Power to direct winding up

Part of Charities (Protection and Social Investment) Bill [Lords] – in a Public Bill Committee at 2:15 pm on 15 December 2015.

Alert me about debates like this

Photo of Anna Turley Anna Turley Shadow Minister (Cabinet Office) 2:15, 15 December 2015

I am happy to take any interventions. We are indeed rattling through these clauses and are the beneficiaries of some excellent analysis of the Bill during its long progress through the other place and in pre-legislative scrutiny. A lot of action has been taken to clarify and improve the Bill. Indeed, it is clear from its drafting that this clause has benefited from much scrutiny.

Clause 7 will provide a new power for the Charity Commission to direct the trustees, or other people in the charity, to take the necessary steps to wind up the charity and transfer its resources elsewhere. The explanatory notes suggest that the power will be used in “rare cases” and state:

The Commission’s usual practice is to attempt to restore a charity to health following a statutory inquiry”.

We all support the positive and supportive role that the Charity Commission would play. As the Minister said, the commission itself cannot wind up the charity, as that would be acting in the charity’s administration; it can only direct the trustees to do so themselves. That is absolutely right and within the boundaries of the commission’s power. The power would be available after the commission had instituted an inquiry and was satisfied either that there was misconduct or mismanagement, or a need to protect charity property. The commission would need to be satisfied on other matters specified in the clause, including that the exercise of the power was

“expedient in the public interest.”

Again, I fear that a burden of decision making and judgment is being placed on the Charity Commission. Just as the decision on whether to publicise a warning under clause 1 will be taken by the commission, so again we find the commission having to be the arbiters of public interest. I do not doubt that it will perform that duty admirably, but we must be conscious that we are asking it to make another judgment call. That risk should be looked at in the context of an environment in which the commission is under pressure to take action on charities that are threatening public trust and confidence, and to be seen to do so. The recent High Court judicial review case mentioned earlier provides an example of how easy it is for the commission to take precipitate and potentially disproportionate action. I sincerely hope that the commission will use its customary wisdom and good judgment in making these decisions. I was reassured to hear that it is expected to use the power only one or two times a year.

Clause 7 also includes provisions relating to notice and appeals. The Joint Committee said that it was persuaded that this power would be used only in rare circumstances and that

“in such circumstances, the Charity Commission would use it sparingly, given its significance”.

The Joint Committee supported the inclusion of the clause, subject to an amendment setting out the publication scheme for a notice of intention to direct the winding up of the charity, and I am pleased that that is now included. I appreciate the Government’s acceptance of the recommendation by the Joint Committee, which also recommended the removal of the proposed condition that the exercise of the power would be

“likely to help increase public trust and confidence in charities”.

That condition was suggested by the Joint Committee on Human Rights, which considers it an example of broad and vague language in the drafting of the Bill. I am pleased that that provision has now been re-worded. In summary, this is an important clause, which we support. It will give the Charity Commission an important power to be able to protect and defend charities’ assets and to ensure that they can be administered swiftly in times of difficulty.