Royal Albert Hall Bill [HL] - Second Reading

– in the House of Lords at 11:52 am on 19 October 2023.

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Lord Harrington of Watford:

Moved by Lord Harrington of Watford

That the Bill be now read a second time.

Photo of Lord Harrington of Watford Lord Harrington of Watford Conservative

My Lords, I felt I was reasonably experienced at doing Bills from my career in the Commons and my experience here. I have taken through quite a few Government Bills, usually with consensus, and I have done a Private Member’s Bill, which became law. I was not aware of the existence of a Private Bill, so this a new procedure for me. I beg to move that this Bill now be read a second time.

I declare my interest as a trustee of the Royal Albert Hall. I was appointed by the DCMS which, under the constitution, is entitled to a trustee. Without a doubt, most people—even the detractors of the Bill—would say that the Corporation of the Hall of Arts and Sciences, which everyone calls the Royal Albert Hall, is one of the nation’s great cultural institutions. Under the constitution, there a number of appointed trustees from other institutions such as the Royal College of Music—usually those geographically surrounding the hall. This stems from the original constitution of the hall and how it was built. Most people know and see the hall as part of the UK’s social and cultural fabric. Everybody knows the big, televised things like the Last Night of the Proms, the Royal Variety Performance and the Festival of Remembrance. However, not everybody knows—I did not know myself before I became a trustee—of its unique contribution to this country. As with many things in the United Kingdom, there are institutions that exist which perhaps would not be designed in the same way if they started now, but they do exist and do a very good job. It is fair to say that our parliamentary system is the classic example of that.

The hall itself was the brainchild of Prince Albert, who died quite shortly afterwards, and the corporation was established to enact his vision. The hall was opened in 1871 and became a charity in 1967. It has about 450 employees, and there are 400 events a year which attract close to 2 million visitors a year. It has an engagement programme that reaches out to more than 180,000 people of all ages and backgrounds. It was Prince Albert’s vision that the hall should serve all people in promoting the arts and sciences. From the beginning, the hall was part-owned by people who funded it by a form of public subscription where people paid to become seat-holders. In return for their purchase, seat-holders where able to attend and enjoy the performances and were given the full responsibility of running the hall, and they are an integral part of it. It is a unique model called a “hybrid model” and has been the core of the hall’s constitution and governance since its origin. I reiterate my view that it is a system that actually works because, after all these years—one and a half centuries—the hall exists and does a pretty good job representing this country with all the people who are involved in it.

The hall is governed by a council of 23 trustees and an elected president. Unlike myself, the majority of trustees are elected seat-holders, and are elected from the seat-holders. There are 319 seat-holders who together hold 1,268 of the hall’s 5,272 seats. Under the constitution, the seat-holders are members of the corporation, and they range from big companies to charities to individuals, some of whom have family ownership going back to the beginning. It is the long-term nature of their ownership that has created this unusual tie; it is the bond between the hall and its members that is its cornerstone today.

There are two ways in which all members support the hall financially, on an equal basis. First, they pay an annual levy, or “seat rate”, and, secondly, by forgoing their tickets for a certain number of days so there are more that the hall can sell commercially to non-seat-holders, and these are known as “exclusions” or “exclusivities”. The average seat rate is £1,900 plus VAT and the exclusion is for about 100 days per year of performances, which obviously brings significant revenue to the hall and increases accessibility to all.

This leads me to the substance of the debate which, following a periodic review of the constitution, seeks to amend the terms of the seat rate and exclusions. The Bill itself contains three substantive clauses. Clause 3 seeks to remove the provision of the cap to the seat rate which, under the constitution, is set by the members every six years. As a quid pro quo, the voting threshold for agreeing the annual seat rate is being changed in the Bill from 66% to 75%, which is the threshold now for the six-year cap. Members were restricted by the six-year cap in how much they could contribute, and recent unexpected inflation has demonstrated the artificiality and the difficulty in forecasting a six-year cap. The restriction on how much the members may agree to contribute will no longer apply. Clause 4 provides a mechanism for members to agree to exclusions over and above, and of a different form from, those permitted by the Act of 1966. The current process by which members do this is of doubtful validity, but it is well intentioned. It leaves the hall exposed to the risk of challenge of acting unlawfully, and the clause will put this on a proper legal footing. It has been a long-running problem for the hall, which we hope can be resolved through the Bill. Administratively and legally, there is a pressing need for this clause.

Clause 5 enables the hall to sell, with membership, two extra seats in the grand tier boxes with the consent of the existing seat-holders in those boxes, and to sell membership to a few existing seat-holders in grand tier boxes who do not have membership. Doing so will enable the hall to raise substantial new capital for the hall’s charitable purposes.

We are debating this Bill in Parliament as a private Act is needed, as I explained before, because the intended changes affect the private rights of members. There is no other way to achieve these means; I promise that, if there were, I would not be standing here today.

When I took on the trusteeship, I was not aware of the acknowledged conflict of interest between seat-holders legally profiting from their seats and the charitable purpose of the hall. I am very well versed in these matters, and they have been there for 150 years without any harm to the hall. In nearly all instances, the conflict of interest is in fact a shared interest, because in so many cases the interests of the hall and the interests of members are aligned. On the few occasions they are not fully aligned, there is a system of managing this. It has processes in place, including an independent conflicts of interest committee that scrutinises at close quarters the decisions of the trustees. We have to remember that in UK law it is the private property of seat-holders and it always has been. Their ownership is separate and legally stands apart from the hall; they do not form part of the charity, and their use within the rules does not deprive the charity of anything. Indeed, neither the charity nor the hall could exist without seat-holders.

When this Bill came up, I was asked to put my name to it on the basis that these were small changes that were legally necessary to ensure that the hall could continue operating in a legal manner. It was not my intention or my expectation that the Bill’s opponents would use this process as an opportunity to put forward their well-known objections to these conflicts in the governance of the hall. I pay tribute to all the people I have met, in particular my noble friend Lord Hodgson for his continued and good-natured engagement. I must confess that before my first conversation with him I was quite naive about these other issues, which I am now fully briefed on and aware of.

I have discussed this with nearly everybody who has put their name down to speak in this debate, and the Charity Commission has also contacted me. I will listen to all contributions to the debate with interest and an open ear, to inform my role as a trustee. I believe that in its intent and extent the Bill is a relatively modest measure and can only benefit the hall. I also believe it would be wrong to allow the critics of the hall—on significant wider constitutional matters—to stand in the way of this small piece of legislation. Whatever the merits of what they say, this small piece of legislation is needed.

At the Bill’s future stages there will be plenty of opportunity for its opponents to say exactly what they think, because it is the custom and practice of the House in relation to private Bills to give the promoter the opportunity in Committee to prove the need for it. I hope that those points are without the scope of the Bill and can be discussed on another occasion, because I believe in the Bill. Nevertheless, the onus of proof is on the promoter, and when it comes to Committee they will no doubt put the hall to proof in the usual way. I beg to move.

Photo of Lord Winston Lord Winston Labour

Before the noble Lord sits down, might I ask him, because I do not know, what income a seat-holder might make from a year’s lease of his seat to people who want to sit in it? As a person who has tried to book seats for a charity, I have the impression that it has been very difficult to do that in the Albert Hall. I would be grateful to know what profit margin a member might have.

Photo of Lord Harrington of Watford Lord Harrington of Watford Conservative

I thank the noble Lord for his question. I am embarrassed to say that I do not know the answer, because these are their seats and they are entitled to sell them as they think fit. I am afraid I cannot answer that question. I have also been involved in a number of charities, which have used and booked the hall. There are lots of seats available that do not belong to the seat-holders, and I know that many seat-holders give some of their seats to charities to help them.

Photo of Viscount Chandos Viscount Chandos Labour 12:04, 19 October 2023

My Lords, I am very pleased to be the first speaker able to thank the noble Lord, Lord Harrington, for his clear introduction to the Second Reading of the Bill, and for the work he has done as the DCMS-nominated independent trustee of the hall. If I raise in my remarks today any concerns about the governance of the Royal Albert Hall and issues around its operations, I make it clear from the outset that these are not criticisms of the noble Lord, who has the unenviable position as one of the minority independent trustees who do not have the conflicts to which I will refer.

When I look at the next business in the House, to take note of the long-term strategic challenge posed by China, I feel momentarily that we are focused in this debate on something of relative insignificance. But, as the noble Lord, Lord Harrington, set out so well, the Royal Albert Hall plays an iconic part in our national life, not least as the central venue for the annual BBC Proms, the largest music festival in the world. The hall, as he explained, transcends this headline association by hosting events ranging from top-level sport to film and television premières and awards ceremonies, from Cirque du Soleil to Eric Clapton— 200 performances since 1964.

I think back nostalgically to attending, 40 years ago, an evening with that great figure in public life, the Australian cultural attaché, Sir Les Patterson, created by the much-missed and brilliant Barry Humphries. Most recently, I attended the concert of the National Youth Choirs, with nearly 1,000 young people performing to an audience crammed with their families and friends. Each of your Lordships will have their own memories and connections with the hall—evidence of the huge importance it has in our lives. With that importance goes a responsibility on the part of the trustees who oversee the hall’s operations; that is the focus of my remarks.

I have no direct interest to declare but flag two things. First, I am a trustee of a number of charities, both operating and grant-making, and I will comment on the Albert Hall’s position within the wider charitable context. Secondly, I have followed the relentless attempts to address the governance issues by the former chair, Richard Lyttelton, who is a friend and distant relative. I always follow the principle of the writer Hugh Kingsmill, who said that friends are God’s apology for relations—I think of him more as the former than the latter.

The Corporation of the Hall of Arts and Sciences, the formal name of the Royal Albert Hall, as explained by the noble Lord, Lord Harrington, is a uniquely constituted organisation. Long-term seat-holders comprise a clear majority of trustees. The rights and values of the seat-holder’s position are not unlike those of a debenture holder for Wimbledon, but the All England Lawn Tennis and Croquet Club is not a charity, whereas the Royal Albert Hall is. Not only do seat-holders benefit from the use of seats at events they attend but they are able to sell tickets on the open market for the most popular events, at very high prices in many cases. In doing this they are behaving perfectly legally but, as the Charity Commission has said, this is a clear conflict of interest. The conflict of interest and the trustees’ reluctance to address the resulting governance issues, such as by requiring a majority of their council to comprise independent trustees who do not own seats, not only harm the reputation of the Royal Albert Hall but damage the charitable sector as a whole, providing an uncomfortable example of private benefit being embedded in the position of seat-holding trustees.

I have never been a great fan of the explanation of somebody’s charitable commitments as “giving something back” as, from my own experience, involvement with a charity as a trustee is hugely rewarding in every sense, except—critically—financial. But, to break my habit of avoiding the phrase, the constitution of the Royal Albert Hall and its unaddressed conflict of interests risks giving the appearance of trustees not so much giving something back as taking something out.

The clear concern of the Charity Commission over many years has not prompted any changes by the trustees of the Royal Albert Hall on a voluntary basis—the majority of those whose conflict is self-evident. The commission’s attempt to refer the issue to the charity tribunal was inexplicably refused by the Attorney-General at that time. Can the Minister explain why the Attorney-General concluded that such an obvious conflict did not justify referral? Will he undertake to raise the issue again with his right honourable friend the current Attorney-General?

Although the Bill, as currently drafted, is disappointing in not providing for the governance changes that the Charity Commission and so many independent parties desire, it provides the opportunity for the issues of conflict and poor governance to be raised and, within the constraints of a private Bill’s procedures, debated in detail and prospectively amended at the later stages of its passage.

In conclusion, at a time when the performing arts, not least music, are under huge funding pressure from the severe cuts to Arts Council England’s budget and the freezing of the BBC licence fee, it is unedifying that trustees of such an important venue who are seat owners can make almost unlimited financial gain. It is deeply disappointing that this Private Member’s Bill makes no attempt to address the conflicts inherent in this unique hybrid constitution. However, I welcome the opportunity it presents for this issue to be addressed by Members of your Lordships’ House and the other place during the passage of the Bill.

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston Chair, Communications and Digital Committee, Chair, Communications and Digital Committee 12:11, 19 October 2023

My Lords, it is a great pleasure to follow the noble Viscount, Lord Chandos, and I echo his remarks about my noble friend Lord Harrington and the way he introduced this Second Reading debate. Like the noble Viscount and my noble friend, I too am a great admirer of the Royal Albert Hall in terms of its importance as a cultural and national institution. It has formed part of my own past too; in fact, only the second time I visited London was to go to the Royal Albert Hall as a teenager, so it is something of which I too have fond memories.

I also recognise, as my noble friend made clear, that he is one of the minority group of five appointed trustees and not one of the 18 majority seat-holders. So I reassure him that my criticisms are not directed at him—but I will have a question or two for him as a member of the hall’s trustee board.

I am grateful to my noble friend Lord Hodgson for ensuring that the debate is happening today and for his tireless pursuit of addressing the current shortcomings of governance at the Royal Albert Hall. I look forward to his and other speeches today, and any proposed remedies that they may wish to suggest that we look at during later stages.

I am not an opponent of the Bill, as I think my noble friend is categorising those of us speaking today, but it takes some audacity for the trustees of the Royal Albert Hall to submit a Bill requesting more decision-making powers without addressing their unacceptable conflicts of interest policy. To be clear, as the noble Viscount said, the fundamental problem with the Royal Albert Hall’s governance regime is that, contrary to standard charity law, its trustees can benefit privately from the decisions that they make about how the hall is run. Noble Lords familiar with charity law will spot immediately that this flies in the face of standard legal practice, which prevents private benefit for trustees. While the Royal Albert Hall’s set-up is perfectly legal, it is none the less unique.

To be fair, a combination of previous Acts of Parliament and the hall’s historic constitution does not render the situation illegal. But in today’s modern world—where public trust in institutions is low and expectations of accountability high; boxes and seats at the Royal Albert Hall are bought and sold for hundreds of thousands, if not millions, of pounds; and trustees of a charity can sell their tickets for concerts at prices at least 10 times their face value—the situation at the Royal Albert Hall seems, to me at least, to be completely unacceptable.

I remind your Lordships that I chaired the Charity Commission from March 2018 to February 2021, but I have no interest to declare and no ongoing involvement in this case, so I speak today in a purely personal capacity. I will come back later to the general practice of private seat-holders and ticket sales at the hall, as there is some connection to some of the general points I want to make, but I must emphasise that what private seat-holders at the Royal Albert Hall do with their own private property is their business and not mine—I well understand that. My concern and focus are on the trustees of a charity, not those who are not responsible for the charity itself, and my concern is that the board of trustees has failed to modernise the hall’s governance to protect its interests and reputation as a charity.

The Charity Commission was engaged in this matter long before I was appointed its chair. At the time of my arrival in post, the then Attorney-General had recently given permission for the regulator to refer the matter to the charity tribunal to clarify some legal questions about its charitable status. That was necessary because the hall had resisted dealing with the trustees’ conflicts of interest. As my noble friend said, they have an existing policy; it would be unfair to say that there is no policy. There is a policy—it exists and is there for anybody to read on its website—but it is a policy, in the minds of the Charity Commission, that is inadequate for the conflicts that exist by virtue of their dual interest. Unfortunately, it seems that, threatened with a judicial review, the Attorney-General withdrew permission and requested that the Charity Commission revise the questions and resubmit its application for the Attorney-General’s approval again.

While that was ongoing, I held several meetings with the then president and his successor to see whether we could resolve the matter without referral to the courts. Originally, the Charity Commission proposed changing the composition of the board so that the majority of trustees were not seat-holders and to introduce a regime so that decisions that might benefit trustees could be made by a quorum of non-seat-holders. Unfortunately, that was rejected. Failing to get the hall’s agreement to that, the Charity Commission proposed a new formulation of members—but that too was rejected. The board of trustees has even, as I understand it, resisted making any internal changes to guarantee that seat-holding trustees cannot sell seat tickets for anything other than face value or via the hall’s ticket office during their time sitting on the board. These are simple, straightforward measures that, I think, most people would expect as reasonable of trustees responsible for a charity.

When it comes to the benefits that private seat-holders who are trustees gain during their time on the board, the annual report of the Royal Albert Hall does not even declare how many seats the trustees or their close family members own or the income that they have derived from them. Ultimately, referring the case to the tribunal seemed to be the only way to find a resolution; but, as noble Lords have already heard, successive Attorney-Generals dodged the decision until, eventually, one of them rejected the Charity Commission’s request.

The hall has always maintained that what it wanted was a new Act of Parliament to modernise its governance and that there were outstanding issues that needed to be addressed. That is clear, as my noble friend has laid out, in the Bill that it has put forward, but the Bill fails to address the fundamental flaw in its model and any of the issues that have been of concern to the Charity Commission for the last 13 years.

As I said, it is important not to conflate the private property rights of seat-holders with the responsibility of the charity’s trustees, but that is what the trustees’ failure to act is doing. Increasingly, artists are objecting to the sale of tickets to their concerts at inflated prices. The hall argues that there is a difference between sale and resale because of their private property rights, but that kind of argument does not wash with fans when the effect on their pockets between resale and sale is the same. It is also worth reminding ourselves that the BBC Proms, the world’s largest classical music festival, is funded by licence fee payers. Yet that does not deter the sale of seats at massively inflated prices and for all we know—we do not know—some of those inflated tickets may be being sold by seat-holding trustees. We just do not know.

Retaining charitable status is clearly important to the hall’s trustees. Losing it was a big concern if the matter of this conflict got as far as a tribunal. It is also worth reminding ourselves, as my noble friend said at the start, that the Royal Albert Hall has not always been a charity, but if that is what it wants to remain, the hall’s trustees need to make some choices. Now is the time for them to modernise their governance and bring it in line with the rest of those charities on the register. I think it is as simple as that.

Just before I close, I have two questions. I ask my noble friend the Minister whether the Government set out any expectations of the hall in terms of modernising its governance at the time of its £20 million recovery loan during Covid. If they did not take that opportunity then, could he explain why not? Could my noble friend Lord Harrington tell us when the board last discussed how to deal with the conflict of interests of its seat-holding trustees and why it chose not to put that in the Bill? Also, has there been any recent discussion about what internal changes trustees could make to their own policies to bring them in line—something as straightforward as saying that for the period that somebody sits on the board, they must resist, or be refused the option of, selling their tickets for anything other than at face value via the ticket office? Clearly, the procedure for this private Bill makes amendments difficult, but I very much hope that as it proceeds to its later stages, that is something we are able to secure.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative 12:23, 19 October 2023

My Lords, I begin by adding my thanks to my noble friend Lord Harrington. He has been infinitely patient in dealing with us gadflies, and I am grateful to him for that. I also share his view that the hall itself is one of the great cultural institutions, and nothing I say in the next few minutes should be seen as in any way criticising the hall as a structure or as a business or an activity—it is a wonderful activity; nor would I wish to be seen to be criticising my noble friend, who is in an unenviable position, as several noble Lords have pointed out, as one of the nominated trustees, nominated by no less than the DCMS, so no doubt my noble friend the Minister, from whom we shall have the pleasure of hearing in a few minutes, had some part in the decision on that appointment.

The noble Viscount, Lord Chandos, referred to Mr Richard Lyttelton. I want to put it on record that in my youth, in my teens and 20s, I was a friend of Mr Lyttelton’s elder brother, sadly no longer with us. I think that should go on the record. Do I agree with everything he says? I do not. Do I agree with some of what he says? I do. Am I his mouthpiece? I most certainly am not. Having cleared those points out of the way, I share the view that as regards the governance of the hall, there is at its heart a major, in my view irreconcilable, conflict of interest. This is an issue that has been of interest to many people: journalists, sector publications and, indeed, as my noble friend Lady Stowell said, the Charity Commission itself. Today, we have before us this Bill promoted by the governing body of the hall that does nothing to address this inherent conflict. Indeed, in some respects, it makes it worse.

I apologise for diving into the detail but we have no Committee stage so I have to take this opportunity to make one or two quite detailed points about the nature of the Bill. Just to summarise the history—not to go over the ground that has been well ploughed already—the Royal Albert Hall was established in Victorian times by public subscription, and in return for your dosh, you got seats in perpetuity. Because not every seat-holder is going to want to go to every concert on every occasion, the hall set up the TRS, the ticket return scheme, which, as many noble Lords have pointed out, enables you to hand your tickets back for the face value, less 10%—for a £100 ticket, you get £90 back.

However, a few years ago a group of trustees decided there was a much more profitable way of doing this by reselling them not through the Albert Hall box office but through third-party websites. Here I address some of the questions asked by the noble Lord, Lord Winston, of my noble friend. If you wish to go to hear Ed Sheeran on Sunday 19 November, you have a ticket with a face value of £200. I have here a screenshot from viagogo offering that ticket for £5,899—£6,000 for a £200 ticket. I also have a screenshot of a letter that Mr Sheeran and his promoters have asked to be circulated, saying that they deplore this practice. Mr Sheeran’s fans are being squeezed out of the hall because they cannot afford to pay £6,000 a pop. This is an extreme example, but a £100 ticket for the last night of the Proms was selling for £1,218, so this has clearly become a very profitable enterprise. The rumour was—and here I address the noble Lord, Lord Winston, again—that before the pandemic, seats were earning between £10,000 and £20,000 a year and were selling for £150,000. That was the rumour. Today, we have had a rush and the market in seats has been very good. I have here a flyer from Harrods Estates offering five seats in the second tier at the Royal Albert Hall for £1.5 million—£300,000 each.

My noble friend Lady Stowell made the point that there is a distinction to be made between those who are trustees who sit on the governing body and those who have private property. The right to enjoy your private property is of course an important cornerstone of our civil society. But the operation of the hall as a commercial business, as it was originally seen, changed when in 1967 it decided to become a registered charity, which has, as many noble Lords have pointed out, a public benefit objective, tax advantages and the regulation of the Charity Commission. I am not going to repeat the point that of the 25 members of the governing body, 19—75%—of them have to be elected from other seat-holders by the seat-holders themselves. There must be a concern, or at least the possibility, that the idea of selling Ed Sheeran seats is more important than an equally worthy but less prestigious concert, such as a school choir competition.

If we summarise the situation now and go to the detail of the Bill, my noble friend Lord Harrington said that it was a hybrid model. My goodness me, he is right. Within the shell of a registered charity, the trustees are running what appears to be a personally highly profitable operation and, by the way, along the way they have managed to get a £20 million loan from the culture recovery fund, which is apparently going to be paid back at £1 million a year over 20 years.

How do these issues play through into the Bill? There are four points. First, the Bill empowers the corporation to create and sell or let two further seats in grand tier boxes. There will be 72 of these. That in itself is a good proposal, because more seats means that there are more seats to be sold, making it more attractive to promoters, who are therefore more interested in hiring the hall. But on what terms are these seats to be sold or let? Clause 5(1) says that they are to be sold or let on such terms—including as to their price—as the hall thinks fit. As I said, the hall is controlled by the council, 75% of whose members are seat-holders, some of whom will be looking to buy seats. They will therefore be deciding the terms on which they award themselves the new seats. As I also said, some seats are on offer at £300,000, so the amounts at stake are far from trivial. This surely cannot be right. At the very least, the terms on which the seats are to be sold or let need to be set by an external valuer approved by the Charity Commission. After all, the hall is a charity.

Secondly, there is a concern, or at least a possibility, that some of those seats have already been allocated and so are already being used profitably by seat-holders. If true, this would mean that the trustees are now trying to give statutory protection through Clause 5(4) to an action they have already taken. Can my noble friend explain whether this is true? If it is, when were these seats allocated and what price was paid for them?

Thirdly, as I have explained, the hall has an outstanding loan of £20 million from the culture recovery fund—that is, effectively, the taxpayer. The Bill proposes the sale of 72 new seats. If they were sold for £300,000 each, that would be £22 million, which would enable that loan to be paid off immediately. Since these are capital items, not income items, priority should go towards paying off that loan, thereby relieving the long-suffering taxpayer of a burden.

Fourthly and finally, as my noble friend Lady Stowell pointed out, there is a need to disentangle the position regarding the resale of tickets by seat-holders who are trustees and so play a significant role in the operation of the hall from that of seat-holders who are not trustees.

It is absolutely clear that the hall has discouraged the resale of tickets in or around the hall. Section 15 of the Royal Albert Hall Act 1966 gave specific powers to prevent what in an earlier age was called ticket touting. Members of your Lordships’ House of a certain age will recall being approached at big sporting or cultural events by gentlemen in grubby macs offering to buy or sell tickets. It is quite understandable that the hall wanted to discourage that sort of activity in or around the hall. Ticket touting still goes on but nowadays rather more discreetly. It is no longer done via gentlemen in grubby macs but happens on the internet, but this does not disguise the fact that this is still ticket touting and damages the hall’s reputation—witness the Ed Sheeran promoter’s letter to every seat-holder. There are various ways in which this could be sorted. My noble friend Lady Stowell made the point that if you became a trustee, you could usefully be required only to use the ticket return scheme, which would show exactly what your return could be.

To conclude, I hope that the promoters of the Bill will be prepared to let some sunshine into this murky business and address some of the points that I and other Members of your Lordships’ House have made. If not, I hope that the Opposed Private Bill Committee will look closely at the implications. I am far from convinced that the House should allow this Bill to proceed further without at least some amendment.

Photo of Lord Etherton Lord Etherton Chair, Bishop's Stortford Cemetery Bill [HL] Committee, Chair, Bishop's Stortford Cemetery Bill [HL] Committee 12:34, 19 October 2023

My Lords, I am very grateful to all Members who have spoken before me, particularly the noble Lord, Lord Harrington, for his introduction. I pay tribute to the noble Lord, Lord Hodgson, who has pursued the issues relating to the constitution of the Albert Hall for many years. One way or another, they have covered virtually all the issues, so I can be relatively brief. I want to concentrate on what, from a legal perspective, are the very simple issues involved in this matter. I do not want to enter into a close analysis of the merits of this private Bill. That is the task of the Opposed Private Bill Committee, which will hear detailed submissions and receive evidence I have not seen, and no doubt will have the benefit of legal advice. However, it is important to make two general points that are relevant to the context of the Bill and that the Opposed Private Bill Committee will undoubtedly wish to bear in mind when it considers the merits of the Bill and the petition against it.

As has been said, the Albert Hall, called the corporation, is in legal terms a most unusual entity—unique, in fact. It was registered as a charity in 1967. It has all the usual financial benefits of a charity and has received large sums of public money for refurbishment and improvement. There are two fundamental legal principles of charity law that are relevant to any consideration of the Bill and of any other decisions made by the council of the corporation. First, an entity can be charitable only if it is wholly and exclusively charitable. This does not prevent a charity having a trading arm, the profits of which are applied exclusively for the purposes of the charity. However, in the case of the Albert Hall, the seat-owners, who are the members of the corporation and form a majority on the governing council, are able to—and many do—treat their seats as investments, generating a profit by selling tickets on the open market for events the seat-owners do not wish to attend. In this way, this charitable corporation provides the means by which the members of the charity can make a purely private profit.

This leads directly on to the second very basic principle, which has been mentioned a number of times. It is a basic principle of trust law that the trustees, whatever they are called—board members, council members or whatever—must not place themselves in a position in which their private interests may conflict with their overriding obligation to further the interest of the charity. This is usually expressed in the pithy statement that trustees must not place themselves in a position where there is a conflict between interest and duty. Plainly, as we have heard, there is a real issue in relation to that point. The power to run the Albert Hall is vested in its members. The members are the seat-holders. The council of the corporation comprises 18 members and five appointed non-members. On the face of it, the presence of members on the council who have profited, intend to profit or wish to profit from their seats by selling tickets for them on the open market involves a clear potential conflict between personal interest and their duty to act solely in the interests of the charity.

This is, on any footing, an extraordinary legal situation. How has it arisen? As has been referred to, the first reason is historical: the building of the Albert Hall, which opened in 1871, was funded by subscribers in consideration of being granted permanent seats. As has been said, 329 members hold over 1,200 seats. The second reason, which was referred to by the noble Baroness, Lady Stowell of Beeston, concerns the limited oversight of the Charity Commissioners over the corporation. The Charity Commission does have power to create schemes to make alterations to the management or other terms of a charity. In the case of the Albert Hall, it can under the statutory constitution relating to the corporation—in Schedule 2 to the Royal Albert Hall Act 1966—only do so on the application of the council.

As the noble Baroness mentioned, the Charity Commissioners wanted to make a reference to the charity tribunal, but under the Charities Act 2011 they could do so only with the consent of the Attorney-General. Permission has been sought in the past, but on the last occasion relating to the Albert Hall, after a number of years without any response whatever, permission was refused by the Attorney-General without any explanation at all. This was really quite a scandalous approach to a serious issue.

I hope that I have said enough—together with everything everybody else has said—to explain why I respectfully recommend that, when considering the present Bill and the opposing petition, the Opposed Bill Committee should be careful to ensure that the charitable objects of the corporation will always have priority over the actual or potential private financial interests of members.

Photo of Baroness Fraser of Craigmaddie Baroness Fraser of Craigmaddie Conservative 12:41, 19 October 2023

My Lords, I approach this Bill from two angles: the first is from my experience of charity law, as I am the chief executive of a charity and was on the board of OSCR, which is the Office of the Scottish Charity Regulator; and the second is my experience in, and love of, the arts. When I worked at English National Ballet, we staged wonderful in-the-round performances at the Royal Albert Hall. I am delighted to see that these productions are still being staged; the very first one, Derek Deane’s “Swan Lake”, which I was involved in when it was first produced in 1997, is coming back in June 2024. It is an unforgettable experience, and I urge noble Lords to book a ticket if they can get one.

Arts and heritage is a tough sector to operate in, particularly in the current climate. It is also an incredibly tough time for charities and, as other noble Lords have said, the Corporation of the Hall of Arts and Sciences, known as the Royal Albert Hall, is a charity and it has chosen to be a charity. In the latest annual report and accounts it declares that its purpose—and I always go back to a charity’s purpose—is to:

“promote the Arts and Sciences as well as to maintain our Grade I listed building, held in trust for the nation”.

I recognise that its royal charter and the various subsequent Royal Albert Hall Acts mean that it is not like other charities, but it is still a charity.

Public benefit is what makes charities different from any other organisation, so surely we should judge any Bill pertaining to the Royal Albert Hall through the lens of whether or not it supports public benefit and enables the corporation to fulfil its purpose to promote the arts and sciences and preserve its building for the nation. Given that, I believe the Royal Albert Hall does need a Bill; I just do not believe that it needs this one.

At the heart of the governance of the hall, as other noble Lords have said, there are huge and unresolved conflicts of interest. As matters currently stand, I do not see that the council, as the noble and learned Lord pointed out, is bound under the current constitution to always act in the interests of the charity, and nor do I see that it properly recognises and manages its conflicts of interest. Both of these are legal requirements for any trustee in any other charitable organisation. I acknowledge, as my noble friend Lady Stowell mentioned, that the council has a conflict of interest policy that is regularly updated—it was last updated in December 2022—and there is a conflicts committee, but in terms of good governance, and on the urging of the Charity Commission, this still reads as though it is marking its own homework.

I also pay tribute to my noble friend Lord Hodgson for his work in trying to resolve these matters, but this Bill seems to be another missed opportunity. We have already mentioned the membership of the council and how those who are not seat-holders will always be outvoted. That constitution has come about because of a historical anomaly, and the scale of influence of seat-holders on decision-making relating to their own private interests is out of step with modern standards of any other charity’s governance.

When the hall was first conceived and built, the model of seat-holders’ contributions was perfectly good. As the hall has developed over the years, it should be congratulated on offering many more performances and hugely expanding its programme. As my noble friend Lord Hodgson mentioned, the 1966 Act recognised the threats posed by ticket touts and banned the sale of tickets within the environs of the hall, but the world has changed since 1871 and since 1966. No one then could have conceived of online ticket sites such as viagogo and there is no way the original seat-holders could have set up a ticket resale site such as hoorahtickets.com or a Facebook group, with over 50,000 members, to maximise profit on their investment.

I have also been checking ticket sites; everybody is obviously having a go at the moment. Apparently, the Last Night of the Proms is indeed going for over £1,000 each. Last week, I could have got a ticket to Ed Sheeran for 650 quid, which sounds like a bargain when there is a report in today’s Telegraph saying that they are going for almost £6,000. These are tickets with a face value of £125 or £200.

People are reselling their tickets in this way when there is a perfectly good official mechanism in place: the ticket-holder return scheme was launched in 1983 to provide a means for seat-holders to resell their tickets back to the hall and give the public the best possible access.

Who does this benefit? The public have to pay more than the face value of the ticket; the organisation loses out on a booking fee and, more concerningly, control of the data of who is in the hall and who they can market to in the future; or the seat-holders, some of whom—not all—seek to maximise financial return for private profit and their right to sell a commercially popular show. As far as I am aware, and I am happy to be corrected, no seat-holder loses money in any year. They receive more from the payment the hall makes to them than the annual contribution they make for the maintenance and enhancement of the hall. Owning the right to use a seat is therefore a very sound financial investment.

I agree with my noble friend Lady Stowell: I am not looking for a Bill that deprives seat-holders of their rights. I have no objection to seat-holders being members of the council or making a profit from their investment, but trustees who have a personal financial interest in the running of any organisation should not be allowed majority sway over that organisation to the extent that we see here, where, I believe, public benefit is compromised. I am not saying that it has been, but its charitable purpose and the maintenance of the building could be neglected.

My issue with the Bill is that, instead of tackling these issues, it just muddies the waters further. It exposes the corporation to significant future risk. I am sorry for going into detail, but I hope your Lordships will forgive me, since we will not have a Committee stage as other Bills do. Specifically, Clause 3 sets the seat-holders’ annual contribution and Clause 4 enables a resolution to be proposed by

“the council; or … not less than twenty members”.

If there is more than one resolution, Clause 4 allows for just

“the resolution with the highest number of votes in favour” to be valid. For me, this Bill not only fails to deal with issues of conflict of interest but enables greater influence for the seat-holders of the organisation.

As my noble friend mentioned, Clause 5 seeks to increase members’ numbers, with powers to add seats to the boxes. This adds to my impression—which may not be backed up by evidence, but in charity governance the impression given is what is important—that the seat-holders are manipulating the legislation for their own benefit, not necessarily that of the hall or the public.

As for most other arts organisations, the financial reserves of the organisation have already been used up and are in deficit thanks to Covid and higher maintenance bills. The members, while an important source of income, do not keep the hall running on their own: the corporation relies on fundraising from major donors, trust foundations, corporates and individuals, just like any other charity. I accept that it receives no regular public subsidy, but, as others have mentioned, it received a £20 million Covid loan through the culture recovery fund, and its accounts show that it receives other grants from time to time. I do not know how the executive can confidently plan for and run an organisation for public benefit when a minority of members can change the rules at any point to suit their own financial interests.

Finally, I hope that your Lordships will look at amendments to the Bill to address some of these issues. It does no good for public trust and confidence in the charity sector, nor for the authority of the Charity Commission, for these issues to remain unaddressed. But I am aware of the little time we have left in this Session. I am also chilled by the comments that I read by the president of the council, who has written to members to state that the charity would

“resist changes that we think would be detrimental to the” private “interests of members”, and that the charity could withdraw the Bill

“if its terms become unacceptable to us”.

I add my thanks to my noble friend Lord Harrington of Watford, not only for the time that he has given to all us gadflies, as I think we are now termed, but for his service on the board of the hall. However, I hope that he and the Minister will agree that it would not be to the benefit of the public—nor, I believe, true to the original vision of the founders of the hall—if the Bill were to pass as it stands and we were to miss yet another opportunity to deal with the conflicts of interest arising out of the current governance arrangements of the hall.

Photo of Baroness Barker Baroness Barker Liberal Democrat Lords Spokesperson (Voluntary Sector), Deputy Chairman of Committees 12:52, 19 October 2023

My Lords, I too thank the noble Lord, Lord Harrington, for the clear way in which he introduced the Bill today. I also thank him for taking the time to talk with me yesterday about it. After I met him, I subsequently went off and did what I should have done from the very start of my preparation: I went to look at the annual report, not of the Royal Albert Hall charity, which somebody going to the Charity Commission would automatically do, but of the Corporation of the Hall of Arts and Sciences, which is the charitable body that we are talking about. On doing so, you can see how our Victorian forefathers have given us a problem of a really difficult technical nature. However, through the discussion that we have had in this debate, the issues are becoming quite clear and simple. This is about a fundamental flaw in the structure of the organisation, which runs counter to the basic precepts of charity law. That is what is happening today and what we must address.

It is a frustrating moment for Members of this House. We do this sort of legislation rather well, and we cannot give it our best shot on this occasion because those of us such as the noble Lord, Lord Hodgson, and the noble and learned Lord, Lord Etherton, who have looked at this issue over several years, will not be able to take part in the Opposed Bill Committee because that body must come to the matter in a state of complete neutrality. All we can do is to do as we have today: to set out the issues as we understand them as clearly as we can and to hope that members of that committee will note what we say. I would also advise them—if I were able to, but I am not—to go back and look at the accounts and the annual reports of not just the Hall of Arts and Sciences but its related companies. I will come back to that point later in my speech.

Annual reports and accounts of charities are always fascinating—I am sorry: I am a person whose happy place is the Charity Commission register. If you look at a charity’s accounts, they always tell you not just the bare, legal things you need to know but an awful lot about what is going on there by the way they are written and what they say and do not. I hand it to the trustees: their report is full, their explanation is detailed, they have a clear exposition of the governance, and they talk about the existence and the operation of their many committees. They have a standing conflicts committee—does that not speak volumes? They also have a governance and ethics committee. The problem is not that they do not have them—they clearly pay a lot of attention to what are almost unique problems—but that those committees are all filled by people for whom the conflict of interest is that of their personal benefit versus the charitable interest.

Looking at the report and listening to the debate, there are three key points on this. One was made by the noble Baroness, Lady Stowell, on the dual role of seat-holders as members of the council and therefore as trustees. I think that it is impossible to do that dual role: when you are a trustee of a charity, you are duty-bound by charity law to make decisions in the best interest of the charity. It is impossible for somebody who is a seat-holder to do that without simultaneously making decisions that have a direct benefit on what may be their business. The noble Baroness said that she had no interest in harming or damaging legitimate businesses and assets which people hold in any way, but the point is that those businesses exist entirely within the charity—physically within it. It is impossible to separate decisions from one entity to the other. Therefore, what I understood to be the second point was that the Charity Commission was trying to find a way to unpick or analyse that conflict of interest in terms of decision-making and benefit. If noble Lords go back and look at this report, which covers the period for 2022, they will see that the charity has made minuscule attempts to deal with some of the criticisms: it has put in one independent person as chair of a committee, and the chair of the council no longer has to be a seat-holder. It is very small and grudging, but it ought to be an indicator of hope to those people who have toiled in the trenches for some time trying to raise this issue that it is possible to bring about some influence.

The second thing that emerges from the accounts is that the purpose of the Bill is unclear. There is a long section in which the charity talks about that. It says that it is a small piece of legislation whose purpose is, as the noble Lord, Lord Harrington, put it earlier, to deal with small issues such as enabling the organisation to generate capital. But we are potentially making a long-term decision about the revenue-generating capacity not just of the charity but of those businesses.

The final thing I would say on this is that the nature of the accounts and the annual report is such that it tells us one clear thing: we cannot make an informed decision on this matter. That was eloquently brought out by the question from the noble Lord, Lord Winston, which nobody can answer: how much money is made by those private seat-holders—businesses, charities, whatever they are? The accounts are incomplete.

It is technically true that those are separate businesses and therefore do not fall within the charity’s accounts, but, as the noble and learned Lord, Lord Etherton, and the noble Baronesses said, many arts charities have operating subsidiary companies that are purely commercial arms and whose profits are covenanted back to the original charity. Many large arts organisations could not exist without those commercial entities generating income for them. The crucial difference is that there is transparent accounting between the two entities and it is always possible to see how the commercial entity and the charity work together, not least so that the charities can demonstrate that they are not doing something they are not allowed to do under charity law, which is to make investments that are beneficial to their trading arms but harmful to the charity. It is not possible to determine that from these accounts.

Yet these accounts mention the other trading companies: the Royal Albert Hall Developments Ltd, which is a separate company, and Royal Albert Hall Concerts Ltd. It is absolutely reasonable that a large charitable entity should seek to contain some of its potential losses and risks by forming separate companies, but there must be clear accountability between the two.

The Bill is a flawed in many ways. It certainly does not address the key issue we have raised. Nor does it do something quite important, which is to help the trustees of the charity counteract assertions that they are not acting with full probity. They might be, but we do not know, and we will never know. The fundamental point, for me, having sat with lots of wet towels around my head as I worked my way through all of it, is that the Bill’s key purpose is the creation of those extra seats, which will in the long term, putting to one side the need to generate capital redevelopment, generate revenue. In permitting that, are we benefiting the charitable purposes of this organisation or are we merely opening up further business opportunities for the businesses that exist within its shell? Unless and until we can answer that correctly and definitively, we ought to say to the trustees that they should not do that.

My final point is on a matter that is not peculiar to this organisation or this case. The role of the Attorney-General in frustrating the Charity Commission’s ability to refer matters to the charity tribunal is a matter of ongoing concern. Those of us who took part in the review of charity law said so at the time. That matter certainly will not be resolved by this Bill, but it is one of the outstanding big issues in charity law that we need to seize on and address.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Energy and Net Zero), Shadow Spokesperson (Science, Innovation and Technology), Shadow Spokesperson (Culture, Media and Sport) 1:04, 19 October 2023

My Lords, as all other Peers have said this lunchtime, we are enormously grateful to the noble Lord, Lord Harrington of Watford, for facilitating this Second Reading debate. As I understand it, it is something of a rarity for private Bills of this kind.

We should also be grateful to the noble Lord for the transparent way in which he described and set out the Bill, and his particular role and interest. I thought I heard him say at some stage during his peroration that the Bill seeks to put questionable practices on a legal footing. We have heard the noble Baronesses, Lady Stowell and Lady Fraser, my noble friend Lord Chandos, the noble and learned Lord, Lord Etherton, and in particular the noble Lord, Lord Hodgson, set out their concerns with great eloquence and a very fine understanding of the legislation that underpins them. I also pay tribute to the noble Baroness, Lady Barker, for putting her finger on one of the major problems. We face something of a difficulty here, frankly, and we should face it honestly. We need to say at the end of all of this that the trustees need to reconsider their position.

That said, the Royal Albert Hall is a treasured cultural institution. These Benches recognise that. We recognise its value, its history and, very importantly, the need to safeguard its future for future generations. Indeed, as a charitable organisation—I declare an interest as an employee of a charity—one of its core missions is to preserve and enhance the wonderful grade 1 listed building that we are all very familiar with. Whether you attend the Proms—I was fortunate in the summer to listen to some fine examples of northern soul—go to a comedy show such as Les Patterson, for whom my noble friend Lord Chandos explained his love, or have a tour of the building, anyone who has visited there will have fond memories and stories to tell. Mine is from 1969, when I witnessed a fine performance by Jethro Tull, with Ian Anderson standing on one leg playing the flute—a sight to behold. I was 16 at the time; I must have escaped my mother’s clutches to get there. It was a memorable concert.

We recognise that, to safeguard the Royal Albert Hall’s future, its trustees must be able to generate new interest in it, and new income, and that this will largely focus on fundraising. However, as with everything in life, this is about balance. The charity’s other key mission is to promote the arts and sciences—its founding purpose, as set out by Prince Albert. We must never see that cause become secondary to the interests of fee-paying members.

Noble Lords will know, as many have expressed, that the past few years have not been an easy time for the arts. During the pandemic the Royal Albert Hall and other venues were forced to close their doors, with all the consequences that brought for venues, performers and others across the cultural industries. Although the Royal Albert Hall does not directly receive taxpayer funding, it does get grants. As others have said, the realities of the pandemic meant it got a sizeable loan from the culture recovery fund, of some £20 million.

Beyond Covid, changes to our relationship with the EU and other domestic schemes that support the arts have created other problems in the field. Although today is not the day to go into the specifics or to debate the rights and wrongs of certain policy decisions, we must consider this legislation in that wider context, and remember that the world around us is changing. Yes, venues and cultural institutions must adapt to changes in how people consume and participate in the arts, but they must also reflect other changes in consumer preferences, including an increased interest in fairness and transparency. The noble Baroness, Lady Fraser, expressed that rather well by drawing on charitable purpose as the basis of her argument.

That said, I can see why the Royal Albert Hall has brought forward these proposals. But they are too narrow. The provisions around additional seats in grand tier boxes would enable the corporation to raise money, while sparing the blushes of those who have already installed seats ultra vires.

This Bill goes into the Opposed Private Bill Committee process, and I can well understand, because of that, why noble Lords have been as forthright as they have in today’s debate. We owe a debt of thanks to the noble Lord, Lord Hodgson of Astley Abbotts, for his forensic take on the Bill and its impact.

Others will have noted the tabling of a petition against the Bill by Mr Lyttelton, in co-operation with the FanFair Alliance and the Court of the Worshipful Company of Musicians. That petition quite rightly raises the questions that have been raised today relating to the institution’s governance, the rights of its members, and the extent to which the proposed changes will impact on ordinary people’s ability to access the arts at an affordable price.

No doubt these topics will also be the subject of detailed discussion in the forthcoming Committee hearings, perhaps informed by the tabling of the amendments which the noble Lord, Lord Hodgson of Astley Abbotts, has drawn our attention to. For our part, we see merit in those amendments; we think they will begin to set this piece of legislation in the right direction, but we do need to get this right. We value the Royal Albert Hall and the work it has done to broaden its appeal and open its doors to new visitors. But we should not lose sight of the need for it to act quite properly as a charity.

As others have highlighted, the proposals raise questions about the charity’s aims, how they are delivered and whether the number of seat-owning members on the organisation’s council gives rise to clear conflicts of interest. I have read the Charity Commission briefing on this, and it is very clear. It says:

“These conflicts of interest are allowed under the charity’s governing documents. However, the situation has regularly attracted criticism and threatens to undermine public confidence in the charity”.

We should take that as a very clear warning. The Charity Commission has put on record its

“longstanding concerns about these inherent conflicts of interest”.

This Bill needs to tackle that issue. The Charity Commission suggests that

“the board of trustees should have enough independent members to enable it to be quorate without the participation of seat-holders or those appointed by seat-holders. The Private Bill does not make provision for these improvements”, but they could be addressed either in the constitution or in legislation.

Previous attempts to get clarity on this have been blocked by the Attorney-General, and one wonders why that might be the case. This Bill does not deal with the core issues regarding those conflicts, and until those issues are properly dealt with, it is a piece of legislation which it is very hard to see our side of the House supporting.

I spoke earlier of balance; I am convinced that there could be a way forward that will support the future of the Royal Albert Hall in a manner that delivers fairer access to the arts that it hosts. But that cannot be as a profitable sideline for those seat-holders who get a benefit from the Royal Albert Hall acting as a charity in the way in which they do. So I too am drawn to the conclusion echoed by the noble Baroness, Lady Fraser, that this piece of legislation is a missed opportunity, and these Benches will not support it in its current form.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport) 1:14, 19 October 2023

I am very grateful to my noble friend Lord Harrington of Watford for introducing his Bill so clearly and, indeed, for the work that he, his fellow trustees, and all the Royal Albert Hall’s staff and supporters do to protect and champion this cherished institution.

Noble Lords have highlighted many ways in which the hall has played an important part in their lives, and in the life of our nation. I know that if my noble friend Lord Lexden had been a participant in the debate, rather than being on the Woolsack for the previous hour of it, he would have mentioned the many historic events to which it has played host. For many years, the Conservative Women’s Organisation held packed-out meetings there. Winston Churchill spoke there on 30 occasions; the first was as a member of the Liberal Government in 1909. The noble Baroness, Lady Barker, may be dismayed to hear that his 10,000-strong audience were all men, the Liberal Party having banned women for fear that suffragettes might interrupt and campaign for votes for women. But, reflecting the long-standing and important neutrality of the hall, it had in fact played host to a meeting of the Women’s Social and Political Union the evening before, some members of which attempted to hide overnight in order to disrupt the meeting. Sadly, they were discovered in the small hours.

As Minister for Arts and Heritage, I have the pleasure of visiting the hall very regularly, from the Proms to the Olivier Awards, and most recently on Monday evening for a delightful concert hosted by Classic FM Live. Like other noble Lords, I would not hesitate to call the hall a true icon in our cultural life. It is for this reason I am not surprised to see so many noble Lords taking an interest in this Bill and in the governance of the hall.

As noble Lords will know, in relation to private Bills, the Government do not generally adopt a position unless the Bill contains provisions which are considered to be contrary to public policy. We take the view that the Bill does not contain any such provisions; therefore, as is the usual form with private Bills, the Government neither support nor oppose it.

Noble Lords have taken the opportunity to ask a number of questions. The noble Viscount, Lord Chandos, referred to what he called cuts by the Arts Council. As he will recall from the excellent debate we had at his instigation earlier this year, the amount distributed by the Arts Council in the new portfolio is higher than in the previous one. It benefits from an additional £43 million of grant in aid secured by my department at the spending review. Thanks to that, and increases from the National Lottery

Photo of Viscount Chandos Viscount Chandos Labour

The cuts in real terms since 2010 of the Arts Council’s grant in aid are, I believe, about 40%.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport)

Thanks to increases from the National Lottery as well, the Arts Council is spending £30 million a year additionally in this portfolio than in the last. The challenges of inflation certainly do beset many cultural institutions, and I speak to them about it, but I did want to correct what the noble Viscount said there.

More pertinently, the noble Viscount mentioned the decisions by previous Attorneys-General not to refer the matter to the tribunal. I cannot speak for decisions made by previous Attorneys-General, but the Attorney-General, as parens patriae, is the constitutional defender of charity and charitable property. She is required to prepare a report for the other place on certain private Bills affecting charitable interests. If she is asked to report on this Bill in another place, she will of course make her views known.

My noble friend Lady Stowell of Beeston and others referred to the loan which the Royal Albert Hall got through the unprecedented culture recovery fund. That £1.5 billion of funding provided assistance to more than 5,000 cultural institutions across the country during the challenging period of the pandemic. It was emergency support to help them through those difficult months, and no conditions were imposed upon it other than to make sure that where there were loans, they would be repaid. It was not designed as an instrument of wider policy, but as an instrument of assistance to organisations that needed it.

Other noble Lords have—

Photo of Baroness Barker Baroness Barker Liberal Democrat Lords Spokesperson (Voluntary Sector), Deputy Chairman of Committees

I wonder whether the Minister would agree with me on this point. All that he said about that loan is absolutely true, and the loan is repayable, I believe, at 2%. Does he not understand the point that some of us are trying to make that, for a member of the council of the Royal Albert Hall, which has to take decisions about the repayment of that loan, it is also possible for that same person to be the owner of a business which is conducted within the Royal Albert Hall, and that therefore they might well take the view that paying back to the Government at a low rate of 2% is better than having to pay back other loans at a higher rate? Therefore, what is actually happening is that something that was proposed for a particular public institution is actually benefiting private companies in a way that was not envisaged.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Parliamentary Under Secretary of State (Department for Culture, Media and Sport)

The cultural recovery fund assisted more than 5,000 organisations across the country of different sizes, constitutions and setups. Some were given grants, while others were given loans, as the noble Baroness said, at a favourable rate to try to assist them at a time when the pandemic made the running of those businesses difficult. Where there are loans, the Government are clear that they must be repaid, but it is for institutions to make the decisions about how they run themselves in the light of that.

Noble Lords took the opportunity to raise a number of broader issues, which I am sure my noble friend Lord Harrington will want to reflect on when he concludes in a moment. Indeed, he may wish to reflect on them as the Bill proceeds to the Private Bill Committee.

Photo of Lord Harrington of Watford Lord Harrington of Watford Conservative 1:21, 19 October 2023

My Lords, I have never been in a debate where I have been complimented so much at the beginning of everyone’s speech and then had almost everything I said disagreed with afterwards. I thank noble Lords for their contributions. The noble Baroness, Lady Fraser, referred to the people who spoke as “gadflies”—I believe that was the expression. With due deference to my noble friend Lord Hodgson, Robin Hodgson and his merry men comes to mind, although I do not think he would quite articulate this Bill in terms of taking from the rich and giving to the poor. I will leave that for him to consider.

In all seriousness, the core point, as far as I can tell, is that the hall’s perspective of the conflict point—which has been brought up by nearly all speakers—is that the existing arrangements with the majority of what would be perceived as conflicted trustees are not really enough for a charity to progress itself in a charitable manner.

My noble friend Lady Stowell asked me when the conflict rules were last changed—that was in 2022—and what discussions there have been about conflicts. There is an independent conflicts committee, none of whose members are trustees. That meets routinely after every council meeting, so there is a process. I accept the argument that it may not be enough and that it does not deal with conflicts properly. That argument can be made, but it is not taken lightly.

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston Chair, Communications and Digital Committee, Chair, Communications and Digital Committee

Just to clarify, that conflicts committee meets after the decisions have been made by members who are conflicted.

Photo of Lord Harrington of Watford Lord Harrington of Watford Conservative

Other than the fact that ongoing conflicts are discussed—it is not the conflicts that have come out in that council meeting, it is future conflicts. However, I accept there is an argument. I would argue, of course, that it is nothing whatever to do with the Bill. It is an argument, and it was very well articulated by other noble Lords.

I was impressed, as ever, by my noble friend Lord Hodgson’s and other noble Lords’ screenshots—I do not know how to do them—and technical knowledge, and by my noble friend’s serious point about tickets for Ed Sheeran and others going for large amounts of money. However, that implies that the people who own those seats have done something wrong by selling them. They own them and they are selling the seats that belong to them on the market, however crazy the market might be. I am pleased to see present Sharon Hodgson, the chairman of the APPG on such matters. She and I have discussed viagogo, for example, but I do not believe that that issue is relevant because those people own those seats.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative

My noble friend really cannot be allowed to get away with that statement. The fact is that we have made a distinction between trustees who are seat-holders and are therefore deciding which concerts seat-holders can offer seats for, and those who are not. People who have no conflict of interest are free to sell seats they do not they want, but once you become a trustee, the name of the game changes. With great respect to my noble friend, I do not think the way he is putting it makes that distinction clear enough.

Photo of Lord Harrington of Watford Lord Harrington of Watford Conservative

My noble friend makes his point clearly and with great lucidity, as ever.

Quite a few points were made about the Covid loan—as has been said, it was given according to the decision of an independent committee that DCMS, I presume, appointed for all the loans that took place—and whether surplus money should be used to pay back the loan early to the Government. Any charitable body which has a loan that it can pay back at 2% would not be doing its duty for charitable purposes if it did not invest it in something that would perhaps pay back at 4%. I do not believe that that point is relevant to the conflict of interest issue.

The valuation of seats was raised. My noble friend Lord Hodgson believes that seats should be valued by an independent evaluator nominated by the Charity Commission, or put through the Charity Commission. I remind him that, although the clause says that the trustees should take professional advice, all trustees, whether they are appointed, like me, or are seat-holders, are subject to the duties of trustees under the Charities Act, which means that they would be in breach of that duty if they sold them at less than the available market price. One noble Lord told me that some of these seats have already been allocated and sold. I am not aware of that, but I intend to find out. I would disapprove most strongly if that were the case, but I do not believe it is.

The noble and learned Lord, Lord Etherton, made, as one would expect, a very significant contribution regarding the legal aspect. He made a point about charities having separate commercial entities. I have some experience of that, having been chairman of a charity that had a separate commercial entity. That happens all the time. However, that is different because the commercial entity of the charity is set up for that purpose. In the case of the hall, the commercial interests are owned by the seat-holders. From that perspective, they are there in two capacities: because they are selling their seats and because they are trustees of the hall, trying to enforce its charitable purposes.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Energy and Net Zero), Shadow Spokesperson (Science, Innovation and Technology), Shadow Spokesperson (Culture, Media and Sport)

There is a point which we need to reflect on. In putting his argument, the noble Lord is seeking to protect those who have a conflict of interest. He is right that the hall can have a commercial side to its charitable practice, but it cannot surely be right that seat-holders be able to exploit its being a charity. Those seats are sold by seat-holders at a vastly inflated commercial rate that reveals no benefit to the hall itself. That is one of the fundamental objections we have voiced clearly today. Until this legislation answers that question, I cannot see the merit in having it before us.

Photo of Lord Harrington of Watford Lord Harrington of Watford Conservative

I thank the noble Lord for that. He made it clear that he felt that his Benches would not be able to support the Bill in its current form, but I do not think that is particularly important today, because I think the last time a Private Bill such as this was divided on was in the 1930s. If I remember correctly, it was a railways Bill.

It has been my duty and pleasure to propose this Bill—perhaps a masochistic form of pleasure, given what has been said in the past couple of hours. The serious point is that I am proud to be a trustee of this charity, and I believe that the trustees act in a manner commensurate with its interests. If I had experienced any conflict of interest or if any decision of the council had been taken that was in conflict with the hall’s charitable purposes, I would not only have resigned but publicised the reasons for doing so. However, I have not found that up to now.

Photo of Lord Winston Lord Winston Labour

Perhaps the noble Lord can tell the House what he feels about the following. At the moment, London is under massive pressure for performance space, and a number of theatres may be at risk of being closed. The Coliseum, for example, which is occupied by the ENO, will clearly be under pressure as well. The great point about this wonderful institution, the Royal Albert Hall, is that it is a monument to culture—in fact, it is said that it is for science as well, although I must say that I cannot remember the last time there was a science meeting there, it was so long ago. There is surely a duty for the trustees to recognise the importance of the Albert Hall, particularly at this time, when the arts are under such pressure.

Photo of Lord Harrington of Watford Lord Harrington of Watford Conservative

The trustees recognise that. The noble Lord’s point is one for any cultural institution of any sort. They are conscious of that point, and the number of performances that are put on effectively by the charity which would not be financially viable to be put on commercially shows their commitment on that point. However, he makes a specific point about financial pressures on the hall. I argue that it is a very well-run institution. Obviously, any surplus goes back to the charity. We had very difficult times during Covid, like all cultural institutions, and we are grateful for the Government’s loan. However, we are very conscious of that issue.

It is traditional with private Bills for the House to wait for a Third Reading when it considers the Bill as amended, admittedly by a different form of Committee to that we are normally used to in the Commons and the Lords. The House will then make its judgment as a result of the Committee and the Third Reading debate. In the meantime, I hope that I have answered some of the questions that were put forward. I argue that some of them are certainly without the scope of the Bill. It is my duty to ask the House to give the Bill a Second Reading.

Bill read a second time and referred to the Examiners.