New Clause 10

Charities Bill [Lords] – in a Public Bill Committee at 3:00 pm on 13 July 2006.

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Property in trusts from residuary legacies

‘(1) After section 36(5) of the Charities Act 1993 (c.10) insert—

“(5A) References to a “charity trustee” in this section mean a trustee of the relevant charity or any proper officer with delegated authority from trustees.”

(2) After section 36(9) of the 1993 Act insert—

“(9A) Requirements in subsection (3), above, do not apply to any property under the value of £500,000 or a sum afterwards  determined by an order, a draft of which has been laid before, and approved by a resolution of, each House of Parliament.”’.—[Martin Horwood.]

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

The new clause was recommended by a learned friend, and I should be interested to hear the Minister’s response to it.

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

The new clause is about delegation, some of which I suspect has already taken place from Lord Phillips to the hon. Gentleman.

The first subsection of the new clause is unnecessary, because the law already allows charity trustees to delegate appropriately. The Charity Commission’s publication “The Essential Trustee: What You Need to Know” puts it like this:

“Trustees can generally delegate certain powers to agents or employees, but will and must always retain the ultimate responsibility for running the charity.”

In the context of section 36 of the 1993 Act, it means that in practice, trustees must personally make the initial decision to sell a property and the final decision to sell it on particular terms. In between, the trustees may and routinely do delegate the administration of the sale to their staff. That balance is right.

The second subsection of the new clause would remove important safeguards on sales of property worth less than £500,000. Since the hon. Gentleman appears to want to allow charities to sell their property without having it properly valued, one wonders how they will know how much it is worth in the first place. However, the serious point is that although he, as the beneficial owner of his own house, is free to sell it at whatever price he likes, the trustees of a charity do not have similar freedom. They must obtain and consider a written report from a qualified surveyor, and they are under a duty to dispose of their land only on the best terms.

The objection to the new clause is that essentially the duties on trustees to take expert advice and to sell only on the best terms reasonably obtainable should not be disapplied as the new clause suggests. They are important safeguards for the disposition of charity lands. However, I have a piece of good news. I understand the amendment’s deregulatory intent, and I undertake to review the regulations that set out what a surveyor’s report must contain. They were made in 1992 and may be seen as over-prescriptive, especially for smaller sales. Our review would aim to reduce the level of detailed prescription in the regulations.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

If the hon. Member for Cheltenham does not mind me saying so, the Minister is right. However, the Minister might want to include the exception—I am not sure how far it is covered by the 1992 provisions—that if a charity sells property to another charity, it does not have to get the best market price. It would be interesting to know whether some of the regulations under the Charities Act 1992 apply.

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

That process is already possible, but I shall consider the hon. Gentleman’s point. On  that basis, I hope that the hon. Member for Cheltenham is happy-ish, and will withdraw his new clause.

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

I am interested in the Minister’s response. I was surprised by his response to the first part of the new clause, which talks about the power to delegate to a proper officer. Part of the problem is that properties can be disposed of once in a blue moon by some charities, but when properties are left as part of a legacy, as they frequently are, the requirement for the trustees always to take the decision can be extremely onerous. I have talked to charities that were under the impression that that was the requirement in law, but the Minister’s response appears to go against it. Nevertheless, if that is the legal situation, and he has put it on the record, they might well be reassured.

In the second half of the new clause, the value of £500,000 is only indicative. It then says,

“or a sum afterwards determined” by the Secretary of State. It is a rare and generous example of me offering rather than withdrawing latitude to the Secretary of State. However, I am reassured by the Minister’s statement, and I beg to ask leave to withdraw the new clause.

Motion and clause, by leave, withdrawn.