Clause 20

Charities Bill [Lords] – in a Public Bill Committee at 12:30 pm on 11 July 2006.

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Power to give specific directions for protection of charity

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I beg to move amendment No. 35, in clause 20, page 21, line 1, leave out

‘the Commission considers to be expedient in the interests’ and insert

‘is necessary for the protection of the property’.

The amendment is straightforward. It would remove the power of the commission to do all sorts of things that it might think expedient in the interests of the charity, and instead restrict the power to things that the commission considers necessary for the protection of the charity’s property, which is more or less the position under section 19 of the 1993 Act. I do not really understand the case for broadening the commission’s power. The commission would be given a fairly broad power in place of a fairly narrow one and the power would be exercisable before the outcome of any inquiry. The commission would not have to wait for the inquiry before deciding what to do, whereas later parts of the Bill provide for the commission to do things following the outcome of an inquiry.

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

I am pleased to support the amendment, which seems sensible. The hon. Gentleman has discovered something that gives unnecessary latitude to the Charity Commission. If an order under the provision were the subject of an attempted challenge by trustees or by a charity, the trustees or the charity would have to find some error in law on the part of the Charity Commission, yet the commission would need only to justify its decision in terms of expediency. That seems a very low test indeed, so the hon. Gentleman’s amendment is well thought out and should be supported.

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

Let me briefly explain the intention of the clause. At the moment, the Charity Commission has a draconian power to suspend or remove trustees from membership of the charity, but it has no intermediate set of powers. A number of cases have arisen in which annual general meetings have not been held and annual accounts have not been submitted because of, for example, a dispute with a charity. In such circumstances, the commission faces Hobson’s choice: it can either do nothing or take extreme action to suspend trustees.

The intention behind the clause is to give the commission the power to give specific directions if it considers that necessary and in the interests of the charity. That would, of course, be reviewable by the charity tribunal. The problem with the amendment is that it would restrict the powers to those necessary for  the protection of the property. The hon. Gentleman says that that is in the 1993 Act; that may well be the case, and that is precisely the problem. The commission would be pushed back to either facing the possibility of using the very extreme power to suspend trusteeship, or sitting on its hands.

The hon. Gentleman raised the question of use of the commission’s powers not having to wait for the outcome of the inquiry. It may not be much reassurance, but that is true of all the commission’s powers, which can be exercised any time after the start of the inquiry. That has always been the case. I hope that, on that basis and in that context, the hon. Gentleman will accept my reassurance.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I appreciate the Minister’s words, which are meant to reassure, but am sorry to say that they do the opposite. The power that the commissioners have at the moment comes into play when they

“are satisfied...that... that there is or has been any misconduct or mismanagement in the administration of the charity; or...that it is necessary or desirable to act for the purpose of protecting the property of the charity or securing a proper application for the purposes of the charity of that property or of property coming to the charity”.

I can think of very few improper ways in which trustees could act that would not, in one way or another, imperil the proper application of the property, except when the trustees were merely making decisions on discretion—they could have spent the money on A, but will spend the money on B.

I do not see why the commission should need an intermediate power. If the purpose of the Bill is to enable charities to get on with running their own affairs, there must be a high level of test before the commission is allowed to interfere. As the hon. Member for Cheltenham said, the power is virtually unappealable. [Interruption.]

The Minister says that it is not unappealable in law, and of course that is right, but it is unappealable in practice because the commissioners would have to demonstrate only that they considered it expedient and in the interests of the charity to do one of the things listed at the bottom of page 20. Yes, their decision would have to be reasonable and rational, but all they would have to say is, “We thought it was expedient.” The tribunal would just say, “Well, you thought it was expedient—sorry, appellant, you’ve had it”.

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

The hon. Gentleman is missing out the rest of the words in the clause:

“in the interests of the charity”.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

Yes, the intervention has to be expedient in the interests of the charity, but the commission may well take a different view from that of the trustees on what is expedient. That is the point. It may be expedient to invest money in A or in B. [Interruption.] The Minister says that it is not that wide.

Photo of Alun Michael Alun Michael Labour, Cardiff South and Penarth

Surely it is generally the case in law that in matters of judgment, the judgment lies with those exercising the judgment, and that what the hon. Gentleman is talking about would not be in question.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

Of course that is normally a matter of law, but the provision gives the power to take any action that the commission considers expedient. The right hon. Gentleman shakes his head. My concern is that it is too broad a power and that it does not require any demonstration of failure. It requires an inquiry to be established. It does not require the inquiry to report.

I know that the Minister has been busy over the weekend and therefore might not have had a chance to read “Power without Accountability”. It repeatedly provides examples of the Charity Commission exercising, not power, but discretion in a way that is difficult to applaud. Let me put it no stronger than that. It is not going to be in the interests of the good governance of charities to give the Charity Commission those broad powers of discretion which, although technically appealable, are impossible to appeal successfully.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 9.

Division number 8 Nimrod Review — Statement — Clause 20

Aye: 6 MPs

No: 9 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Clause 20 ordered to stand part of the Bill.

Clauses 21 and 22 ordered to stand part of the Bill.