Clause 40

Charities Bill [Lords] – in a Public Bill Committee at 5:15 pm on 11 July 2006.

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Power to transfer all property

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I beg to move amendment No. 40, in clause 40, page 40, line 19, leave out ‘(or any of the purposes)’.

This is really quite a simple amendment, which invites the Minister to say why he is happy that a charity that has, say, four purposes should be permitted to transfer its property to a charity that might have only one of those four purposes. In the general interests of ensuring that the donor’s wishes are applied where reasonably practicable and where there is nothing to suggest that any of the four purposes are not practicable, it is odd that proposed new section 74(4)(b) of the 1993 Act should say

“or any of the purposes”.

I propose the deletion of those words.

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

The hon. Gentleman may have slightly misinterpreted the purpose of the words

“or any of the purposes”.

By my reading, the purpose of those words is to allow, for example, the transfer of property from a charity with a narrow purpose to a much larger charity with a number of purposes, one of which might be applicable to the charitable purpose for which the property was given or is owned. However, more than one of its purposes might be applicable. The clause introduces an entirely sensible flexibility into the process, so I oppose the amendment.

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

I am grateful to the hon. Member for Isle of Wight for tabling his amendment and I shall try as best I can to explain the clause—although, as a health warning, I should say that it is not easy to explain.

My key response is to suggest that new section 74A of the 1993 Act must be taken with new section 74B. In other words, for the property to be transferred, the charity trustees of the transferor charity must be satisfied that that would further the purposes for which the property is held. In other words, the trustees must believe that the transfer will further and transfer the purposes for which the gift or the assets were originally put.

I can best explain the effect of the amendment in the following way. Suppose, for the sake of argument, a charity had purposes A, B and C and thought about  transferring property to one that had purposes B, D and F. Under the clause as it stands, the first charity could decide to transfer the property or asset to the second charity because it had purpose B. The second charity would not share all the first charity’s purposes, but the two would have a purpose in common.

If the amendment were made, the transfer would not be possible because the purposes of the charity to which transfer was to take place would not be substantially similar to the purposes of the transferring charity or any of the purposes, because purposes B, D and F of the second charity would not be the same as A, B and C, or as A or B or C. That explanation is incredibly convoluted, but it is the best that I can do. I give way to the hon. Member for Cheltenham, who I hope will simplify the explanation.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I am impressed by the Minister’s attempt at numerology. However, would a concrete example be a charity established for the benefit of elderly people in the UK that was trying to transfer to, for instance, Help the Aged, which is established for the benefit of elderly people in the UK and overseas? One of the purposes would be applicable, but not both. Flexibility on the number of purposes would be relevant in such a case.

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

Brilliant—I give the hon. Gentleman full marks for making the point much better than I could have done. On that basis, I hope that the hon. Member for Isle of Wight will withdraw his amendment.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I am certainly intrigued. The point made by the hon. Member for Cheltenham was exactly the same as the one he made earlier, but it was not the same as the Minister’s point. I think that the Minister said that if a charity was established for the relief of poverty among elderly people in Hampshire, the Isle of Wight and Sussex, it would be fine to transfer the property to a charity whose purposes were to relieve poverty among elderly people in Hampshire, Surrey and Kent. The Minister accepts that. If the Minister now says that the hon. Member for Cheltenham was right and he was wrong, I shall be prepared to withdraw my amendment.

Edward Milibandindicated dissent.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

The Minister is shaking his head, so I do not think that he is saying that.

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

Now I am going to cause confusion by saying that how the hon. Gentleman just put it is correct. Now that I think about it, the problem with the example given by the hon. Member for Cheltenham is that the whole purpose of his first charity was subsumed in part of the purposes of his second, so it did not accord with my example. However, the example given by the hon. Member for Isle of Wight is consistent with mine.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I am grateful for that. In that case, I am happy about the elderly people in the Isle of Wight, but under the scenario that I have sketched out, my hon.  Friends who represent Hampshire—and I have forgotten the name of the other place—would not be happy because their elderly people would be deprived of the charity’s benefits.

In my example, the charity’s purposes are three-fold, that is, it covers Hampshire, the Isle of Wight and Sussex. Under sub-paragraph (4)(b) any of those purposes will do—the Isle of Wight is in there, so stuff those in Hampshire and Sussex. If that is what the Government mean—but I am prepared to give way to the hon. Member for Cheltenham who has no interest in this.

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

The Minister was correct in pointing out the flaw in my earlier, perhaps simplistic, example. In the hon. Gentleman’s example, if the property was in the Isle of Wight and had been given by the donor for the benefit of the relief of poverty in the Isle of Wight, it would happily transfer under the clause and have difficulty transferring if the amendment were made.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

It would, but that does not meet the requirements set out in sub-paragraph (4)(a), which states that it must be

“expedient in the interests of furthering the purposes for which the property is held” to transfer it to be “any of the purposes” of the transferor charity.

I can only repeat the example. Let us say that the property is money rather than real property. It is held for the benefit of pensioners in those three counties and is transferred to a charity that only has the interests of pensioners in one of those counties. The Isle of Wight Society for the Blind is a good example of a charity to which to transfer their property. The benefit is being reduced by two-thirds—rather more given the relative populations of the three counties. Two-thirds of the prospective beneficiaries are cut off from benefit.

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

I am sorry to be picky, but surely that would fail test A, so it would not actually apply?

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I accept that would fail test A. In that case, I still do not understand why it is possible for there to be one purpose in common. If the hon. Member for Cheltenham’s thesis is right, one purpose is okay. However, if the Minister’s thesis is right, then one purpose is not okay.

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

This is a shadows and fog debate. We should step outside of the ivory tower for one minute. There is a context to the provision. It is about charities whose gross income in the last financial year did not exceed £10,000. Transfer requires a two-thirds vote of the trustees and it has to further the purposes for which the property is held by the transferor charity.

The hon. Member for Isle of Wight is incredibly ingenious, as he has proved in this Committee, and he has managed to think of an example. However, I do not quite see why anyone would set up a charity for the three purposes that he described. If they did, why  would they want to “stuff”—as he so eloquently put it—the people of Hampshire by transferring the money elsewhere?

I am all in favour of intellectual and abstract debate. However, on this occasion, I think that the clause is fine. We can trust the trustees of those small charities to make the right decisions and I suggest that we move on.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

Since I am in a friendly mood and largely trust the trustees of single charities, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 ordered to stand part of the Bill.