Clause 5

Charities Bill [Lords] – in a Public Bill Committee at 5:15 pm on 4 July 2006.

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Special provisions about recreational charities, sports clubs etc.

Question proposed, That the clause stand part of the Bill.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

The hon. Member for Bishop Auckland referred to the clause some moments ago. My worry, which arose before she raised that matter, is that a

“registered sports club established for charitable purposes is to be treated as not being so established, and accordingly cannot be a charity.”

I understand, of course, that, if the club were registered under the Recreational Charities Act 1958, certain provisions would apply to it, but if a club—as is now possible and has been so in the past—becomes a charity by virtue of its sporting activity and then becomes a registered sports club, what is the position of its assets? When an organisation ceases to be a charity, it loses its assets. What will be the consequences of that treatment of a sports club that is a charity, but which then chooses to register under the provision?

Photo of Lynda Waltho Lynda Waltho PPS (Mr David Hanson, Minister of State), Northern Ireland Office

I draw attention to subsection (3) because I am particularly worried about the proposal to omit miners welfare trusts from the special provisions category. I am sure that right hon. and hon. Members have experience of such trusts. I have a miners welfare association in my constituency. The Beech Tree Miners Welfare Association in Wollescote provides great assistance to miners, ex-miners, their families and widows. It assists with matters like aids and adaptations. It is its centre of the community. Most community events take place there, such as family weddings. It is a polling station. It runs youth clubs and has all sorts of recreational facilities for the whole community. It is most definitely of great benefit to the community, so I am greatly worried that it is to be omitted. Will my hon. Friend the Parliamentary Secretary reconsider the special provision to ascertain whether it is necessary to omit miners welfare association charities?

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

Before the Minister responds, I wish to say that the notes on the clauses do not make clause 5 clear. I was not sure whether to read subsection (3), under which miners’ welfare trusts are omitted, without submitting it as an exception to the change that the clause makes or whether in light of the fact that they will cease to be charities. My guess is that it is the first assumption rather than my second, but no doubt the hon. Gentleman will be able to the help the Committee about that.

Subsection (4) states:

“A registered sports club established for charitable purposes is to be treated as not being so established, and accordingly cannot be a charity.”

If a club had charitable status, should not the clause read “ceases to be a charity”? If so, what will happen to the assets or does that apply only to those charities and clubs that purport to be registered after the Bill becomes an Act?

Let us consider an organisation that is not a club, such as the British Olympic Association. Is that charitable? If so, how do we know whether it is covered under the Bill?

Photo of Ed Miliband Ed Miliband Parliamentary Secretary (Cabinet Office)

It is a great joy to respond on the clause, which is a bit of a rag-bag, sweeping up matter on part 1. I shall really excite the Opposition by saying that part of the clause is motivated by a desire to be compatible with the European convention on human rights. I thought that that would cause some gasps. Let me explain what the clause does, because as the hon. Member for Worthing, West said, it is not clear.

The first part of the clause, up to the end of subsection (2)(b), deals with the problem that the Recreational Charities Act 1958 makes it charitable in certain circumstances to provide recreational leisure time facilities either for the public as a whole, or for women only, but not for men only. That element of discrimination arguably makes the Act incompatible with the ECHR. Subsection (2) therefore makes it charitable to provide recreational leisure time facilities for men only as well as for women only, or for the public as a whole. The only alternative to that would have been to rule out women-only charities, which we feared could adversely affect women’s institutes, among others. In order to comply with the principle of non-discrimination, we have allowed for men-only charities. We know better than to take on the WI.

Photo of Ed Miliband Ed Miliband Parliamentary Secretary (Cabinet Office)

Indeed. Subsection (3) deals with miners welfare trusts. I note the concerns of my hon. Friend the Member for Stourbridge (Lynda Waltho) on this issue, and I promise that I will report back on this matter on Report, and that I will make further inquiries into it. The provision is being repealed because it is also seen as being incompatible with the ECHR, because it discriminates in favour of a certain occupation as against members of other trades or professions.

Before members of the Committee become alarmed, I should point out that there has been extensive consultation with the Coal Industry Social Welfare Organisation on this issue to find a way to enable the 330 miners welfare trusts to continue their good work. As the consultation took place before I became a Minister, I shall meet representatives from CISWO and other miners welfare trusts. We will do further research on the position of such trusts, and I will report back, as my hon. Friend asks, on Report. Miners welfare trusts that allow entry to people other than miners will not be affected and will continue to qualify. I think that in practice—I have to be careful what I say here—other organisations should also qualify as having charitable purposes with little effort, but we need to research that. Further work must be done, and I will report back.

The final part of the clause deals with sports clubs. Subsections (4) and (5) prevent a sports club that is registered as a community amateur sports club, or CASC, from also being a charity. That is because CASC status and charitable status are meant to be separate options for small, community-based sports clubs, because there are different tax and regulatory regimes for CASC  organisations. We certainly do not want to get rid of CASC status, because it has been widely welcomed in the amateur sports club community. Given the different tax and regulatory regimes, clubs could not be covered by both the CASC and charities regimes. Hence, the slight ugliness of this part of the clause.

As to what happens to organisations that might transition from one to another, my understanding is that it will continue to be possible for a CASC to move to charitable status and vice versa, which is exceptional in charity law. I hope that that reassures the Conservative spokesman and the hon. Member for Worthing, West.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

This is a serious issue and it is useful for the Committee to hear the background to the sports club change. Incidentally, I am sure that the Committee will welcome what the Parliamentary Secretary, Cabinet Office said about the miners trust, but he may want to get his experts to look at organisations that are not clubs and do not have premises, such as associations of people who have retired from work in the Royal Mail, local government, national civil service and so on. I suspect that there is no problem because the provision may be tied to property, but if I am wrong the Minister may want to help the House with a statement or some words on Report.

On community sports clubs, if they started as a charity and had it written into their articles that if they ceased to be a charity they would be required to yield up their assets to another organisation, they might be involved in turning into a completely new organisation with extra costs as a result of this legislative change. If the Parliamentary Secretary has time, it would be worth him double checking that he will not force innocent bodies into paying a lot of money to lawyers to go through a change of form. If that can happen automatically, the Committee and, later, the House will accept what he said, but it might be worth double checking that to be sure.

The Minister may also want to clarify the position of recreational charities with premises and those who provide activities that may not take place on their own premises. I have no doubt that in tax law the community sports facility concession is equivalent to that available to charities with perhaps some change on VAT. He may want to check that it is not tied to premises and that others will not be caught unnecessarily. I am not accusing him of being malevolent, but the matter is tricky and words of assurance do not work if all the possibilities and circumstances of those involved have not been checked.

Photo of Roger Gale Roger Gale Conservative, North Thanet

Hansard may record that that was an intervention and not a speech. At this stage, I admonish all hon. Members to keep interventions relatively brief.

Photo of Ed Miliband Ed Miliband Parliamentary Secretary (Cabinet Office)

Thank you, Mr. Gale. The hon. Gentleman obviously knows far more than I do about community amateur sports clubs, which play an important role. My understanding is that if a charity wants to become a CASC, it can start a new CASC and pass its assets over. The new CASC would then have charitable purposes without being a charity but would have all the benefits of charitable status.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

This will be brief. Unless there is a provision in the legislation dealing with CASCs that allows a charity to pass its assets to an organisation that is not a charity, the Minister may be providing more reassurance than the legislation provides. It would be helpful if he could clear up the matter—if not today, then soon.

Photo of Ed Miliband Ed Miliband Parliamentary Secretary (Cabinet Office)

I certainly do not want to go any further in trying to clear it up today. I will return to the matter on Report to clarify the precise position relating to the transitional issue between CASCs and charities that are sports clubs.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.