen, asked whether the receiver's remuneration always comes out of a charity's income rather than its capital. As far as I can be certain, that is the case.

We have covered the issue several times, and I think that we have the legislation and the framework right. The type of intervention that I have described is a good example of what can be achieved through the right sort of appointment when a charity in the past has perhaps operated below par or inappropriately. I trust that the noble Lord will withdraw his amendment.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, the noble Lord said that I had agreed with him that some £20 million had been secured, and he said that some £19 million had been secured with the KICC charity. But the noble Lord does not seem to have taken on board that the vast majority of that amount were the assets of the charity in the form of property, which was not in any danger. I understand that the problem was that the person running the charity had paid himself some £200,000 and that arrangements were being made for him to repay that in any case. The amount spent on the whole exercise was exhorbitant.

I am glad that the Minister said that the receivers and managers were paid out of income, as laid down by the Charities Act 1993, as I said. Most of the income of charities is in the form of donations. Am I not right in thinking that charities have to use donations for the purpose for which they are given? The noble Lord, Lord Phillips of Sudbury, is shaking his head, so I may be wrong.

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

My Lords, I was shaking my head because the noble Lord has put it over-simply. In the normal course of events if a gift is made subject to a condition as to the use of that gift, the charity can use it only according to that condition. Most gifts are not of that nature, and are therefore usable for any purpose. If a charity finds itself in the position of having no other assets out of which to meet its obligations other than assets donated to it subject to condition or trust, in those circumstances it will have to have recourse to those earmarked gifts to discharge its obligations. I offer that to help.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I am grateful because that clarifies the position. I was always under the impression that if one set out an appeal to, say, restore the bells in a church, funds had to be used for that purpose, and not to restore the roof. I am glad that the noble Lord has put me right. I always learn things in this House.

Photo of Lord Phillips of Sudbury Lord Phillips of Sudbury Spokesperson in the Lords (Id Cards & Charities Bill), Home Affairs 8:30, 8 November 2005

My Lords, the noble Lord has just given a formulation which, regrettably, is not so. If there is an appeal to raise money for bells, the money raised in the course of the appeal must be applied to the bells, save in circumstances where the charity has obligations which it cannot meet out of its general assets and has to have recourse to its earmarked assets such as a fund for the bells. In those circumstances the funds would not go towards the bells but to meet the obligations. I am getting into deep water—I should sit down and shut up.

Photo of Lord Swinfen Lord Swinfen Conservative

My Lords, I thank the noble Lord very much. I think that I should sit down and shut up, too.

I do not intend to take this matter any further tonight. I just wanted to make certain that the House was aware that, in my view, the Charity Commission does not always run its receivers and managers as well as it should. It ought to have a good hard look at how they operate. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 [Power to transfer all property]:

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

moved Amendment No. 8:

Page 40, line 19, after "purposes" insert "(or any of the purposes)"

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

My Lords, I should like to put on record my gratitude to the noble Lord, Lord Hodgson, for diligently raising some issues to do with Clause 40, which gives the power to some charities to transfer all property. Amendments Nos. 80 and 81, which he tabled at Report and Amendments Nos. 59 and 60, which he tabled in Committee, were neat and succinct, and I feel minded to apologise for the length of the amendments we have tabled in response. However, they have to be drafted in that way to give full effect to what we are attempting to achieve.

For the benefit of any noble Lords who were not present during our earlier debates, Clause 40 gives an unincorporated charity with a gross income of £10,000 or less the power to transfer all its property to one or more charities. This group of amendments falls into two sets, because we have identified a need to have different regimes for permanent endowment on the one hand and both expendable endowment and accumulated income on the other.

The first set of amendments in the group comprise Amendments Nos. 8, 9 and 10. They set out the regime for property other than permanent endowment—in other words, expendable endowment and accumulated income. The noble Lord's concerns were that where the transferor charity had purposes A and B, the current provisions of the Bill require that if there is more than one transferee charity, both should also have purposes A and B. Amendments Nos. 11, 12 and 13, which form the second set of amendments in the group, set up a regime for a transfer where a charity has permanent endowment.

I could go into greater detail, but I see the noble Lord giving me the nod that I no longer need to do so. I think he understands fully the purport and intention of the amendments. With 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 noble Lord for having taken this point on board. We have chased through, and I am very grateful; I think this will help smaller charities get together.

On Question, amendment agreed to.

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

moved Amendments Nos. 9 to 12:

Page 40, line 20, leave out "wide enough to encompass the purposes" and insert "substantially similar to the purposes (or any of the purposes)"

Page 41, line 14, leave out "purposes which are similar in character" and insert "such of its purposes as are substantially similar"

Page 41, line 37, at end insert—

"( ) Where a charity has a permanent endowment, this section has effect in accordance with section 74AA."

Page 42, line 26, at end insert—

"74AA TRANSFER WHERE CHARITY HAS PERMANENT ENDOWMENT

(1) This section provides for the operation of section 74 above where a charity within section 74(1) has a permanent endowment (whether or not the charity's trusts contain provision for the termination of the charity).

(2) In such a case section 74 applies as follows—

(a) if the charity has both a permanent endowment and other property ("unrestricted property")—

(i) a resolution under section 74(2) must relate to both its permanent endowment and its unrestricted property, and

(ii) that section applies in relation to its unrestricted property in accordance with subsection (3) below and in relation to its permanent endowment in accordance with subsections (4) to (11) below;

(b) if all of the property of the charity is comprised in its permanent endowment, that section applies in relation to its permanent endowment in accordance with subsections (4) to (11) below.

(3) Section 74 applies in relation to unrestricted property of the charity as if references in that section to all or any of the property of the charity were references to all or any of its unrestricted property.

(4) Section 74 applies in relation to the permanent endowment of the charity with the following modifications.

(5) References in that section to all or any of the property of the charity are references to all or any of the property comprised in its permanent endowment.

(6) If the property comprised in its permanent endowment is to be transferred to a single charity, the charity trustees must (instead of being satisfied as mentioned in section 74(4)(b)) be satisfied that the proposed transferee charity has purposes which are substantially similar to all of the purposes of the transferor charity.

(7) If the property comprised in its permanent endowment is to be transferred to two or more charities, the charity trustees must (instead of being satisfied as mentioned in section 74(4)(b)) be satisfied—

(a) that the proposed transferee charities, taken together, have purposes which are substantially similar to all of the purposes of the transferor charity, and

(b) that each of the proposed transferee charities has purposes which are substantially similar to one or more of the purposes of the transferor charity.

(8) In the case of a transfer to which subsection (7) above applies, the resolution under section 74(2) must provide for the property comprised in the permanent endowment of the charity to be divided between the transferee charities in such a way as to take account of such guidance as may be given by the Commission for the purposes of this section.

(9) The requirement in section 74(11) shall apply in the case of every such transfer, and in complying with that requirement the charity trustees of a transferee charity must secure that the application of property transferred to the charity takes account of any such guidance.

(10) Any guidance given by the Commission for the purposes of this section may take such form and be given in such manner as the Commission considers appropriate.

(11) For the purposes of sections 74 and 74A above, any reference to any obligation imposed on the charity trustees by or under section 74 includes a reference to any obligation imposed on them by virtue of any of subsections (6) to (8) above.

(12) Section 74(14) applies for the purposes of this section as it applies for the purposes of section 74."

On Question, amendments agreed to.

Clause 41 [Power to replace purposes]:

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

moved Amendment No. 13:

Page 42, line 28, leave out "74A" and insert "74AA"

On Question, amendment agreed to.

Clause 43 [Power to spend capital]:

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 have to detain the House for a moment or two on this amendment. It deals with an issue I raised at Report stage but, having heard the arguments then put forward by both the Minister and the noble Lord, Lord Phillips—the noble Lord has an amendment in this group, which aims down the same alleyway as mine—I have returned to it on a narrowed basis. The amendment is concerned with Clause 43 and the power to spend capital. Clause 43 is the replacement for Section 75 of the Charities Act 1993.

Perhaps I may briefly summarise the background again. I remain concerned by the unsatisfactory and unclear position of what is known as "permanent endowment". Permanent endowment is defined in Section 96(3) of the Charities Act 1993 as follows:

"A charity shall be deemed for the purposes of this Act to have a permanent endowment unless all property held for the purposes of the charity may be expended for those purposes without distinction between capital and income, and in this Act, 'permanent endowment' means, in relation to any charity, property held subject to a restriction on its being expended for the purposes of the charity".

The result of this definition is that unless a donor specified that a gift was not to be regarded as permanently endowed, it would be so regarded. Gifts that may have been made centuries ago are therefore trussed up in a way that is probably quite at odds with the wishes of the now long dead original donor.

My amendment on Report sought to reverse this position by taking into permanent endowment only those gifts so specifically designated by the donor. The present position is that charities can be inhibited in maintaining their assets in their most effective form; for example, selling a small piece of land with planning permission and using the proceeds to enhance and improve the charity's other buildings will require the Charity Commission's consent. This may be given only the basis of a scheme of "recoupment", which requires the replacing of the fixed asset over a period of years.

To my commercial, but non-legal, eye—I am aware that the noble Lord, Lord Phillips, dislikes fudges—recoupment seems to be a classic fudge. Recoupment is normally carried out on a straight, pound for pound basis. This means that neither interest nor inflation is taken into account. So if recoupment is really meant to protect the alleged wishes of the original donor, it fails to do so. So why should we not be open and clear about it? Let us accept that proving a negative is extremely difficult and allow that, unless the donor expressly wished it, permanent endowment will not apply.

On Report, I tabled two amendments, the second of which was a redefinition of Clause 96(3) of the 1993 Act. On reflection, having re-read the debate of 18 October, I think that I was being overambitious. Amendment No. 14 is therefore a narrower amendment which would permit "land" to be included in "available endowment fund". That would be achieved by leaving out lines 17 to 19 of page 45 of the Bill.

I have heard it suggested that this amendment is unnecessary because when the land is sold it becomes cash and so no longer falls within the prohibition, but instead qualifies as "available endowment fund" under Clause 43(7)(a) and (b). If this is indeed the case, the whole clause must be without purpose. It must indeed be a farce.

In our earlier debate, the noble Lord, Lord Phillips, asked me three questions to which I owe him a formal reply. First, do I seek to apply this principle to charity law generally? Yes, I do. Secondly, he asked me to define and explain the issue of "intention". This is no longer relevant because I am not seeking to redefine "permanent endowment" any longer. Thirdly, he asked about the application of the new approach. Again, some of its force has been reduced by the narrower objective of the amendment, but I of course seek to reach back to solve the problem of donations made many years ago where no specific wish was expressed by the donor. Indeed, the noble Lord, Lord Phillips, and his colleagues in charity law are now well aware of this problem and so always ensure that present donors' views are made clear when the gift is made.

I conclude. It is generally accepted that the definition of "permanent endowment" in the 1993 Act is unduly restrictive, clumsy and unhelpful to charities. My amendment seeks to achieve clarity and to free charities from dependence on the inevitably capricious judgments that are made from time to time by the Charity Commission.

I do not wish to divide the House on my amendment unless I have to. I hope that the Minister will be able to reassure me by making a commitment to look further at this issue during the passage of the Bill in another place. At the very least, the Minister needs to put on record his expectation that the Charity Commission will act expeditiously and flexibly in this important area. 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, although my Amendment No. 15 is grouped with Amendment 14, it might be clearer to the House if the Minister were to reply to the amendment moved by the noble Lord, Lord Hodgson. If the Minister prefers that the pair be dealt with together, I will be content; but I wonder whether it will not be confusing things to have two different amendments—which are complex enough—being responded to on a single occasion. What does the Minister think?

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

My Lords, the Minister thinks it would be wise to deal with them both together, so that we can move business rather faster.

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

My Lords, that is irresistible reasoning. My amendment is directed at a situation where a charity has endowed property in the form of land—sometimes called in specie land—which is surplus to its requirements; or at least where the land could better be used by its being sold and invested in other land; or, more likely, sold and invested in buildings on the land.

The amendment in my name would, subject to its provisions, allow the trustees of the charity, without recourse to the Charity Commission, to go ahead with the sale—and to use the proceeds on a building which had an expected life of not less than 75 years, or on other land used for the purposes of the charity. Secondly, it would allow that to be done without the need for recoupment. The noble Lord, Lord Hodgson, put it well; there is a burden of recoupment, especially as it normally has to come out of the charity's income. Imagine a charity realising £1 million on the sale of some land which it was going to use for a building for its own purposes; there might then be a recoupment order which would so reduce the net income of the charity, year to year, as to make the whole venture impractical.

Amendment No. 15 therefore says that, if its conditions are to be complied with, then, first, the excluded endowment, as it is called,

"is surplus to . . . current and foreseeable needs"; secondly, that,

"the trustees are satisfied that the purposes of the charity could be carried out more effectively", if that excluded land were to be sold and the proceeds used for purchasing other land and erecting new buildings; thirdly and importantly, if it be the latter—that is to say, the funds are to be used for the building of premises—a qualified architect must certify that the expected life of the new buildings is,

"not less than 75 years".

Then, to bolt and bar the arrangement, because it is quite a radical departure from the current one, the Charity Commission, in looking at the resolution of the trustees importing the provisions of this amendment, would have to be satisfied,

"as to the wishes of the donor", and take those into account. It should also take into account,

"changes in the circumstances relating to the charity", since the making of the land that is being sold. Thirdly, it would have to have regard to,

"the spirit of the gift or gifts".

Provided it was satisfied on those three counts, there would be a more or less automatic endorsement of the resolution of the trustees to get on with the sale for the purposes mentioned.

I hope that the noble Lord, Lord Hodgson, will identify himself with my remarks. It seems to me to be an exception to the hitherto iron rule protecting endowment in the form of land. It is practical and it will speed the better use by charities of surplus land. It should therefore be encouraged by the Government. I hope that the amendment will commend itself to the Minister.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 8:45, 8 November 2005

My Lords, the effect of Amendment No. 14 would be that permanent endowment land held on trust to be used for the purposes of the charity would fall within the scope of the new power set out in Clause 43 to permit unincorporated charities to spend capital in certain circumstances. That, if I understand rightly, is the purpose of the amendment moved by the noble Lord, Lord Hodgson. It would facilitate the use of capital proceeds of sale of such land without the need for it to be recouped out of the future income of the charity. I believe that that is also the intention behind the amendment tabled by the noble Lord, Lord Phillips. He seeks, in the circumstances set out in his amendment, to permit the expenditure of proceeds of the sale of land in some cases. This would be when the land was held on trust, when it is stipulated that it is to be used for the purposes of the charity, and when the land is surplus to current foreseeable needs, when the purposes of the charity could be more effectively carried out and the proceeds used to purchase land or erect buildings which are to be used for the purposes of charity, and when the buildings are to be erected by a qualified architect who has certified that the proposed buildings have an expected life of not less than 75 years.

We do not believe it right to override that stipulation, when trusts on land which is held specifically set out that land is to be used for the purposes of the charity. That remains our position. Having said that, in recognition of some of the concerns that have been expressed, the commission has told me that it will carry out a fundamental review of its interpretation of the law on practice when it exercises its discretion whether to require recoupment. That review will also cover the principles governing the circumstances of recoupment in any particular case. In particular, the commission assures me that it will consider whether an apportionment of the value of sales proceeds between the value of the land and the value of the buildings, the latter only requiring recoupment, may be appropriate. It will also consider whether in the provision of substantial buildings lasting, say, over 75 years, and when the proceeds may be surplus to the charity's reasonable requirements, any recoupment may be necessary at all.

There may be other factors as well, but the commission has assured me that it will carry out a review, which it hopes to complete in the next few months. I believe that these matters are best dealt with by the commission on a case-by-case basis, given the different circumstances that apply to each charity that may be affected. It is not best dealt with by statutory intervention—and I think that the noble Lord, Lord Hodgson probably agrees with that from the hint that he gave in his earlier comments on what he expected out of our discussion of these amendments.

I reassure the House that the commission has recognised the issue and will review it. I hope that, having heard that, the noble Lords will feel able to withdraw, or not move, their valuable amendments—valuable because they focus on a genuine issue—and that we can proceed in that way, as it would be a more constructive approach.

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, who remains courteous as ever at the end of a very long session on this Bill. The only thing that I disagreed with was his assumption that the amendments were intended to break permanent endowment. We are saying that when it is not made clear by the original donor it will be assumed that he or she did not want permanent endowment, as opposed to the other way round. We are not trying to undermine the position, and I do not believe that the noble Lord, Lord Phillips, is trying to do that either. All we are saying is, "Back then, they didn't know what they were saying, so can we give some flexibility so that the charity can go forward?" That is what I believe is important—that we ensure that the Charity Commission does not truss up these charities because someone in 1800 did not say, "I am prepared to allow this to be used widely for the general benefit of the charity that I am trying to establish". That was all that we were trying to get at.

The Minister has gone a good way—two-thirds of the way; it is two rather than three cheers for the Minister on this one. In the light of what the Minister has said, I hope that we can pick this up and have another go at it in the other place. In the mean time, 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

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

Page 47, line 19, at end insert—

"( ) This section is without prejudice to section 75ZB.

75ZB POWER TO SPEND CAPITAL WHICH CONSISTS OF EXCLUDED ENDOWMENT

(1) This section applies to any excluded endowment of a charity which cannot be spent under the provisions of section 75A and "excluded endowment" means land held on trusts which stipulate that it is to be used for the purposes, or any particular purposes, of the charity.

(2) Where the conditions in subsection (3) below are met, the charity trustees may resolve for the purposes of this section that the excluded endowment, or part of it, ought to be sold and be freed from—

(a) the restrictions with respect to expenditure of capital; and

(b) any restrictions with respect to the use to which the land must be put; that apply to it so that the proceeds of sale may be used to purchase land or erect buildings (or both) to be used to further the purposes, or any particular purpose, of the charity.

(3) The conditions referred to in subsection (2) are that—

(a) the charity trustees are satisfied that the excluded endowment (or part thereof) which they propose to sell is surplus to the current and forseeable needs of the charity;

(b) the charity trustees are satisfied that the purposes of the charity could be carried out more effectively if the excluded endowment, or the relevant portion thereof, were sold and the proceeds applied in purchasing land or erecting buildings (or both) to be used for the purposes, or any particular purpose, of the charity; and

(c) that, where the charity trustees propose using the proceeds of sale of the expendable endowment (or part thereof) to erect a building, the charity trustees have obtained a certificate from a qualified architect that the proposed building has an expected life of not less than 75 years.

(4) The charity trustees—

(a) must send a copy of any resolution under subsection (2) to the Commission, together with a statement of their reasons for passing it and a certified copy of the statement referred to in subsection (3)(c) above; and (b) may not implement the resolution except in accordance with the following provisions of this section.

(5) Subsections (6) and (7) of section 75A apply to this section.

(6) When considering whether to concur with the resolution, the Commission must take into account—

(a) any evidence available to it as to the wishes of the donor or donors mentioned in section 75A(1)(a),

(b) any changes in the circumstances relating to the charity since the making of the gift or gifts (including, in particular, the needs of its beneficiaries, and the social, economic and legal environment in which it operates),

(c) the spirit of the gift or gifts mentioned in section 75A(1)(a) (even though a sale would be inconsistent with the restrictions imposed upon the gift or gifts).

(7) Before the end of the period of three months beginning with the relevant date, the Commission must notify the charity trustees in writing either—

(a) that the Commission concurs with the resolution, or

(b) that it does not concur with it.

(8) In subsection (7) above, "the relevant date" means—

(a) in a case where the Commission directs the charity trustees under subsection 75A(6) (as applied to this section) to give public notice of the resolution, the date when that notice is given, and

(b) in any other case, the date on which the Commission receives the copy of the resolution in accordance with subsection (4) above.

(9) Where—

(a) the charity trustees are notified by the Commission that it concurs with the resolution, or

(b) the period of three months mentioned in subsection (7) above has elapsed without the Commission notifying them that it does not concur with the resolution, the excluded endowment (or portion) may, by virtue of this section, be sold and expended in carrying out the purposes, or any particular purpose, set out in the resolution mentioned in subsection (2).

(10) In this section—

(a) "qualified architect" means an individual registered with the Architects Registration Board; and

(b) references to the erection of buildings includes any expenditure reasonably necessary to equip such buildings for the purposes of the charity."

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 respond briefly to the Minister. I am grateful for the movement that his reply represented. I would be grateful if he would respond to this, however briefly. He said that the Charity Commission was undertaking a review of all this, and that it thought there might be a possibility of changing its own policy with regard to permanent endowment, which would be along the lines of the amendment. My concern is that if it comes to the conclusion that it does not have that flexibility or that power, unless it acts speedily we will have lost the chance to put the law right in the other place. It seemed to me that the Minister endorsed the overall objective of both my amendment and that of the noble Lord, Lord Hodgson. I wonder, therefore, whether he can give us any reassurance that if the inquiries prove to be negative we can have a joint essay down the other end to make the Bill that much better.

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

My Lords, I would like to be able to say, "Yes, of course we can do that", but the noble Lord is asking for something I cannot deliver, and I think he knows that. I said that this is best dealt with not in the legislative straitjacket that can sometimes be created but by way of an internal commission review. I am sure the noble Lords, Lord Phillips and Lord Hodgson, will want to make some representations to the commission on what they both consider to be important issues. My understanding is that the commission will be flexible in the way it responds. It understands the point the noble Lord, Lord Hodgson, made about charities being "trussed up". We have gone a long way on this, but I cannot give that assurance. It would be quite wrong of me to do so, and I think the noble Lord understands that.

Amendment No. 15 not moved.

Clause 44 [Merger of charities]:

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

moved Amendment No. 16:

Page 48, line 31, leave out "and (7)" and insert "to (7A)"

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

My Lords, in moving Amendment No. 16, I shall also speak to Amendments Nos. 24 to 32, which are grouped with it. These amendments fulfil the undertaking I think I gave the noble Lord, Lord Phillips, on Report on 18 October, to consider in consultation with him a number of concerns he had about the operation of the merger provisions in Clause 44. The noble Lord pointed out that the Bill, as drafted, contained measures that meant a merger in which a vesting declaration is used does not need to be notified to the commission. He argued that the vesting declaration was a novel and powerful piece of legal machinery, the use of which ought to be notified so that it would be registered by the commission.

We accept the argument, so one effect of these amendments, in particular Amendment No. 24, is to require notification to the commission of any merger in which a vesting declaration is used. That notification will then trigger registration of the merger by the commission.

I could go into more detail related to the amendments, but I am not sure it is entirely necessary. I am sure both noble Lords will understand where we are trying to go with this. It reflects our earlier discussions and debates. 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. 17:

Page 48, line 33, leave out "whereby" and insert "in connection with which"

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

My Lords, in moving Amendment No. 17, I shall also speak to Amendments Nos. 18 to 23, which are grouped with it. Clause 44 is designed to make certain types of merger between charities easier. It does so with two legal devices: one is the vesting declaration, to make the transfer of property from a transferor charity to a transferee charity easier, and the other is a device to ensure that gifts to a transferor charity that take effect on or after the date of registration of the merger belong automatically to the transferee charity, unless they are excluded gifts.

The Bill provides for the Charity Commission to keep a register of mergers. It allows for any relevant charity mergers to be notified to the commission and requires the commission to enter in the register every relevant charity merger that is notified to it. A relevant charity is defined in subsection (4) of new Section 75C which is inserted through Clause 44.

The noble Lord, Lord Phillips, identified at an earlier stage what he considered to be shortcomings in the relevant charity merger definition. It is these shortcomings that this group of amendments seeks to address. The effect of the amendments is to make it clearer than the existing words do that a relevant charity merger includes a merger in which the transferring charities have already gone out of existence on the transfer of their property to the merged charity and the merger in which the transferring charities are in future to go out of existence. In other words it clarifies that a merger in which a transferring charity or charities have transferred all their property and are intending to go out of existence but have not yet done so counts as a relevant charity merger and thus can be notified to and registered by the commission. 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. 18 to 23:

Page 48, line 35, after "exist" insert ", or is to cease to exist,"

Page 48, line 37, leave out "whereby" and insert "in connection with which"

Page 48, line 38, after "exist" insert ", or are to cease to exist,"

Page 48, line 41, leave out "that" and insert "which"

Page 48, line 42, after "property")" insert "and whose trusts do not contain provision for the termination of the charity"

Page 49, line 3, leave out "the" and insert "any"

On Question, amendments agreed to.

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

moved Amendments Nos. 24 to 32:

Page 49, line 9, at end insert—

"(6A) If a vesting declaration is made in connection with a relevant charity merger, a notification under subsection (3) above must be given in respect of the merger once the transfer, or the last of the transfers, mentioned in subsection (6) above has taken place."

Page 49, line 10, leave out "Such a notification" and insert "A notification under subsection (3) is to be given by the charity trustees of the transferee and"

Page 49, line 11, leave out "so involved" and insert "of property involved in the merger"

Page 49, line 12, leave out "and"

Page 49, line 15, at end insert "; and

"(c) in the case of a notification required by subsection (6A), set out the matters mentioned in subsection (7A).

(7A) The matters are—

(a) the fact that the vesting declaration in question has been made;

(b) the date when the declaration was made; and

(c) the date on which the vesting of title under the declaration took place by virtue of section 75D(2) below." .

Page 49, leave out lines 16 to 25 .

Page 49, leave out lines 26 and 27 and insert—

"( ) In this section and section 75CA—

(a) any reference to a transfer of property includes a transfer effected by a vesting declaration; and

(b) "vesting declaration" means a declaration to which section 75D(2) below applies."

Page 49, line 30, at end insert—

"75CA REGISTER OF CHARITY MERGERS: SUPPLEMENTARY

(1) Subsection (2) applies to the entry to be made in the register in respect of a relevant charity merger, as required by section 75C(3) above.

(2) The entry must—

(a) specify the date when the transfer or transfers of property involved in the merger took place,

(b) if a vesting declaration was made in connection with the merger, set out the matters mentioned in section 75C(7A) above, and

(c) contain such other particulars of the merger as the Commission thinks fit.

(3) The register shall be open to public inspection at all reasonable times.

(4) Where any information contained in the register is not in documentary form, subsection (3) above shall be construed as requiring the information to be available for public inspection in legible form at all reasonable times.

(5) In this section—

"the register" means the register of charity mergers;

"relevant charity merger" has the same meaning as in section 75C."

Page 49, line 35, leave out "contemplation of" and insert "connection with"

On Question, amendments agreed to.

Clause 75 [Pre-consolidation amendments]:

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

moved Amendment No. 33:

Page 77, line 24, after first "or" insert "other"

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

My Lords, this is a minor drafting amendment suggested to us by parliamentary counsel. It is a technical matter. I beg to move.

On Question, amendment agreed to.

Clause 76 [Interpretation]:

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

had given notice of his intention to move Amendment No. 34:

Page 78, line 3, leave out "the context of section 6(5) or 74(5)" and insert "sections 6(5), 74(5) and 75"

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

My Lords, my speaking note simply says, "Do not move this amendment". So I shall not do so.

[Amendment No. 34 not moved.]

Clause 78 [Short title and extent]:

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

moved Amendment No. 35:

Page 78, line 32, leave out "or repeal" and insert ", repeal or revocation"

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

My Lords, Schedule 9 sets out some repeals and revocations that we are making. One repeals an Act but revokes secondary legislation. Amendment No. 35 is a minor drafting amendment to Clause 78 suggested by parliamentary counsel. Clause 78 currently states that:

"Any amendment or repeal made by this Act has the same extent as the enactment to which it relates."

Since Schedule 9 includes both repeals and revocations, not just repeals, we need to amend Clause 78 to refer to both repeals and revocations.

Amendment No. 59 has also been suggested by counsel. Counsel has identified the need to amend the Intervention Board for Agricultural Produce (Abolition) Regulations 2001 as a consequential amendment to our earlier Amendment No. 107 to the Deregulation and Contracting Out Act 1994, which we debated on Report. That amendment was to enable certain functions of the Charity Commission to be contracted out where a Minister makes an order so providing. I beg to move this minor amendment.

On Question, amendment agreed to.

Schedule 4 [Appeals and applications to Charity Appeal Tribunal]:

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 9:00, 8 November 2005

moved Amendment No. 36:

Page 102, line 32, after "2005," insert—

"( ) any other enactment specified in regulations made by the Secretary of State,"

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

My Lords, this amendment is about the new schedule to the Bill—Schedule 1D. It allows the Charity Commission to refer matters to the Charity Appeal Tribunal which have arisen in connection with the exercise by the commission of any of its functions and involve the operation of charity law or the application of charity law to a particular state of affairs. The Attorney-General may refer to the tribunal matters which involve the operation of charity law or the application of charity law to a particular state of affairs.

There is a definition in the Bill of what "charity law" means in this context. It is any enactment contained in or made under the Act which this Bill will become, the Charities Act 1993 or any rule of law which relates to charities. The amendment allows the Secretary of State to specify additional enactments which come within the meaning of "charity law" for the purposes of references to the tribunal. We think that it is possible that it might become desirable for the tribunal to consider matters of charity law contained in enactments other than those contained in or made under the Act that this Bill will become and the 1993 Act. This power gives sufficient flexibility to enable the tribunal to grow and develop according to need and avoids the necessity of having a comprehensive list of enactments set out in the Bill. I beg to move.

On Question, amendment agreed to.

Schedule 6 [Group Accounts]:

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

moved Amendment No. 37:

Page 105, line 20, at end insert—

:TITLE3:"Accounting records

1A (1) The charity trustees—

(a) of a parent charity, or

(b) of any charity which is a subsidiary undertaking, must ensure that the accounting records kept in respect of the charity under section 41(1) of this Act not only comply with the requirements of that provision but also are such as to enable the charity trustees of the parent charity to ensure that, where any group accounts are prepared by them under paragraph 2(2), those accounts comply with the relevant requirements.

(2) If a parent charity has a subsidiary undertaking in relation to which the requirements of section 41(1) of this Act do not apply, the charity trustees of the parent charity must take reasonable steps to secure that the undertaking keeps such accounting records as to enable the trustees to ensure that, where any group accounts are prepared by them under paragraph 2(2), those accounts comply with the relevant requirements.

(3) In this paragraph "the relevant requirements" means the requirements of regulations under paragraph 2."

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

My Lords, this group of amendments introduces some refinements to the Bill's existing provisions on group accounts. The amendments achieve three things. First, they will ensure that, where group accounts are required to be prepared, the accounting records of the charities involved are sufficient to allow the group accounting requirements to be met.

Secondly, they will give the Home Secretary power to make regulations setting the income and asset thresholds above which the accounts of a charity group must be professionally audited. At present, the Bill prescribes specific income and asset thresholds—respectively at £500,000 and £2.8 million. Some concerns have been expressed about the relationship between the audit thresholds for group accounts and for single-entity accounts. The approach that this amendment adopts will allow us to give more thought to that relationship and to consult more widely on it. The noble Lord, Lord Hodgson, may have raised that point earlier.

Thirdly, these amendments will ensure that, where a parent charity is required to have its own accounts audited and is required to prepare group accounts, the accounts of the group must also be audited. 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 wish to ask the Minister a question about Amendment No. 38. It removes paragraphs (a) and (b), at the bottom of page 106 and the top of page 107, which set the aggregate gross income at £500,000 and tie that to an accounts threshold or an asset trigger of £2.8 million. As he mentioned, I have distaste for such multiple triggers, but they are at least on the face of the Bill. I am not clear from what he said whether the accounts threshold will disappear and we will have only a gross income figure and an asset figure, or whether the Government are just thinking about whether the threshold will disappear. If it is to disappear, I shall give three cheers, because that is one more threshold out of the way. If not, how will it make its reappearance? If I remember correctly from Committee, the accounts threshold is a Companies Act figure—nothing to do with charities regulation itself. A word of clarification would be helpful.

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

My Lords, I think that the noble Lord is correct on the last point—that is my recollection, too. Regarding his general question, we are at the thinking stage. To provide further clarity, I had better send the noble Lord a note about exactly what that means but, given his earlier comments, I think that he would welcome the amendment.

On Question, amendment agreed to.

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

moved Amendments Nos. 38 to 42:

Page 106, line 41, leave out from beginning to end of line 6 on page 107 and insert—

"(a) the aggregate gross income of the group in that year exceeds the relevant income threshold, or

(b) the aggregate gross income of the group in that year exceeds the relevant income threshold and at the end of the year the aggregate value of the assets of the group (before deduction of liabilities) exceeds the relevant assets threshold.

(1A) In sub-paragraph (1)—

(a) the reference in paragraph (a) or (b) to the relevant income threshold is a reference to the sum prescribed as the relevant income threshold for the purposes of that paragraph, and

(b) the reference in paragraph (b) to the relevant assets threshold is a reference to the sum prescribed as the relevant assets threshold for the purposes of that paragraph.

"Prescribed" means prescribed by regulations made by the Secretary of State."

Page 107, line 6, at end insert—

"(1B) This paragraph also applies where group accounts are prepared for a financial year of a parent charity under paragraph 2(2) and the appropriate audit provision applies in relation to the parent charity's own accounts for that year."

Page 107, line 8, after "charity" insert "by virtue of sub-paragraph (1) or (1B)"

Page 107, line 32, after "charity" insert "by virtue of sub-paragraph (1)"

Page 107, line 35, at beginning insert "In this paragraph"

On Question, amendments agreed to.

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

moved Amendment No. 43:

Page 110, line 19, after "the" insert "copy of the"

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

My Lords, these amendments remove an anomaly brought about by the existing law and I ought to put on record my debt to the Charity Commission for the suggestion.

Section 45 of the Charities Act 1993 requires all but the smallest registered charities to send their annual reports, their accounts and any report of an auditor or examiner to the Charity Commission each year. Section 46 of that Act also allows the commission to require some non-registered charities to send in these documents.

I understand that, in practice, a large number of charities send the commission copies of the documents that I have referred to. Strictly speaking that fails to comply with the statutory requirement, which is for the actual documentation—not copies of it—to be sent in. A further anomaly is that the existing law also requires trustees to preserve their annual accounts for six years, which of course they cannot do if they comply with the requirement to send them to the commission.

These amendments remove the requirement for charities to send in the originals of their documents and replace it with a requirement to send in copies. The amendments make the equivalent changes to the new group of accounts provisions. The amendments will also allow trustees to carry out their duty to preserve their annual accounts, since they will be retaining the originals while sending copies to the commission. Finally, they will require the trustees of a charity to preserve its annual report only if a copy of the report has not been required to be sent to the commission. 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. 44 to 46:

Page 110, line 20, after "both" insert "a copy of"

Page 110, line 38, after "the" insert "copy of the"

Page 110, line 38, at end insert "a copy of"

On Question, amendments agreed to.

Schedule 7 [Charitable incorporated organisations]:

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

moved Amendment No. 47:

Page 118, line 22, at end insert—

"69IA CONVERSION OF COMMUNITY INTEREST COMPANY

(1) The Secretary of State may by regulations make provision for the conversion of a community interest company into a CIO, and for the CIO's registration as a charity.

(2) The regulations may, in particular, apply, or apply with modifications specified in the regulations, or disapply, anything in sections 53 to 55 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 or in sections 69G to 69I above."

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

My Lords, a community interest company, or CIC, is the new type of company introduced by statute in 2004. A CIC cannot, as we have discussed before, have charitable status, but it must carry on its activities for the benefit of the community.

There would be no general objection to a CIC's seeking to become a charity. It may be, therefore, that some CICs would seek to become charities by converting to charitable incorporated organisation, or CIO, form. This amendment allows the Home Secretary to make regulations providing for CICs to convert directly to CIO form. 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, could I just search out a little truth from the Minister? Subsection (2) of Amendment No. 47 proposes that regulations in the Charities Act will, or could, disapply Sections 53 to 55 of the Companies (Audit, Investigations and Community Enterprise) Act 2004. Am I right in assuming that it is a sort of cross-referencing where we will pick into another Act and change or disapply it? If so, that is the sort of maddening thing that makes legislation very complicated and difficult for people to understand because they do not realise that they have to reach across to another Act to find out that it no longer applies because it has been changed in an Act with which there is no immediate connection between charities and the Companies Act 2004. Have I got it right or am I being unduly paranoid?

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

My Lords, any difficulty that might be experienced by a charity or a CIC or a CIO can be averted by providing charities in general with access to information about how this Act applies to other Acts. I have a feeling that at an earlier stage we discussed ways in which we could achieve some form of consolidation and I suspect that that may help as well. That is probably the answer to the noble Lord's point. It is incumbent on us to ensure that cross-referencing is easily understood and, as a general issue, I shall ensure that that is properly raised with the officials.

On Question, amendment agreed to.

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

moved Amendment No. 48:

Page 122, line 41, leave out "and registered societies" and insert ", registered societies and community interest companies"

On Question, amendment agreed to.

Schedule 8 [Minor and consequential amendments]:

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

moved Amendment No. 49:

Page 142, leave out lines 7 to 10 and insert—

""(8) The Comptroller and Auditor General shall send to the Commission a copy of the accounts as certified by him together with his report on them.

(9) The Commission shall publish and lay before Parliament a copy of the documents sent to it under subsection (8) above.""

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

My Lords, the Official Custodian for Charities is currently an officer of the Charity Commission who acts as holder of certain charity assets. For example, when in the course of an investigation the commission concludes that charity assets are at sufficient risk to warrant their removal from the trustees who hold them, the commission may transfer them to the Official Custodian.

The Official Custodian's accounts are examined and certified each year by the Comptroller and Auditor General. This minor amendment simply removes from the Comptroller and Auditor General and gives to the Charity Commission the task of laying the Official Custodian's accounts before Parliament. That is consistent with the Bill giving the commission the task of laying its own annual report before Parliament and, because of that, I think that this is an extremely good idea. 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. 50:

Page 147, line 19, at end insert—

"After section 19B (inserted by section 21 of this Act) insert—

"19C COPY OF ORDER UNDER SECTION 18, 18A, 19A OR 19B, AND COMMISSION'S REASONS, TO BE SENT TO CHARITY

(1) Where the Commission makes an order under section 18, 18A, 19A or 19B, it must send the documents mentioned in subsection (2) below—

(a) to the charity concerned (if a body corporate), or

(b) (if not) to each of the charity trustees.

(2) The documents are—

(a) a copy of the order, and

(b) a statement of the Commission's reasons for making it.

(3) The documents must be sent to the charity or charity trustees as soon as practicable after the making of the order.

(4) The Commission need not, however, comply with subsection (3) above in relation to the documents, or (as the case may be) the statement of its reasons, if it considers that to do so—

(a) would prejudice any inquiry or investigation, or

(b) would not be in the interests of the charity; but, once the Commission considers that this is no longer the case, it must send the documents, or (as the case may be) the statement, to the charity or charity trustees as soon as practicable.

(5) Nothing in this section requires any document to be sent to a person who cannot be found or who has no known address in the United Kingdom.

(6) Any documents required to be sent to a person under this section may be sent to, or otherwise served on, that person in the same way as an order made by the Commission under this Act could be served on him in accordance with section 91 below.""

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

My Lords, Amendment No. 50 is tabled in the name of my noble friend Lady Scotland. We have had several debates about the need to provide a copy of orders and the reasons for making orders in relation to particular protective powers of the commission. Most recently, we debated an amendment similar to this one on Report on 12 October. I think that it was Amendment No. 55, tabled by the noble Lord, Lord Phillips of Sudbury. During that debate, I said that the Government wanted to give the matter further thought and return with an amendment of their own covering the commission's protective powers under the Charities Act 1993.

It is the commission's usual practice to inform trustees why it has taken any significant action using its protective powers. The amendment will make that a statutory requirement, subject to certain safeguards. It will require the commission to provide the trustees—or the charity, if a corporate body—with a copy of the order where it exercises a protective power under Section 18 and new Sections 18A, 19A, and 19B of the Charities Act 1993. It will also require the commission to provide a statement of reasons for making the order. However, the commission would not need to comply with this requirement—or not comply with it in relation to the statement of reasons—while it considered that to do so either would prejudice any inquiry or investigation or would not be in the interests of the charity.

We are responding to an issue that was raised at an earlier stage by the noble Lord, Lord Phillips. I hope that noble Lords will welcome the amendment, and 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 grateful for these amendments. They are in much the same form as those that I moved previously, and I think that they will prove very important for all charities affected by the orders concerned.

On Question, amendment agreed to.

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

moved Amendments Nos. 51 to 57:

Page 152, line 42, after "year"," insert—

"( ) before "the annual report" insert "a copy of","

Page 153, line 3, at end insert—

"( ) before "the annual report" insert "a copy of","

Page 153, line 8, leave out sub-paragraph (5) and insert—

"(5) In subsection (4)—

(a) for "annual report transmitted to the Commissioners" substitute "copy of an annual report transmitted to the Commission", and

(b) before "the statement", and before "the account and statement", insert "a copy of".

(5A) In subsection (5) before "annual report" insert "copy of an"."

Page 153, line 9, at end insert—

"( ) after "Any" insert "copy of an","

Page 153, line 13, leave out sub-paragraph (7) and insert—

"(7) In subsection (7) for the words from "which they have not" onwards substitute "of which they have not been required to transmit a copy to the Commission.""

Page 153, line 41, leave out sub-paragraph (6) and insert—

"(6) For subsection (7) substitute—

"(7) The following provisions of section 45 above shall apply in relation to any report required to be prepared under subsection (5) above as if it were an annual report required to be prepared under subsection (1) of that section—

(a) subsection (3), with the omission of the words preceding "a copy of the annual report", and

(b) subsections (4) to (6).""

Page 154, leave out lines 2 and 3 and insert—

"(a) for "Any annual report or other document kept by the Commissioners" substitute "Any document kept by the Commission", and"

On Question, amendments agreed to.

Schedule 9 [Repeals and Revocation]:

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

moved Amendments Nos. 58 and 59:

Page 167, line 14, column 2, leave out "29(8)" and insert "29(7) and (8)"

Page 167, line 22, at end insert—

"Intervention Board for Agricultural Produce (Abolition) Regulations 2001 (S.I. 2001/3686) Regulation 6(11)(a)."

On Question, amendments agreed to.

An amendment (privilege) made.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Government Whip, Government Whip 9:15, 8 November 2005

My Lords, I beg to move that this Bill do now pass. I ought to put on record a few thanks. Prior to today's deliberations, we had debated the Bill for no fewer than 57 hours, so my guess is that we have topped 60 since it was first introduced in another place in December 2004.

I thank in particular the noble Lord, Lord Hodgson of Astley Abbotts, and the noble Lord, Lord Phillips of Sudbury, for one of the most thorough and constructive considerations of a piece of legislation I have ever had any connection with in your Lordships' House. Although he is not here, I thank the noble Lord, Lord Swinfen, for his persistent and telling approaches. I did not always agree with them, but he none the less did good service and stayed the course.

The noble Lord, Lord Sainsbury of Preston Candover, played an important part. The noble Lord, Lord Campbell-Savours, made an interesting series of interventions. I can even remember the noble Lord, Lord Wedderburn of Charlton, keeping us entertained for some hours in the early stages of Committee. At that stage, I almost gave up the will to live. I did not mean that, but I am sure noble Lords understand what I mean. Back-Benchers have played a commendably important role in the Bill, and I express my gratitude to them.

I also thank the charities that have become involved in the process. Their advice to Members from all parts of the House has been helpful. Some amendments would not otherwise have found their way on to the statute book without them. There are also one or two individuals who petitioned us for particular things, showed some powerful insight into the operation of the law and enabled us to make some constructive changes. Bodies that represent charities and their interests, particularly the Charity Law Association, are owed a debt of gratitude. I am most grateful to them for their rigorous critical thinking and sensitive, informed approach to the Bill.

Finally, I thank my colleagues in the Whips' Office for putting up with my grumpy nature and occasional ill humour as I have had to go through the Bill in great detail over such a long time. Of course, we all ought to thank the officials who have serviced these debates. The Bill team has been magnificent, and the collaborative work between it and the Charity Commission has enabled us to solve some problems that otherwise might not have reached a friendly and intelligent resolution. So, to all those parties, I say a big thanks. It has been a pleasure, and I hope that the Bill now finds favour in another place.

Moved, That the Bill do now pass.—(Lord Bassam of Brighton.)

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 for his kind words and endorse all the thanks that he proffered. It would be remiss, however, not to thank him. It has been a very heavy load—60 hours, as he says—and I think the Minister has been responsible for about 58 of those. I commend him and the noble Lord, Lord Hodgson of Astley Abbotts. Neither of them are lawyers.

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

My Lords, they should both be very relieved not to be lawyers. However, they have got their heads around the ineffable complexities of this legislation in a remarkable way. Without that commitment, I am sure, we would not have got to where we have in the manner in which we have.

I, too, give my personal thanks to the Bill team and the Charity Commission team. Both have been at all times open, helpful and ready to discuss and surmount many of the problems that we have faced along the way. My greatest gratitude to them. I also mention, en passant, NCVO, which has put a lot of work into this Bill; the Law Society; and one must not forget, although one might, the Association of Charitable Trusts, which has been dogged, if ever that word had meaning; and particularly Judith Hill at the Charity Law Association, who has been the generalissimo of its terrific efforts.

I thank the Minister again for what he said and all Members of the House for making this a model consideration of a difficult measure.

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 add my sincere thanks to the Minister for all that he has done and for his patience. It seems a long time since we started. The Second Reading of the Bill in its original form was on Thursday 20 January, so I am not surprised that there have been 60 hours of debate. I thank the noble Lord, Lord Phillips, who kept me on the straight and narrow from a legal point of view. I also thank the Bill team and the Charity Commission. I felt that we would never get to a position where there were fewer than 100 amendments on the Marshalled List. We got down to 59 today, which was a big advance.

Those of us who want to keep legislation short should remember that we have managed to expand the Bill from 72 to 78 clauses and from 129 to 172 pages. That is the result of our efforts, so we have not been as good at holding down the size of the legislation, but I am sure that, thanks to the work of the Minister, the Bill team, Members of the House and outside advisers, the Bill is a very much better piece of legislation. As we wave the Bill goodbye, I express the hope, in the nicest possible way, that we never have to see it again.

On Question, Bill passed, and sent to the Commons.

House adjourned at twenty-two minutes past nine o'clock.