Schedule 4

Charities Bill [Lords] – in a Public Bill Committee at 3:45 pm on 6 July 2006.

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Appeals and applications to Charity Appeal Tribunal

Amendment proposed: No. 19, in schedule 4, page 91, line 13, leave out from ‘ matter’ to end of line 29 and insert—

‘as set out in paragraph 3, an appeal may be brought to the Tribunal against any decision, direction or order made or given by the Commission under this Act (including any decision not to give a direction, make an order or otherwise act under this Act).

(2) Such an appeal may be brought by—

(a) the Attorney General;

(b) any person from the following—

(i) the persons who are or claim to be the charity trustees of the institution or who otherwise have control or management of the institution,

(ii) (if a body corporate) the institution itself, and

(iii) any other person who is or may be affected by the decision, direction or order (as the case may be).

(3) In determining such an appeal the Tribunal—

(a) shall consider afresh the decision, direction or order appealed against, and

(b) may take into account evidence which was not available to the Commission.

(4) The Tribunal may—

(a) dismiss the appeal; or

(b) if it allows the appeal, exercise any of the following powers—

(i) quash the decision, direction or order (as the case may be) in whole or in part, and (if appropriate) remit the matter to the Commission,

(ii) substitute for all or part of the decision, direction or order (as the case may be) such other decision, direction or order as could have been made or given by the Commission,

(iii) give such direction to the Commission as it shall consider appropriate,

(iv) substitute for all or part of any direction or order any other direction or order which could have been made by the Commission, and

(v) add to the decision, direction, or order (as the case may be) anything which could have been contained in the original decision, direction or order.’.—[Mr. Turner.]

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 9.

Division number 5 Nimrod Review — Statement — Schedule 4

Aye: 4 MPs

No: 9 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment No. 81, in schedule 4, page 96, line 45, at end insert—

‘1

2

3

Appointment of a receiver and manager in respect of the property and affairs of the charity under section 18(1)(vii) and section 19 of this Act.

The persons are— (a) any person whose powers or duties as a trustee are performed or exercised by the receiver or manager under the order, and (b) any other person who is or may be affected by the order.

Power to— (a) quash the order and (if appropriate) remit the matter to the Commission, (b) substitute for all or part of the order which could have been made by the Commission, (c) direct the dismissal and replacement of the receiver or manager.’.

Photo of Roger Gale Roger Gale Conservative, North Thanet

With this it will be convenient to discuss amendment No. 82, in schedule 4, page 96, line 45, at end insert—

‘1

2

3

The continued appointment of a receiver and manager in respect of the property and affairs of the charity under section 18(1)(vii) and section 19 of this Act.

The persons are— (a) any person whose powers or duties as a trustee are performed or exercised by the receiver or manager under the appointment, and (b) any other person who is or may be affected by the appointment.

Power to— (a) end the appointment, (b) direct the ending of the appointment and remit the matter to the Commission, (c) direct the dismissal and replacement of the receiver or manager, (d) transfer the responsibility for paying all or part of the costs of the receiver or manager to the Commission, (e) direct the compensation of the charity by the Commission for all or part of the costs already incurred by the receiver or manager.’.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

We have at times been a little rude about schedule 4, particularly about its size, complexity and tables. However, I am not sure that I entirely go along with what has been said about it; I am quite impressed by it. I would rather like to congratulate the drafters of the Bill on their clear setting out of what can and cannot be presented to the tribunal, who can make the applications, and what the outcomes may be. It is quite easy to follow, and it is therefore quite easy to spot when things have been missed out.

Earlier, we discussed amendments through which I was trying to introduce exactly what I am trying to introduce here, and various objections were made to my broader approach in the main part of the Bill. The suggestion was made that my earlier amendments might offend various legal principles, in terms of not being legal decisions or drawing in administration. I hope that these extremely detailed amendments to the schedule will not commit any of those crimes. I urge the Minister not to dismiss them frivolously, because they deal with extremely serious issues that may—as we  know from the Association for Charities document—affect the very existence of some charities, and certainly the value of their assets. The costs incurred in the course of the appointment of a receiver and manager may sometimes hugely exceed those expected, even by the charity commissioner, at the time of appointment.

There are major issues at stake. The Charity Commission is an extremely powerful body and it is right that we should address in detail the decisions that it makes. Amendment No. 81 covers the appointment of

“a receiver and manager in respect of the property and affairs of the charity”,

which is a decision analogous to others set out in the schedule. The mention of the

“continued appointment of a receiver and manager” in amendment No. 82 carries no suggestion of drawing the tribunal into the matter of administration, covering merely the whether the continued appointment is appropriate. Evidence might be brought to bear from the consequences of that continued appointment, and that is as it should be. That would surely apply also to any of the other matters listed in the schedule—it is difficult to see how they could be discussed without reference to their consequences.

I give you notice that I shall want to move amendment No. 82 when I may, Mr. Gale. The amendments contain important detail and I hope that they avoid the legal difficulties on the grounds of which the Minister objected to earlier amendments.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I would like to support the amendments. Judging by the information that I have been given, I do not think that there can be a more serious decision affecting a charity than the appointment of a receiver and what we now hope to call an interim manager.

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

To short-circuit the discussion, amendment No. 81 simply duplicates an existing provision in the Bill. It is rather opaque, so I shall set it out for the Committee. It is on page 95, column 1 and relates to an order

“made by the Commission under section 18(1) of this Act in relation to a charity.”

It is precisely about the appointment of a receiver-manager. I thought that I would short-circuit what would no doubt have been an eloquent speech by the hon. Gentleman.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I am grateful, and I am sure the Committee is equally grateful that it will be deprived of my eloquence on amendment No. 81.

On amendment No. 82 the matter to consider is not only the appointment of a receiver-manager but the decisions that follow it, if decisions they be. I assume that the commission has a duty to take care of the assets of charities, but in a case that has been brought to my attention the continued appointment of an interim manager for the Cancer Care Foundation led to expenditure of £325,000 in about eight months by PricewaterhouseCoopers and additional £300,000 costs to the charity’s trading company. That is a considerable  amount of money even to what appears to be a charity with a certain amount of money in the bank. It had £800,000 but was forced by the decision of the Charity Commission to spend £325,000 of it.

It may well be that there was a good case for the appointment of a receiver-manager, but I am inclined to ask whether there is a process for deciding whether there was a good case for the continuation of that appointment. That is why I intend to support amendment No. 82. I also ask whether there is a good case for better monitoring of the expenditure of the receiver-manager at the charity’s expense. If a charity has £800,000 in the bank and donors are bringing in £50,000 a month, as I believe they were for the benefit of the hospices supported by the Cancer Care Foundation, one has to ask why that money was not going out to the hospices supported by the Cancer Care Foundation, one has to ask why that money was not going out to the hospices and whether the donors were receiving good value for the £325,000 that PricewaterhouseCoopers billed the charity.

Of course, there may be a good case for the appointment and the continuation. However, the question is whether the decision is legally right and whether the expenditure should be undertaken without proper review.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

Will the Minister make clear whether there is a difference in law, or in the Bill, between references in column 2 to “trustees” and the amendment’s mention of

“any person whose powers or duties as a trustee are performed”?

For me, there is an ambiguity, which I am sure is clear to experts, about whether column 2 refers to the majority, all or two of the trustees, or whether a single trustee could be counted as the “trustees”.

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

The hon. Member for Worthing, West is keeping up his fine record of asking difficult questions. I shall endeavour to come back to him on that point.

I have already dealt with why amendment No. 81 is unnecessary; I assure the Committee that what it requires is already in the Bill, albeit rather implicitly. On amendment No. 82, there is a distinction that is difficult to draw, but it is nevertheless there. The hon. Member for Isle of Wight put it well in talking about the decisions taken by the interim manager. However, that is a question of the conduct of the charity.

We would not suggest that the charity tribunal intervene in the decisions made by the charity trustees or persons acting in lieu of the charity trustees—namely, the interim manager. I do not think that the hon. Member for Cheltenham would support the idea that the charity tribunal should have jurisdiction over what the trustees do.

The interim manager is appointed in lieu of trustees. I appreciate that the distinction between the original appointment of the interim manager, which is a legal decision, and the question of conduct and decisions made by the manager, may be hard to discern. However, there is a distinction and it is right to hold to it.

The Charity Commission has a duty to conduct periodic reviews of receiver managers and what they are doing, and—this may offer last-minute reassurance to the hon. Gentleman—if, on review, the commission decides not to end a receiver manager’s appointment, that decision can be taken to the charity tribunal. In other words, there is an appeal against the Charity Commission’s decision to continue with the interim manager after a periodic review.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Could the Minister tell the Committee to whom the receiver manager owes a duty?

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

As I understand it, the receiver manager is acting on behalf of the beneficiaries of the charity.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

The Minister has made a critically important statement. The intention seems to be entirely in line with the amendment and with many of the concerns that we have raised today. The practice may not quite be there yet in that he talks about a periodic review, but if I interpret correctly what he said it seems to be entirely at the discretion of the commission, and it apparently has no obligation to do it at a particular time. However, it seems to be within the Minister’s powers to make regulations or orders directing the  commission to conduct periodic reviews, or to amend the table in order to have reviews at specific timetabled periods, or some other mechanism. We seem to be nine tenths of the way to agreement.

If the Minister can assure me that he will pursue that one last remaining issue of the timetable of the periodic review, assure me that it is a genuine opportunity to challenge the continued appointment of a receiver and manager, then I would be very reassured indeed.

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

I must be careful. It is not for the Minister to tell the commission how often the periodic review should be. However, in the interest of harmony, I shall endeavour to return later and tell the Committee how often the periodic reviews should happen, and the basis of their determination. I hope therefore that the hon. Gentleman will withdraw the amendment.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

I am encouraged by what I have heard. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 4 agreed to.

Further consideration adjourned.—[Liz Blackman.]

Adjourned accordingly at Four o'clock till Tuesday11 July at half-past Ten o'clock.