Lord Hodgson of Astley Abbotts:

Moved by Lord Hodgson of Astley Abbotts

2: After Clause 36, insert the following new Clause—“References to the Tribunal(1) In section 325 of the Charities Act 2011, in subsection (2), for “with the consent of the Attorney General” substitute “where the Commission has given the Attorney General 28 days’ notice of its intention to make such a reference”.(2) In section 326 of the Charities Act 2011, in subsection (1), at the end insert “provided the Attorney General has given the Commission 28 days’ notice of his or her intention to make such a reference”.”Member’s explanatory statementThis amendment implements the Law Commission’s recommendations that the Charity Commission should not be required to obtain the consent of the Attorney General before making a reference to the Tribunal and vice versa.

My Lords, the hour is late—later than any of us would wish it to be. In the famous phrase of Mr Jeremy Clarkson, it is time to put the pedal to the metal. Before I do, I thank the noble Lord, Lord Stevenson of Balmacara, and the noble Baroness, Lady Barker, for their putting their names to this amendment. The noble Baroness has tested positive for Covid and cannot be here tonight. I am sure that I speak for the whole House in wishing her a very speedy recovery.

The only other preliminary remark I wish to make is addressed to the Minister, who has struggled mightily to find a way through this particular problem. However, I am afraid that he has been impaled—as I have—on what I can only describe as the obduracy and inflexibility of the Attorney-General’s Office. With that—to horse!

When I undertook the review of the Charities Act for the Government 10 years ago, it was brought home to me that there was a fundamental flaw at the top of the regulatory structure. This comes about because under Section 325 of that Act, the Charity Commission, the sector’s regulator, cannot—and I mean cannot—approach the charity tribunal for a ruling on a point of law unless it has first obtained the permission of the Attorney-General. This has a number of serious consequences, which were brought out to me in evidence I gathered for my review.

First, there is not a clear chain of responsibility and command: an important issue in regulating a sector as diverse as the charity sector. Secondly, this divergence of control can undermine the authority of the commission and prevent it obtaining clarity in the development of charity law. Thirdly, and most unattractively, there is a possibility that rich, powerful and well-connected charities will think it possible to take on the commission in the hope that the Attorney-General will provide cover for them later. Those were the points made in favour of sorting this out.

However, there was a contrary point, which was that the commission should not be permitted to go running off to the tribunal too frequently. Therefore, when I made my recommendation, I said that while the veto of the Attorney-General should go, the Charity Commission had to inform the Attorney-General and join the Attorney-General in any case it wished to take to the tribunal. Therefore the veto went, but in no way could the Attorney-General be blindsided.

Although my report was well received by the Government and by the sector, this recommendation was rejected. However, the Government passed the report to the Law Commission and asked it to consult on whether it could form the basis of a Bill. The Law Commission did so and produced a report, and the Bill tonight is largely the result of that consultation. The Law Commission also produced a report, and in recommendation 43 of that report it supported the conclusion that I had reached. It produced—very much more elegantly—wording to cover this particular point, and it is that wording which forms the basis of Amendment 2 tonight. It is not my wording—it is the Law Commission’s wording.

However, the Government again rejected the Law Commission’s recommendation. What were the reasons for the Government not to accept its recommendation? First, they said that the Attorney-General’s consent was

“an important element in the system”— but they did not say quite how it was important. The second argument is that the Attorney-General’s consent assists him in fulfilling his duties to protect charitable interests. I would argue that the Attorney-General has a role in protecting all the law, including charity law, but that if he intervenes in charitable law, this unilateral power may serve not to protect charity law but to risk confusing it.

The final plank of the Government’s argument is that this is very rarely used—it has been used only three times—and therefore it does not really matter about the Attorney-General because it is such a rare occurrence. The reality is that a matter that gets to the Charity Tribunal must be one of the most sensitive, important and critical issues of charity law, and therefore the role of the Attorney-General remains highly relevant. So I ask the House to hold in its mind briefly the basis for my in-principle objection to this. I now turn to how this power has been used in practice.

One of the first references was about private schools. The House will readily understand the difficulties that surround charitable status, public benefit and fee paying. It was always rumoured, and has now been confirmed, that in this case the Attorney-General asked the Charity Commission if there were any questions that it wished to be asked at the tribunal. The commission sent in a list of questions but, extraordinarily, the Attorney-General did not ensure that all these were asked. I ask myself whether this is a way that the Attorney-General is showing proper support for the charity regulator and helping to obtain clarity in charity law.

The second case is that of the Royal Albert Hall. It is one of our great public institutions and home to many important events in our cultural and other calendar, such as the last night of the Proms and the Festival of Remembrance, familiar to all Members of your Lordships’ House. It is a charity built by subscription in Victorian times. The subscribers received, in response to their money, seats in perpetuity to concerts in the hall. Since clearly not every subscriber will want to go to every concert every night, they arranged a system for the seats to be resold through the Royal Albert Hall box office with a 10% handling charge—face value less 10%. That is known as the TRS or ticket return scheme.

A few years ago, the seat-holders decided that there was a more profitable way of doing this and that they could sell their seats not through the Royal Albert Hall box office but through third-party websites. In Committee, I explained that tickets for an Eric Clapton concert in May 2022 with a face value of £175 were selling for £1,185. If your taste is for the Beach Boys, a ticket for the concert on 24 June next year with a face value of £85 is selling tonight on viagogo for £185. And so on.

As a result, this has become pretty profitable. It is alleged that pre-pandemic—I will come back to the pandemic in a minute—seats were earning between £10,000 and £20,000 a year and changing hands for £150,000 each. I need to make it very clear that I have no objection to seat-holders seeking to make the best use of their private property. The right to enjoy private property is a cornerstone of a civil society. Seat-holders take a risk when they buy their seats. I do not suppose that being a seat-holder in the Albert Hall in the last couple of years has been particularly profitable, although I have to tell that House that the hall did get a £20 million repayable loan from the Culture Recovery Fund which will have helped it deal with the short-term liquidity problems.

However, as I said a moment ago, the Royal Albert Hall is a charity and is governed by a board of trustees. There are 25 of them and 19 are elected by the seat-holders—so 75% of the governing body that decides ultimately which seats should be reserved for seat-holders, and which should be let go, are seat-holders themselves. There must be a concern that the more profitable events will be reserved for seat-holders and the less attractive ones handed back. It was on this very narrow point that the Charity Commission approached the Attorney-General for permission to go to a tribunal. It was not that you should not be able to be a seat-holder but that, if you were a seat-holder and a trustee, there was at least a possibility of a conflict of interest which should be decided by the tribunal.

The original application on this was made over four years ago in August 2017. During the intervening period, at six-monthly intervals, I have probed with Parliamentary Questions to no avail. That is how it lasted until Second Reading in the summer, when I drew attention to this issue and subsequently tabled this amendment. Then, quite suddenly, the walls of Jericho fell down. The Attorney-General made up her mind—only she did not. She made up her mind not to make up her mind. She decided to refuse the Charity Commission permission to go to the tribunal, and did so on the sole grounds that it “would not be in the public interest”; no more, no less. So, after four years, she kicked the legs from under the Charity Commission and gave no reason for so doing. That is an extraordinary situation for the Charity Commission—the sector regulator—to find itself in.

It has been suggested to me that, in pursuing this matter tonight, I may undermine the position of the Law Commission and bring its legalistic procedure into disrepute—first, on the grounds that Law Commission Bills are not amended. Well, they are amended; I served on a Law Commission Bill—an insurance Bill—when the noble Lord, Lord Eatwell, who is not in his place tonight, moved and carried an amendment. Secondly, there are the grounds that new material should not be introduced to the Bill. My amendment is not new material; it is a Law Commission amendment in a Law Commission Bill, word for word what the Law Commission suggested.

Thirdly, it was suggested to me that I should not have been surprised that the Attorney-General would give no reason for her decision beyond “not in the public interest” because law officers never give details of their advice. There are a number of very noble and learned Lords in the House tonight. I understand that, had it been advice, it would of course have been covered by privilege—but it was not advice, it was intervention. She chose to intervene in this case; if she chooses to intervene in the way that the charity sector is regulated, she owes to the regulator, the sector and, indeed, society an explanation of the reasons for her decision. The Law Commission’s work and procedures have a deservedly high reputation in modernising and clarifying our law. If the action of one Back-Bench Committee Peer should cause the Government to throw out and abandon the whole procedure, then matters have reached a pretty pass.

But enough of this—to summarise: the present position as regards the relationship between the Attorney-General and the Charity Commission is wrong in principle, and has proved flawed in practice. The change that I put before the House tonight is supported overwhelmingly by the sector, by trade bodies such as the NCVO and by academic opinion. With due deference to my noble friend on the Front Bench, the government arguments against this change are threadbare. I beg to move.

My Lords, I support this amendment. In view of the hour, as well as the great clarity of the explanation given by the noble Lord, Lord Hodgson, in moving it, I can be brief. The Charity Commission is an expert body. It is perfectly placed to form its own view on all the matters identified in Section 325(1)(a) and (b) of the Charities Act 2011. The curiosity is that, notwithstanding that rather basic fact, Section 325(2) permits the commission to make a reference to the tribunal on these matters, or any of them, only with the consent of the Attorney-General.

I have two points. First, it seems to me rather wasteful for the Attorney-General, in effect, to have oversight—indeed control—over the decision-making of another expert body. That is especially the case here because the subject matter of Section 325 is very far removed from the traditional territory that we associate with the office of the Attorney-General—the criminal-law side of which will be familiar to all Members of your Lordships’ House. Secondly, I find it surprising that the Attorney-General should wish to retain this power at the margin of the regular diet of the office. One might imagine that the Attorney-General has many other very important matters to be thinking about, without the need to second-guess the deliberations of the commission.

My Lords, I am very pleased to follow the noble Lord, Lord Grabiner, in supporting the noble Lord, Lord Hodgson. I have played no part in the Bill, but, when I saw the amendment and the background to it, I thought that it was worth supporting at whatever time, as it were. I am not bothered about what time it is; if we worried about the time, we would never get any legislation done.

I am not a lawyer, and it is almost 50 years since I was a PPS in the law officers’ department. I remember that, when I went there, it was explained to me what law officers did and did not do and how they were different from other Ministers. In this case, it seems to me—again, as a non-lawyer—that the Attorney-General is operating as a supervising Minister, not a law officer. That is a completely different function.

I have not checked, but, if I remember rightly, the Charity Commission is nominally still a department. It is not some quango that is too big or a body that is of no significance; it is one of, I think, 21 non-ministerial departments. I do not know how many other regulators that we think are doing their job on behalf of the public and Parliament are actually hemmed in by this kind of power. Twice I have put forward proposals for a Select Committee on regulators, because no one looks at regulators systematically in Parliament to check that what they do is what is says on the tin and to see what the difficulties are. We wait for the odd scandal to come, and then there is a Select Committee—that is not good enough.

With this one, the fact of the matter is that the Attorney-General is not, and cannot operate as, a law officer. It is the role of a supervisor. I have been in six government departments: I know the difference between a Minister supervising an external body, developing its own policy, and coming up against the law officers. There is a difference, and in this case it is absolutely clear that the Attorney-General is not operating in the formal structure as a law officer.

If it is the Law Commission, we are used to hearing the other place say, “Oh, don’t bother about that. It’ll get nodded through. We can trust it. It’ll have done all the homework”. You do not do the time, simply because that is what the Law Commission is there to do. I cannot see any damage to it from this. This is a Law Commission Bill, and, as the noble Lord, Lord Hodgson, said, he has used its report to construct the amendment. There has got to be a better reason. It is no good the Attorney-General hiding behind the law officer role when she is not performing that role. That bears some scrutiny, but of course we cannot do that in this place; it will require someone in the other place.

My final point is on the regulators, which we have to trust. There are a lot of regulatory bodies. The top 20 or 30 regulators look after billions of pounds of other bodies’ expenditure. Parliament delegates that role to those regulators.

The Charity Commission is a regulator; it is an awkward one, in the sense that the uniformity of charities is crazy. There are some 180,000 charities and the top 2% or so are probably dealing with half the money—there are loads of tiny charities which do not get a look in. When you get something such as the example of the Royal Albert Hall, raised by the noble Lord, Lord Hodgson, and which I am aware of from previous debates, you cannot ignore it. It is not right for Parliament or the regulator to ignore that—it is a failure of public duty. Therefore, the Minister will need to have better reasons than those given in the past for opposing this.

It is actually quite easy as a Minister at the Dispatch Box when you have an open and shut case such as this. I fully admit that I did it only twice in eight years when I was on that Bench in this House, but you can report back to the boss in the department: “Well, they were all against me; we were going to lose; it uses Government time; it was easier to accept the amendment because it was overwhelmingly agreed to”. You can do that, and if they are cheesed off with it, they can alter it down in the other place, because it is an open and shut case. So I invite the Minister to try it out; it can work. You can accept an amendment at the Dispatch Box on the strength of the debate and survive as a Minister, and the amendment can strengthen the Bill. That is what we are here to do.

My Lords, we on the Liberal Democrat Benches fully support this amendment in the name of the noble Lord, Lord Hodgson. When I heard the story of the Albert Hall that he outlined, there was only one thing I could say: “Land of Hope and Glory”. It seems to me that there is no justification for the way in which the Attorney-General acted in this case, without giving any proper reason. I did a bit of research to see what the published response of the Government was to the report of the Law Commission. No satisfactory reason for the need for the consent of the Attorney-General was given.

Because of the time, I will not delay your Lordships any longer, but it seems that the noble Lord, Lord Hodgson, should be congratulated, not only on this amendment but on all the work that he has done in this field and the report that he brought forward.

My Lords, the view of the Labour Party, the official Opposition, is that we will abstain if this amendment is put to a Division.

I heard the speeches of the noble Lord, Lord Hodgson, at Second Reading, in Committee and on Report. He makes a very strong case, which he has made again today. As my noble friend Lord Rooker said, the traditional way that both Houses deal with Law Commission Bills is to essentially nod them through. That was, and is, the agreement between the usual channels regarding this Bill as well. However, the best that I can do for the noble Lord, Lord Hodgson, is to abstain, because there is merit in the underlying preceding agreement which the usual channels have had. That is the reason I take a different view from the noble Lord, Lord Thomas, who has expressed his support for the amendment.

We on these Benches will be abstaining. I will leave it to the Minister to make his own case.

I thank my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment and for outlining the case again. Before I respond to it, I certainly associate myself with the comments of the noble Lord, Lord Thomas of Gresford, that my noble friend should be congratulated on all his work in this field. The Bill we are debating tonight is in very large part the result of his long-standing interest and considerable work in reviewing charity law.

On this issue, we have from the outset been at odds: where my noble friend sees obduracy, I see consistency. The noble Lord, Lord Rooker, is absolutely right: we can amend these Bills, even in the Law Commission procedure—we have just made some amendments in the previous group—but what is important is that we proceed on the basis of consensus and avoid areas of political disagreement. On this, the Government have been clear from the outset that we were not minded to accept the single recommendation from the Law Commission; and my noble friend has been equally consistent that he thought it was an important one. But we have made clear throughout the passage of the Bill our position on the role of the Attorney-General and the value placed on the Attorney-General’s oversight of references to the tribunal.

With respect to the noble Lord, Lord Rooker, and his advice that I take this away: I have taken it away and discussed it with the Attorney-General and her office on numerous occasions through the passage of the Bill so far, and I have had some helpful discussions with my noble friend, the noble and learned Lord, Lord Etherton, who is the chairman of the Special Public Bill Committee, and others, but our position remains as my noble friend Lord Hodgson knows it. Let me explain why that is.

Section 326 of the Charities Act 2011 provides the Attorney-General with the power to refer to the Charity Tribunal any question involving

“the operation of charity law in any respect, or … the application of charity law to a particular state of affairs.”

The Charity Commission has an equivalent power to make a reference to the tribunal where the question has arisen in connection with the exercise by the commission of any of its functions, but only with the consent of the Attorney-General under Section 325(3). These rights were considered by Parliament during the passage of the Charities Act 2006, which now appear in the consolidated 2011 Act, and it was agreed that this provision was necessary. The Attorney-General has an historic duty, on behalf of the Crown, to protect charitable interests in England and Wales. The Attorney-General’s consent for references to the charity tribunal is an important element in the system of checks and balances which should not be removed.

My noble friend says the Government have not made clear what specifically the Attorney-General’s role is. It is part of the Attorney-General’s role to assess whether a referral to the tribunal is in the interests of the public. This oversight also provides a second pair of eyes in ensuring that the costs associated with such a referral are not put on charities or on the public unnecessarily. So the Attorney-General works alongside the Charity Commission and provides a second opinion on referrals to the tribunal.

While this particular consent function is narrowly drawn, it is only one tool in a wider portfolio for performing her constitutional role as defender of charitable interests in the wider public interest. The Attorney-General’s wider role means that she has a unique perspective and is able to take into account considerations of societal issues and the wider repercussions for charities. In recent years, we have had Attorneys-General in both your Lordships’ House and another place. As such, the Attorney-General’s oversight reaches beyond charity law and regulation.

It should be remembered that the reference procedure is a unique declaratory power which enables the Charity Commission and the Attorney-General to seek rulings on what might be hypothetical questions. Outside this procedure, hypothetical questions are rarely entertained by the courts, for good reason. It is therefore right and proper that a public interest consideration is applied in the exercise of this unusual procedure. The value of the Attorney-General’s unique perspective has been recognised and commented on by the courts.

With this in mind, the Government oppose my noble friend’s Amendment 2, which would do away with the Attorney-General’s consent function altogether. We believe that by removing this mechanism completely, an important part of the Attorney-General’s oversight of charity law would be lost. So my noble friend will not be surprised to hear me say again that I am afraid we still disagree on this issue, as we did at the outset, and I would hope that he may yet withdraw his amendment.

It is important to note how rare these cases are. The Charity Commission and the Attorney-General have worked together on two references that the Attorney-General has made to the tribunal since the 2006 provisions were put in place, and there has been only one reference that the Charity Commission has sought the Attorney-General’s consent to pursue, which the Attorney-General, as my noble friend outlined, refused to give earlier this year. That is the context we find ourselves in for this debate.

Is it not the case that, if the amendment were to pass, the Attorney-General would have the power to intervene at any stage in the public interest if the public interest became involved? I do not see why she has to give her consent before the reference to the tribunal can be made.

That consent function, my Lords, is something the Government consider important; it is part of the assessment of whether it is in the public interest for the reference to the tribunal to begin, with all the costs and time that it would involve. That is part of the reason why the Government cannot accept my noble friend’s amendment.

While supporting the Attorney-General’s role, we are also aware of concerns raised by noble Lords regarding the time taken for the Attorney-General to make a decision on whether to grant consent in the particular case to which my noble friend referred. His amendment is grouped with Amendment 4 in the name of the noble and learned Lord, Lord Etherton, which provides that the Attorney-General must make her decision on an application for a reference to the tribunal within 60 days, otherwise consent would be deemed to be given. His amendment also requires that the Attorney-General publish a comprehensive statement explaining the reasons for any refusal of consent.

Regrettably, however, the noble and learned Lord’s amendment does not acknowledge that there may be good reasons beyond the Attorney-General’s control that require additional time in her decision-making. There may be times, for instance, when a case requires further information to be submitted, either by an individual charity or the Charity Commission, to enable the Attorney-General to make a fully informed decision. There may be mediation under way between parties involved which needs to conclude before a decision can be made, or a case could be particularly complex and require further investigation and deliberation. Given how complex these rare cases normally are, a strict 60-day time limit following which consent is automatically given would amount to the effective removal of the Attorney-General’s consent function by the back door. I have outlined the reasons why we do not agree that the consent function should be removed. Doing it in that way would also be inappropriate.

It is regrettable that a decision on whether to grant consent to a reference in the case involving the Royal Albert Hall took so long, but one complex case does not justify a change in the law. I thank once again my noble friend Lord Hodgson and the noble and learned Lord, Lord Etherton, for his Amendment 4.

I just want to be clear about this. I fully take on board the point that it is one case, but the Attorney-General is in a different position to other Ministers. With other Ministers, we can get access to their diaries, what meetings they have had, so we can see who has lobbied them. How do we know who, if anybody, lobbied the Attorney-General during that period of nearly four years? How do we know that, with the Attorney-General being unlike other Ministers?

My Lords, the Attorney-General is a Member of Parliament. Previously, they have been Members of your Lordships’ House; the current Attorney-General is a Member of another place. She is therefore subject to the same parliamentary scrutiny and the methods available to Members in another place to ask her those questions. This is a reflection of her particular role, but she is not a remote person; she is a Member of Parliament who can be asked questions. She makes her view known, as she has in this case, but we do not think that this case alone should warrant a change in the law.

Does the Attorney-General claim the same prevention of disclosing that there is when she gives advice to the Government for when she gives or refuses consent under this provision? If it is different, why has she not given more reasons for it in the case of the Albert Hall?

My Lords, no, I do not think that the Attorney-General claims client confidentiality in the same way. Her role overseeing charity law is part of her function as parens patriae. However, we think that it is important to maintain the consent function. As I have said, she is a Member of Parliament, so these questions could be posed to her.

The Attorney-General has set out her reasons why she does not think it would be in the public interest for reference to be made. Noble Lords may disagree with that, and they may ask her about that, but I reiterate that I do not think that one case, however long or complex it may be, should warrant a change in the law. It is for that reason that I hope my noble friend may yet withdraw his amendment.

My Lords, this has, as ever, been an interesting debate and I am very grateful to the noble Lords, Lord Grabiner, Lord Rooker and Lord Thomas of Gresford, for their support and, indeed, to the noble Lord, Lord Ponsonby, for the half-loaf that he offered. I am very grateful for that as well.

I do not propose to go on about this. My noble friend has talked about the oversight of charity law. I think we have seen what has been happening with the oversight of charity law. The noble and learned Lord, Lord Etherton, produced quite an elegant half-loaf of a 60-day limit and a requirement to explain because the Attorney-General is performing a declaratory, not an advisory, role, which we discussed. The Attorney-General cannot even make that move to help a past Master of the Rolls with his elegant diplomatic solution.

It is late. Let us finish. If your Lordships support my amendment, you are voting for transparency, clarity and sunshine. If you vote against it, I am afraid you are voting for obscurity, obfuscation and concern that charity law may not be developing as even-handedly as it should. I have now been on this case for 10 years. I owe it to all the people who have been to talk to me, who say that this needs to be sorted out, that on this occasion I wish to test the opinion of the House.

Ayes 18, Noes 81.

Amendment 2 disagreed.

Amendments 3 and 4 not moved.

Clause 39: “Connected person”: power to amend