Lord Parkinson of Whitley Bay:

Moved by Lord Parkinson of Whitley Bay

1: Clause 12, page 13, line 37, at end insert—“(4) In section 348 (regulations subject to affirmative procedure etc)—(a) in subsection (1), after paragraph (c) insert—“(d) regulations under section 285(3) (power to amend period or multiplier specified);”;(b) in subsection (2), for “or (c)” substitute “, (c), (d)”.”Member’s explanatory statementThis Amendment provides for the power to make regulations added by Clause 12 to be subject to affirmative resolution procedure.

My Lords, I rise to speak to Amendment 1 in my name. As this was a Law Commission Bill, scrutinised through the Special Public Bill process, I thank the noble Lords who sat on the Special Public Bill Committee which examined it, chaired ably by the noble and learned Lord, Lord Etherton. It consisted of my noble friends Lord Cruddas, Lord Bellingham, Baroness Fullbrook and Lord Sharpe of Epsom, the noble Lord, Lord Ponsonby of Shulbrede, and the noble Baronesses, Lady Goudie and Lady Barker, and was ably assisted by our clerk, Alasdair Love. I thank them and all those who gave evidence to the committee.

Amendment 1 responds to an amendment tabled by the noble and learned Lord, Lord Etherton, in Committee. I am grateful to him for his suggested amendment, and for the time that I have had to consider the policy behind it. The Government accept that the two thresholds in Clause 12—to vary the proportion of permanent endowment which may be borrowed, and the period over which such borrowing must be repaid—are of a different nature from the other financial thresholds contained in the Bill. Those other financial thresholds are concerned with monetary sums. They set the level at which it is appropriate for trustees to make their decision independently, or for the Charity Commission to oversee that decision. We maintain that in relation to the powers to vary those financial thresholds, and thus change where that balance is to be struck, the negative resolution procedure provides a proportionate level of parliamentary scrutiny.

However, Clause 12 does not indicate where regulatory Intervention is required in the same way. It does not set out monetary sums. Instead, it places a percentage limit on how much a charity can borrow from its permanent endowment and specifies the period over which such borrowing must be repaid. Therefore, any variation of these thresholds has a slightly different implication. The financial thresholds elsewhere in the Bill can be adjusted to reflect changes in the value of money. By contrast, any amendment of the Clause 12 thresholds would not be about changes in the value of money.

We have carefully considered the various arguments regarding the right level of parliamentary scrutiny in relation to these powers, including the fifth report of the Delegated Powers and Regulatory Reform Committee of your Lordships’ House. We have been persuaded that it is appropriate for an additional level of parliamentary scrutiny to be put in place for any future changes made to the thresholds in Clause 12. Amendment 1 would therefore require any variation of the maximum proportion of permanent endowment from which a charity may borrow, and the period over which any such borrowing must be repaid, to be subject to the affirmative resolution procedure rather than the negative procedure. We consider that this amendment will help to maintain the balance between protecting donors’ funds and wishes and providing flexibility for trustees to make the best use of opportunities to fulfil their charitable purposes.

As a result of this change to Clause 12, it is also necessary to make consequential amendments to Clause 39 of the Bill. I will briefly explain these amendments. Amendment 1 inserts subsection (1)(d) into Section 348 of the Charities Act 2011 to confirm that any amendment to the delegated powers in Clause 12 is subject to the affirmative resolution procedure. Later in the Bill, Clause 39 makes other amendments to Section 348 of the Charities Act 2011. The Clause 12 amendment to Section 348 means that the wording in Clause 39 needs to be rearranged. Amendments 5, 6 and 7 are consequential amendments to change references to subsections in Section 348 to accommodate Amendment 1. I beg to move.

My Lords, we support these government amendments. The Minister has explained them very clearly. I have nothing to add. He is just following up on recommendations in the fifth report of the Delegated Powers and Regulatory Reform Committee.

Amendment 1 agreed.