All 9 contributions to the Charities Act 2022

Read Bill Ministerial Extracts

Wed 26th May 2021
Charities Bill [HL]
Lords Chamber

1st reading & 1st reading
Wed 7th Jul 2021
Second Reading Committee
Grand Committee

Second reading committee & Second reading committee
Wed 14th Jul 2021
Charities Bill [HL]
Lords Chamber

2nd reading & 2nd reading
Thu 18th Nov 2021
Charities Bill [HL]
Lords Chamber

Committee stage & Committee stage & Lords Special Public Bill Committee
Tue 14th Dec 2021
Charities Bill [HL]
Lords Chamber

Report stage & Report stage
Tue 18th Jan 2022
Charities Bill [ Lords ]
General Committees

Second reading committeeSecond Reading
Tue 25th Jan 2022
Tue 22nd Feb 2022
Charities Bill [Lords]
Commons Chamber

3rd reading & 3rd reading
Thu 24th Feb 2022
Royal Assent
Lords Chamber

Royal Assent & Royal Assent & Royal Assent & Royal Assent & Royal Assent & Royal Assent & Royal Assent & Royal Assent

Charities Bill [HL]

1st reading
Wednesday 26th May 2021

(2 years, 10 months ago)

Lords Chamber
Read Full debate Charities Act 2022 Read Hansard Text
First Reading
19:32
A Bill to amend the Charities Act 2011 and the Universities and College Estates Act 1925; and for connected purposes.
The Bill was introduced by Baroness Barran, read a first time and ordered to be printed.

Second Reading Committee

Second reading committee
Wednesday 7th July 2021

(2 years, 9 months ago)

Grand Committee
Read Full debate Charities Act 2022 Read Hansard Text
Wednesday 7 July 2021
The Second Reading Committee met in a hybrid proceeding.

Charities Bill [HL]

Second Reading
13:45
Moved by
Baroness Barran Portrait Baroness Barran
- Hansard - - - Excerpts

That the Bill be now read a second time.

Considered in Second Reading Committee on 7 July.
Bill read a second time and committed to a Special Public Bill Committee.

Charities Bill [HL]

Committee stage & Lords Special Public Bill Committee
Thursday 18th November 2021

(2 years, 4 months ago)

Lords Chamber
Read Full debate Charities Act 2022 Read Hansard Text Amendment Paper: HL Bill 17-I Marshalled list of amendments for Special Public Bill Committee - (16 Nov 2021)
Reported from Committee
The Bill was reported from the Special Public Bill Committee with amendments. The Bill, as amended, was ordered to be printed.
House adjourned at 6.14 pm.

Charities Bill [HL]

Report stage
Tuesday 14th December 2021

(2 years, 4 months ago)

Lords Chamber
Read Full debate Charities Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 68-I Marshalled list for Report - (10 Dec 2021)
Report
21:38
Clause 12: Power to borrow from permanent endowment
Amendment 1
Moved by
1: Clause 12, page 13, line 37, at end insert—
“(4) In section 348 (regulations subject to affirmative procedure etc)—(a) in subsection (1), after paragraph (c) insert—“(d) regulations under section 285(3) (power to amend period or multiplier specified);”;(b) in subsection (2), for “or (c)” substitute “, (c), (d)”.”Member’s explanatory statement
This amendment provides for the power to make regulations added by Clause 12 to be subject to affirmative resolution procedure.
Lord Parkinson of Whitley Bay Portrait The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
- Hansard - - - Excerpts

My Lords, I rise to speak to Amendment 1 in my name. As this was a Law Commission Bill, scrutinised through the Special Public Bill process, I thank the noble Lords who sat on the Special Public Bill Committee which examined it, chaired ably by the noble and learned Lord, Lord Etherton. It consisted of my noble friends Lord Cruddas, Lord Bellingham, Baroness Fullbrook and Lord Sharpe of Epsom, the noble Lord, Lord Ponsonby of Shulbrede, and the noble Baronesses, Lady Goudie and Lady Barker, and was ably assisted by our clerk, Alasdair Love. I thank them and all those who gave evidence to the committee.



Amendment 1 responds to an amendment tabled by the noble and learned Lord, Lord Etherton, in Committee. I am grateful to him for his suggested amendment, and for the time that I have had to consider the policy behind it. The Government accept that the two thresholds in Clause 12—to vary the proportion of permanent endowment which may be borrowed, and the period over which such borrowing must be repaid—are of a different nature from the other financial thresholds contained in the Bill. Those other financial thresholds are concerned with monetary sums. They set the level at which it is appropriate for trustees to make their decision independently, or for the Charity Commission to oversee that decision. We maintain that in relation to the powers to vary those financial thresholds, and thus change where that balance is to be struck, the negative resolution procedure provides a proportionate level of parliamentary scrutiny.

However, Clause 12 does not indicate where regulatory intervention is required in the same way. It does not set out monetary sums. Instead, it places a percentage limit on how much a charity can borrow from its permanent endowment and specifies the period over which such borrowing must be repaid. Therefore, any variation of these thresholds has a slightly different implication. The financial thresholds elsewhere in the Bill can be adjusted to reflect changes in the value of money. By contrast, any amendment of the Clause 12 thresholds would not be about changes in the value of money.

We have carefully considered the various arguments regarding the right level of parliamentary scrutiny in relation to these powers, including the fifth report of the Delegated Powers and Regulatory Reform Committee of your Lordships’ House. We have been persuaded that it is appropriate for an additional level of parliamentary scrutiny to be put in place for any future changes made to the thresholds in Clause 12. Amendment 1 would therefore require any variation of the maximum proportion of permanent endowment from which a charity may borrow, and the period over which any such borrowing must be repaid, to be subject to the affirmative resolution procedure rather than the negative procedure. We consider that this amendment will help to maintain the balance between protecting donors’ funds and wishes and providing flexibility for trustees to make the best use of opportunities to fulfil their charitable purposes.

As a result of this change to Clause 12, it is also necessary to make consequential amendments to Clause 39 of the Bill. I will briefly explain these amendments. Amendment 1 inserts subsection (1)(d) into Section 348 of the Charities Act 2011 to confirm that any amendment to the delegated powers in Clause 12 is subject to the affirmative resolution procedure. Later in the Bill, Clause 39 makes other amendments to Section 348 of the Charities Act 2011. The Clause 12 amendment to Section 348 means that the wording in Clause 39 needs to be rearranged. Amendments 5, 6 and 7 are consequential amendments to change references to subsections in Section 348 to accommodate Amendment 1. I beg to move.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
- Hansard - - - Excerpts

My Lords, we support these government amendments. The Minister has explained them very clearly. I have nothing to add. He is just following up on recommendations in the fifth report of the Delegated Powers and Regulatory Reform Committee.

Amendment 1 agreed.
Amendment 2
Moved by
2: After Clause 36, insert the following new Clause—
“References to the Tribunal
(1) In section 325 of the Charities Act 2011, in subsection (2), for “with the consent of the Attorney General” substitute “where the Commission has given the Attorney General 28 days’ notice of its intention to make such a reference”.(2) In section 326 of the Charities Act 2011, in subsection (1), at the end insert “provided the Attorney General has given the Commission 28 days’ notice of his or her intention to make such a reference”.”Member’s explanatory statement
This amendment implements the Law Commission’s recommendations that the Charity Commission should not be required to obtain the consent of the Attorney General before making a reference to the Tribunal and vice versa.
Lord Hodgson of Astley Abbotts Portrait Lord Hodgson of Astley Abbotts (Con)
- Hansard - - - Excerpts

My Lords, the hour is late—later than any of us would wish it to be. In the famous phrase of Mr Jeremy Clarkson, it is time to put the pedal to the metal. Before I do, I thank the noble Lord, Lord Stevenson of Balmacara, and the noble Baroness, Lady Barker, for their putting their names to this amendment. The noble Baroness has tested positive for Covid and cannot be here tonight. I am sure that I speak for the whole House in wishing her a very speedy recovery.

The only other preliminary remark I wish to make is addressed to the Minister, who has struggled mightily to find a way through this particular problem. However, I am afraid that he has been impaled—as I have—on what I can only describe as the obduracy and inflexibility of the Attorney-General’s Office. With that—to horse!

21:45
When I undertook the review of the Charities Act for the Government 10 years ago, it was brought home to me that there was a fundamental flaw at the top of the regulatory structure. This comes about because under Section 325 of that Act, the Charity Commission, the sector’s regulator, cannot—and I mean cannot—approach the charity tribunal for a ruling on a point of law unless it has first obtained the permission of the Attorney-General. This has a number of serious consequences, which were brought out to me in evidence I gathered for my review.
First, there is not a clear chain of responsibility and command: an important issue in regulating a sector as diverse as the charity sector. Secondly, this divergence of control can undermine the authority of the commission and prevent it obtaining clarity in the development of charity law. Thirdly, and most unattractively, there is a possibility that rich, powerful and well-connected charities will think it possible to take on the commission in the hope that the Attorney-General will provide cover for them later. Those were the points made in favour of sorting this out.
However, there was a contrary point, which was that the commission should not be permitted to go running off to the tribunal too frequently. Therefore, when I made my recommendation, I said that while the veto of the Attorney-General should go, the Charity Commission had to inform the Attorney-General and join the Attorney-General in any case it wished to take to the tribunal. Therefore the veto went, but in no way could the Attorney-General be blindsided.
Although my report was well received by the Government and by the sector, this recommendation was rejected. However, the Government passed the report to the Law Commission and asked it to consult on whether it could form the basis of a Bill. The Law Commission did so and produced a report, and the Bill tonight is largely the result of that consultation. The Law Commission also produced a report, and in recommendation 43 of that report it supported the conclusion that I had reached. It produced—very much more elegantly—wording to cover this particular point, and it is that wording which forms the basis of Amendment 2 tonight. It is not my wording—it is the Law Commission’s wording.
However, the Government again rejected the Law Commission’s recommendation. What were the reasons for the Government not to accept its recommendation? First, they said that the Attorney-General’s consent was
“an important element in the system”—
but they did not say quite how it was important. The second argument is that the Attorney-General’s consent assists him in fulfilling his duties to protect charitable interests. I would argue that the Attorney-General has a role in protecting all the law, including charity law, but that if he intervenes in charitable law, this unilateral power may serve not to protect charity law but to risk confusing it.
The final plank of the Government’s argument is that this is very rarely used—it has been used only three times—and therefore it does not really matter about the Attorney-General because it is such a rare occurrence. The reality is that a matter that gets to the Charity Tribunal must be one of the most sensitive, important and critical issues of charity law, and therefore the role of the Attorney-General remains highly relevant. So I ask the House to hold in its mind briefly the basis for my in-principle objection to this. I now turn to how this power has been used in practice.
One of the first references was about private schools. The House will readily understand the difficulties that surround charitable status, public benefit and fee paying. It was always rumoured, and has now been confirmed, that in this case the Attorney-General asked the Charity Commission if there were any questions that it wished to be asked at the tribunal. The commission sent in a list of questions but, extraordinarily, the Attorney-General did not ensure that all these were asked. I ask myself whether this is a way that the Attorney-General is showing proper support for the charity regulator and helping to obtain clarity in charity law.
The second case is that of the Royal Albert Hall. It is one of our great public institutions and home to many important events in our cultural and other calendar, such as the last night of the Proms and the Festival of Remembrance, familiar to all Members of your Lordships’ House. It is a charity built by subscription in Victorian times. The subscribers received, in response to their money, seats in perpetuity to concerts in the hall. Since clearly not every subscriber will want to go to every concert every night, they arranged a system for the seats to be resold through the Royal Albert Hall box office with a 10% handling charge—face value less 10%. That is known as the TRS or ticket return scheme.
A few years ago, the seat-holders decided that there was a more profitable way of doing this and that they could sell their seats not through the Royal Albert Hall box office but through third-party websites. In Committee, I explained that tickets for an Eric Clapton concert in May 2022 with a face value of £175 were selling for £1,185. If your taste is for the Beach Boys, a ticket for the concert on 24 June next year with a face value of £85 is selling tonight on viagogo for £185. And so on.
As a result, this has become pretty profitable. It is alleged that pre-pandemic—I will come back to the pandemic in a minute—seats were earning between £10,000 and £20,000 a year and changing hands for £150,000 each. I need to make it very clear that I have no objection to seat-holders seeking to make the best use of their private property. The right to enjoy private property is a cornerstone of a civil society. Seat-holders take a risk when they buy their seats. I do not suppose that being a seat-holder in the Albert Hall in the last couple of years has been particularly profitable, although I have to tell that House that the hall did get a £20 million repayable loan from the Culture Recovery Fund which will have helped it deal with the short-term liquidity problems.
However, as I said a moment ago, the Royal Albert Hall is a charity and is governed by a board of trustees. There are 25 of them and 19 are elected by the seat-holders—so 75% of the governing body that decides ultimately which seats should be reserved for seat-holders, and which should be let go, are seat-holders themselves. There must be a concern that the more profitable events will be reserved for seat-holders and the less attractive ones handed back. It was on this very narrow point that the Charity Commission approached the Attorney-General for permission to go to a tribunal. It was not that you should not be able to be a seat-holder but that, if you were a seat-holder and a trustee, there was at least a possibility of a conflict of interest which should be decided by the tribunal.
The original application on this was made over four years ago in August 2017. During the intervening period, at six-monthly intervals, I have probed with Parliamentary Questions to no avail. That is how it lasted until Second Reading in the summer, when I drew attention to this issue and subsequently tabled this amendment. Then, quite suddenly, the walls of Jericho fell down. The Attorney-General made up her mind—only she did not. She made up her mind not to make up her mind. She decided to refuse the Charity Commission permission to go to the tribunal, and did so on the sole grounds that it “would not be in the public interest”; no more, no less. So, after four years, she kicked the legs from under the Charity Commission and gave no reason for so doing. That is an extraordinary situation for the Charity Commission—the sector regulator—to find itself in.
It has been suggested to me that, in pursuing this matter tonight, I may undermine the position of the Law Commission and bring its legalistic procedure into disrepute—first, on the grounds that Law Commission Bills are not amended. Well, they are amended; I served on a Law Commission Bill—an insurance Bill—when the noble Lord, Lord Eatwell, who is not in his place tonight, moved and carried an amendment. Secondly, there are the grounds that new material should not be introduced to the Bill. My amendment is not new material; it is a Law Commission amendment in a Law Commission Bill, word for word what the Law Commission suggested.
Thirdly, it was suggested to me that I should not have been surprised that the Attorney-General would give no reason for her decision beyond “not in the public interest” because law officers never give details of their advice. There are a number of very noble and learned Lords in the House tonight. I understand that, had it been advice, it would of course have been covered by privilege—but it was not advice, it was intervention. She chose to intervene in this case; if she chooses to intervene in the way that the charity sector is regulated, she owes to the regulator, the sector and, indeed, society an explanation of the reasons for her decision. The Law Commission’s work and procedures have a deservedly high reputation in modernising and clarifying our law. If the action of one Back-Bench Committee Peer should cause the Government to throw out and abandon the whole procedure, then matters have reached a pretty pass.
But enough of this—to summarise: the present position as regards the relationship between the Attorney-General and the Charity Commission is wrong in principle, and has proved flawed in practice. The change that I put before the House tonight is supported overwhelmingly by the sector, by trade bodies such as the NCVO and by academic opinion. With due deference to my noble friend on the Front Bench, the government arguments against this change are threadbare. I beg to move.
Lord Grabiner Portrait Lord Grabiner (CB)
- Hansard - - - Excerpts

My Lords, I support this amendment. In view of the hour, as well as the great clarity of the explanation given by the noble Lord, Lord Hodgson, in moving it, I can be brief. The Charity Commission is an expert body. It is perfectly placed to form its own view on all the matters identified in Section 325(1)(a) and (b) of the Charities Act 2011. The curiosity is that, notwithstanding that rather basic fact, Section 325(2) permits the commission to make a reference to the tribunal on these matters, or any of them, only with the consent of the Attorney-General.

I have two points. First, it seems to me rather wasteful for the Attorney-General, in effect, to have oversight—indeed control—over the decision-making of another expert body. That is especially the case here because the subject matter of Section 325 is very far removed from the traditional territory that we associate with the office of the Attorney-General—the criminal-law side of which will be familiar to all Members of your Lordships’ House. Secondly, I find it surprising that the Attorney-General should wish to retain this power at the margin of the regular diet of the office. One might imagine that the Attorney-General has many other very important matters to be thinking about, without the need to second-guess the deliberations of the commission.

22:00
Lord Rooker Portrait Lord Rooker (Lab)
- Hansard - - - Excerpts

My Lords, I am very pleased to follow the noble Lord, Lord Grabiner, in supporting the noble Lord, Lord Hodgson. I have played no part in the Bill, but, when I saw the amendment and the background to it, I thought that it was worth supporting at whatever time, as it were. I am not bothered about what time it is; if we worried about the time, we would never get any legislation done.

I am not a lawyer, and it is almost 50 years since I was a PPS in the law officers’ department. I remember that, when I went there, it was explained to me what law officers did and did not do and how they were different from other Ministers. In this case, it seems to me—again, as a non-lawyer—that the Attorney-General is operating as a supervising Minister, not a law officer. That is a completely different function.

I have not checked, but, if I remember rightly, the Charity Commission is nominally still a department. It is not some quango that is too big or a body that is of no significance; it is one of, I think, 21 non-ministerial departments. I do not know how many other regulators that we think are doing their job on behalf of the public and Parliament are actually hemmed in by this kind of power. Twice I have put forward proposals for a Select Committee on regulators, because no one looks at regulators systematically in Parliament to check that what they do is what is says on the tin and to see what the difficulties are. We wait for the odd scandal to come, and then there is a Select Committee—that is not good enough.

With this one, the fact of the matter is that the Attorney-General is not, and cannot operate as, a law officer. It is the role of a supervisor. I have been in six government departments: I know the difference between a Minister supervising an external body, developing its own policy, and coming up against the law officers. There is a difference, and in this case it is absolutely clear that the Attorney-General is not operating in the formal structure as a law officer.

If it is the Law Commission, we are used to hearing the other place say, “Oh, don’t bother about that. It’ll get nodded through. We can trust it. It’ll have done all the homework”. You do not do the time, simply because that is what the Law Commission is there to do. I cannot see any damage to it from this. This is a Law Commission Bill, and, as the noble Lord, Lord Hodgson, said, he has used its report to construct the amendment. There has got to be a better reason. It is no good the Attorney-General hiding behind the law officer role when she is not performing that role. That bears some scrutiny, but of course we cannot do that in this place; it will require someone in the other place.

My final point is on the regulators, which we have to trust. There are a lot of regulatory bodies. The top 20 or 30 regulators look after billions of pounds of other bodies’ expenditure. Parliament delegates that role to those regulators.

The Charity Commission is a regulator; it is an awkward one, in the sense that the uniformity of charities is crazy. There are some 180,000 charities and the top 2% or so are probably dealing with half the money—there are loads of tiny charities which do not get a look in. When you get something such as the example of the Royal Albert Hall, raised by the noble Lord, Lord Hodgson, and which I am aware of from previous debates, you cannot ignore it. It is not right for Parliament or the regulator to ignore that—it is a failure of public duty. Therefore, the Minister will need to have better reasons than those given in the past for opposing this.

It is actually quite easy as a Minister at the Dispatch Box when you have an open and shut case such as this. I fully admit that I did it only twice in eight years when I was on that Bench in this House, but you can report back to the boss in the department: “Well, they were all against me; we were going to lose; it uses Government time; it was easier to accept the amendment because it was overwhelmingly agreed to”. You can do that, and if they are cheesed off with it, they can alter it down in the other place, because it is an open and shut case. So I invite the Minister to try it out; it can work. You can accept an amendment at the Dispatch Box on the strength of the debate and survive as a Minister, and the amendment can strengthen the Bill. That is what we are here to do.

Lord Thomas of Gresford Portrait Lord Thomas of Gresford (LD)
- Hansard - - - Excerpts

My Lords, we on the Liberal Democrat Benches fully support this amendment in the name of the noble Lord, Lord Hodgson. When I heard the story of the Albert Hall that he outlined, there was only one thing I could say: “Land of Hope and Glory”. It seems to me that there is no justification for the way in which the Attorney-General acted in this case, without giving any proper reason. I did a bit of research to see what the published response of the Government was to the report of the Law Commission. No satisfactory reason for the need for the consent of the Attorney-General was given.

Because of the time, I will not delay your Lordships any longer, but it seems that the noble Lord, Lord Hodgson, should be congratulated, not only on this amendment but on all the work that he has done in this field and the report that he brought forward.

Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
- Hansard - - - Excerpts

My Lords, the view of the Labour Party, the official Opposition, is that we will abstain if this amendment is put to a Division.

I heard the speeches of the noble Lord, Lord Hodgson, at Second Reading, in Committee and on Report. He makes a very strong case, which he has made again today. As my noble friend Lord Rooker said, the traditional way that both Houses deal with Law Commission Bills is to essentially nod them through. That was, and is, the agreement between the usual channels regarding this Bill as well. However, the best that I can do for the noble Lord, Lord Hodgson, is to abstain, because there is merit in the underlying preceding agreement which the usual channels have had. That is the reason I take a different view from the noble Lord, Lord Thomas, who has expressed his support for the amendment.

We on these Benches will be abstaining. I will leave it to the Minister to make his own case.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
- Hansard - - - Excerpts

I thank my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment and for outlining the case again. Before I respond to it, I certainly associate myself with the comments of the noble Lord, Lord Thomas of Gresford, that my noble friend should be congratulated on all his work in this field. The Bill we are debating tonight is in very large part the result of his long-standing interest and considerable work in reviewing charity law.

On this issue, we have from the outset been at odds: where my noble friend sees obduracy, I see consistency. The noble Lord, Lord Rooker, is absolutely right: we can amend these Bills, even in the Law Commission procedure—we have just made some amendments in the previous group—but what is important is that we proceed on the basis of consensus and avoid areas of political disagreement. On this, the Government have been clear from the outset that we were not minded to accept the single recommendation from the Law Commission; and my noble friend has been equally consistent that he thought it was an important one. But we have made clear throughout the passage of the Bill our position on the role of the Attorney-General and the value placed on the Attorney-General’s oversight of references to the tribunal.

With respect to the noble Lord, Lord Rooker, and his advice that I take this away: I have taken it away and discussed it with the Attorney-General and her office on numerous occasions through the passage of the Bill so far, and I have had some helpful discussions with my noble friend, the noble and learned Lord, Lord Etherton, who is the chairman of the Special Public Bill Committee, and others, but our position remains as my noble friend Lord Hodgson knows it. Let me explain why that is.

Section 326 of the Charities Act 2011 provides the Attorney-General with the power to refer to the Charity Tribunal any question involving

“the operation of charity law in any respect, or … the application of charity law to a particular state of affairs.”

The Charity Commission has an equivalent power to make a reference to the tribunal where the question has arisen in connection with the exercise by the commission of any of its functions, but only with the consent of the Attorney-General under Section 325(3). These rights were considered by Parliament during the passage of the Charities Act 2006, which now appear in the consolidated 2011 Act, and it was agreed that this provision was necessary. The Attorney-General has an historic duty, on behalf of the Crown, to protect charitable interests in England and Wales. The Attorney-General’s consent for references to the charity tribunal is an important element in the system of checks and balances which should not be removed.

My noble friend says the Government have not made clear what specifically the Attorney-General’s role is. It is part of the Attorney-General’s role to assess whether a referral to the tribunal is in the interests of the public. This oversight also provides a second pair of eyes in ensuring that the costs associated with such a referral are not put on charities or on the public unnecessarily. So the Attorney-General works alongside the Charity Commission and provides a second opinion on referrals to the tribunal.

While this particular consent function is narrowly drawn, it is only one tool in a wider portfolio for performing her constitutional role as defender of charitable interests in the wider public interest. The Attorney-General’s wider role means that she has a unique perspective and is able to take into account considerations of societal issues and the wider repercussions for charities. In recent years, we have had Attorneys-General in both your Lordships’ House and another place. As such, the Attorney-General’s oversight reaches beyond charity law and regulation.

It should be remembered that the reference procedure is a unique declaratory power which enables the Charity Commission and the Attorney-General to seek rulings on what might be hypothetical questions. Outside this procedure, hypothetical questions are rarely entertained by the courts, for good reason. It is therefore right and proper that a public interest consideration is applied in the exercise of this unusual procedure. The value of the Attorney-General’s unique perspective has been recognised and commented on by the courts.

With this in mind, the Government oppose my noble friend’s Amendment 2, which would do away with the Attorney-General’s consent function altogether. We believe that by removing this mechanism completely, an important part of the Attorney-General’s oversight of charity law would be lost. So my noble friend will not be surprised to hear me say again that I am afraid we still disagree on this issue, as we did at the outset, and I would hope that he may yet withdraw his amendment.

It is important to note how rare these cases are. The Charity Commission and the Attorney-General have worked together on two references that the Attorney-General has made to the tribunal since the 2006 provisions were put in place, and there has been only one reference that the Charity Commission has sought the Attorney-General’s consent to pursue, which the Attorney-General, as my noble friend outlined, refused to give earlier this year. That is the context we find ourselves in for this debate.

22:15
Lord Thomas of Gresford Portrait Lord Thomas of Gresford (LD)
- Hansard - - - Excerpts

Is it not the case that, if the amendment were to pass, the Attorney-General would have the power to intervene at any stage in the public interest if the public interest became involved? I do not see why she has to give her consent before the reference to the tribunal can be made.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
- Hansard - - - Excerpts

That consent function, my Lords, is something the Government consider important; it is part of the assessment of whether it is in the public interest for the reference to the tribunal to begin, with all the costs and time that it would involve. That is part of the reason why the Government cannot accept my noble friend’s amendment.

While supporting the Attorney-General’s role, we are also aware of concerns raised by noble Lords regarding the time taken for the Attorney-General to make a decision on whether to grant consent in the particular case to which my noble friend referred. His amendment is grouped with Amendment 4 in the name of the noble and learned Lord, Lord Etherton, which provides that the Attorney-General must make her decision on an application for a reference to the tribunal within 60 days, otherwise consent would be deemed to be given. His amendment also requires that the Attorney-General publish a comprehensive statement explaining the reasons for any refusal of consent.

Regrettably, however, the noble and learned Lord’s amendment does not acknowledge that there may be good reasons beyond the Attorney-General’s control that require additional time in her decision-making. There may be times, for instance, when a case requires further information to be submitted, either by an individual charity or the Charity Commission, to enable the Attorney-General to make a fully informed decision. There may be mediation under way between parties involved which needs to conclude before a decision can be made, or a case could be particularly complex and require further investigation and deliberation. Given how complex these rare cases normally are, a strict 60-day time limit following which consent is automatically given would amount to the effective removal of the Attorney-General’s consent function by the back door. I have outlined the reasons why we do not agree that the consent function should be removed. Doing it in that way would also be inappropriate.

It is regrettable that a decision on whether to grant consent to a reference in the case involving the Royal Albert Hall took so long, but one complex case does not justify a change in the law. I thank once again my noble friend Lord Hodgson and the noble and learned Lord, Lord Etherton, for his Amendment 4.

Lord Rooker Portrait Lord Rooker (Lab)
- Hansard - - - Excerpts

I just want to be clear about this. I fully take on board the point that it is one case, but the Attorney-General is in a different position to other Ministers. With other Ministers, we can get access to their diaries, what meetings they have had, so we can see who has lobbied them. How do we know who, if anybody, lobbied the Attorney-General during that period of nearly four years? How do we know that, with the Attorney-General being unlike other Ministers?

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
- Hansard - - - Excerpts

My Lords, the Attorney-General is a Member of Parliament. Previously, they have been Members of your Lordships’ House; the current Attorney-General is a Member of another place. She is therefore subject to the same parliamentary scrutiny and the methods available to Members in another place to ask her those questions. This is a reflection of her particular role, but she is not a remote person; she is a Member of Parliament who can be asked questions. She makes her view known, as she has in this case, but we do not think that this case alone should warrant a change in the law.

Lord Thomas of Gresford Portrait Lord Thomas of Gresford (LD)
- Hansard - - - Excerpts

Does the Attorney-General claim the same prevention of disclosing that there is when she gives advice to the Government for when she gives or refuses consent under this provision? If it is different, why has she not given more reasons for it in the case of the Albert Hall?

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
- Hansard - - - Excerpts

My Lords, no, I do not think that the Attorney-General claims client confidentiality in the same way. Her role overseeing charity law is part of her function as parens patriae. However, we think that it is important to maintain the consent function. As I have said, she is a Member of Parliament, so these questions could be posed to her.

The Attorney-General has set out her reasons why she does not think it would be in the public interest for reference to be made. Noble Lords may disagree with that, and they may ask her about that, but I reiterate that I do not think that one case, however long or complex it may be, should warrant a change in the law. It is for that reason that I hope my noble friend may yet withdraw his amendment.

Lord Hodgson of Astley Abbotts Portrait Lord Hodgson of Astley Abbotts (Con)
- Hansard - - - Excerpts

My Lords, this has, as ever, been an interesting debate and I am very grateful to the noble Lords, Lord Grabiner, Lord Rooker and Lord Thomas of Gresford, for their support and, indeed, to the noble Lord, Lord Ponsonby, for the half-loaf that he offered. I am very grateful for that as well.

I do not propose to go on about this. My noble friend has talked about the oversight of charity law. I think we have seen what has been happening with the oversight of charity law. The noble and learned Lord, Lord Etherton, produced quite an elegant half-loaf of a 60-day limit and a requirement to explain because the Attorney-General is performing a declaratory, not an advisory, role, which we discussed. The Attorney-General cannot even make that move to help a past Master of the Rolls with his elegant diplomatic solution.

It is late. Let us finish. If your Lordships support my amendment, you are voting for transparency, clarity and sunshine. If you vote against it, I am afraid you are voting for obscurity, obfuscation and concern that charity law may not be developing as even-handedly as it should. I have now been on this case for 10 years. I owe it to all the people who have been to talk to me, who say that this needs to be sorted out, that on this occasion I wish to test the opinion of the House.

22:22

Division 3

Ayes: 18


Liberal Democrat: 9
Crossbench: 3
Conservative: 3
Labour: 2
Green Party: 1

Noes: 81


Conservative: 80
Independent: 1

22:34
Amendments 3 and 4 not moved.
Clause 39: “Connected person”: power to amend
Amendments 5 to 7
Moved by
5: Clause 39, page 29, line 20, leave out “(c)” and insert “(d) (inserted by section 12)”
Member’s explanatory statement
This amendment is consequential upon the amendment of Clause 12 in the name of Lord Parkinson of Whitley Bay.
6: Clause 39, page 29, line 21, leave out “(d)” and insert “(e)”
Member’s explanatory statement
This amendment is consequential upon the amendment of Clause 12 in the name of Lord Parkinson of Whitley Bay.
7: Clause 39, page 29, line 23, leave out “for “or (c)” substitute “, (c) or (d)”” and insert “after “(d)” (inserted by section 12) insert “or (e)””
Member’s explanatory statement
This amendment is consequential upon the amendment of Clause 12 in the name of Lord Parkinson of Whitley Bay.
Amendments 5 to 7 agreed.
Schedule 2: Minor and consequential amendments
Amendment 8
Moved by
8: Schedule 2, page 35, line 3, in column 1, leave out “under section 226”
Member’s explanatory statement
This amendment removes an unnecessary reference to section 226 of the Charities Act 2011.
Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
- Hansard - - - Excerpts

Amendments 8 to 12 are in my name. I shall outline them as briskly as I can, and I think it makes sense for me to speak to them in reverse order.

Amendment 12 is a concessionary amendment, responding to the amendment tabled by the noble and learned Lord, Lord Etherton, in Committee on 18 November. He highlighted an issue that had arisen during the Committee’s evidence-gathering: that the Bill, as currently drafted, does not offer the right to appeal Charity Commission decisions made under new Sections 280A and 67A that the Bill would insert into the Charities Act 2011. Having had time to consider the policy and implications that lay behind his amendment, I am happy now to bring forward this government amendment by way of concession.

The Government agree that appeal rights should exist in respect of Charity Commission decisions to withhold consent under new Section 280A. New Section 280A replaces existing powers under Sections 267 to 280 of the Charities Act 2011 for certain types of unincorporated charities to transfer property and alter their purposes. Two of these existing powers, under Sections 268 and 275, carry the right to appeal a Charity Commission decision to withhold consent. It is appropriate, therefore, that an appeal right is afforded to decisions under new Section 280A where Charity Commission consent is withheld. This would create an appeal right that is as close as possible to the appeal rights connected to those sections that will be repealed and replaced.

The Government acknowledge that affording the right to appeal Charity Commission decisions to withhold consent under new Section 280A, and not to extend that appeal right to cover decisions to give consent, is not exactly matched to the equivalent appeal rights given to charitable companies and charitable incorporated organisations under Sections 198 and 226 of the Charities Act 2011. It is, however, consistent with the existing appeal rights under Sections 268 and 275 of the 2011 Act.

These types of amendments that require Charity Commission consent for unincorporated charities under new Section 280A are wider than for charitable companies and charitable incorporated organisations. It is important also to note that the new power under new Section 280A is broader than the existing powers for unincorporated charities. The right to appeal Charity Commission decisions to withhold consent under new Section 280A will therefore be a slightly broader appeal right than at present. There is operational concern that any wider broadening of appeal rights to cover both the giving and withholding of consent would not be proportionate for the tribunal and the Charity Commission. In a similar vein, this concern is echoed in the suggestion to introduce what would be a completely new right to appeal Charity Commission decisions under new Section 67A, which allows trustees to apply funds from a failed or surplus fund-raising appeal for new purposes. Where those funds exceed £1,000, Charity Commission consent is required.

Decisions regarding the use of funds from a failed fundraising appeal can often involve internal disputes within a charity, and these cases are generally low-risk for the sector at large but can be contentious for individuals. There will often be one party left disgruntled with whatever decision the Charity Commission makes. Opening up new appeal rights in respect of these decisions is expected to invite a disproportionate administrative burden on the Charity Commission and the tribunal, given the types of issues usually at stake in such decisions. The context of a charity using funds from a failed appeal for different purposes is also a narrower decision to be taken by trustees and is less likely to have the same impact as a charity changing its general purposes.

Sections 280A and 67A should not, therefore, be treated in the same way. A judicial review is considered the most appropriate route to challenge a Charity Commission decision under Section 67A. Amendment 12 therefore inserts the right to appeal Charity Commission decisions under new Section 280A, where consent is withheld, into Schedule 6 to the Charities Act 2011. It does this by inserting paragraph 8(c) into Schedule 2 to the Bill.

Amendments 9, 10 and 11 shift some wording around in order to accommodate Amendment 12. Without these very minor changes, Amendment 12 would not make sense.

Finally, I speak to Amendment 8. In reviewing the Bill to draft these concessionary amendments, it was noticed that paragraph 2 of Schedule 2 refers to “Section 226” twice, unnecessarily. In the interests of avoiding using unnecessary words—which is a good lesson for this hour of night—this amendment removes those superfluous words from the Bill. This is purely a drafting change for tidying-up purposes.

I hope noble Lords will agree that this amendment and the consequential amendments which accompany it are appropriate and necessary for the reasons I have set out. I beg to move.

Amendment 8 agreed.
Amendments 9 to 12
Moved by
9: Schedule 2, page 35, line 25, leave out “omit”
Member’s explanatory statement
This amendment is consequential upon the amendment in the name of Lord Parkinson of Whitley Bay at page 35, line 29.
10: Schedule 2, page 35, line 26, at beginning insert “omit”
Member’s explanatory statement
This amendment is consequential upon the amendment in the name of Lord Parkinson of Whitley Bay at page 35, line 29.
11: Schedule 2, page 35, line 28, at beginning insert “omit”
Member’s explanatory statement
This amendment is consequential upon the amendment in the name of Lord Parkinson of Whitley Bay at page 35, line 29.
12: Schedule 2, page 35, line 29, at end insert—
“(c) after that entry insert—

“Decision of the Commission to withhold consent under section 280A(7) in relation to an amendment of the trusts of an unincorporated charity.

The persons are—(a) the charity trustees of the charity, and (b) any other person who is or may be affected by the decision.

Power to quash the decision and (if appropriate) remit the matter to the Commission.”

Member’s explanatory statementThis amendment would enable an appeal to the Tribunal in respect of a decision of the Charity Commission to withhold consent under section 280A(7), as inserted by Clause 3.
Amendments 9 to 12 agreed.
House adjourned at 10.43 pm.

Charities Bill [ Lords ]

Second reading committee
Tuesday 18th January 2022

(2 years, 2 months ago)

General Committees
Read Full debate Charities Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 68-I Marshalled list for Report - (10 Dec 2021)
The Committee consisted of the following Members:
Chair: Sir Gary Streeter
† Afolami, Bim (Hitchin and Harpenden) (Con)
† Bailey, Shaun (West Bromwich West) (Con)
† Clarkson, Chris (Heywood and Middleton) (Con)
Furniss, Gill (Sheffield, Brightside and Hillsborough) (Lab)
† Greenwood, Margaret (Wirral West) (Lab)
† Hart, Sally-Ann (Hastings and Rye) (Con)
Howell, Paul (Sedgefield) (Con)
† Huddleston, Nigel (Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport)
† Jupp, Simon (East Devon) (Con)
† Maskell, Rachael (York Central) (Lab/Co-op)
† Mishra, Navendu (Stockport) (Lab)
Moore, Damien (Southport) (Con)
† Russell-Moyle, Lloyd (Brighton, Kemptown) (Lab/Co-op)
† Smith, Jeff (Manchester, Withington) (Lab)
† Wheeler, Mrs Heather (South Derbyshire) (Con)
† Wild, James (North West Norfolk) (Con)
† Winter, Beth (Cynon Valley) (Lab)
Kevin Maddison, Katya Cassidy, Committee Clerks
† attended the Committee
Second Reading Committee
Tuesday 18 January 2022
[Sir Gary Streeter in the Chair]
Charities Bill [Lords]
14:00
None Portrait The Chair
- Hansard -

Before we begin, I remind Members that they are expected to wear face coverings and to maintain social distancing as far as possible. This is in line with current Government guidance and that of the House of Commons Commission.

I will start by outlining the procedure for Second Reading Committees, which are uncommon. This Committee is charged with recommending to the House whether the Charities Bill [Lords] ought to be read a Second time, or whether it ought not to be read a Second time. The debate in this Committee replaces a Second Reading debate in the House. After this Committee has made its recommendation, the question on Second Reading in the House will be decided without further debate.

The rules governing a Second Reading debate in the House apply in Second Reading Committees. In particular, Members may speak more than once only by leave of the Committee or through interventions. The Minister, however, has the right of reply at the end of the debate.

14:01
Nigel Huddleston Portrait The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Nigel Huddleston)
- Hansard - - - Excerpts

I beg to move,

That the Committee recommends that the Charities Bill [Lords] ought to be read a Second time.

It is a pleasure, as always, to serve under your chairmanship, Sir Gary. This Bill brings in modest but important technical reforms that will allow charities to function more efficiently by implementing the majority of the recommendations from the Law Commission’s “Technical Issues in Charity Law” report. The reforms in the Bill are the product of extensive consultation and represent a great example of the Law Commission’s work to simplify complex areas of the law, and I am pleased to be discussing the Bill’s Second Reading in Committee.

Currently, charities are too often burdened by complicated regulation and administrative costs. This Bill will simplify processes, in turn enabling charities to ensure that their focus and resources are for public good. I thank my noble Friends Baroness Barran and Lord Parkinson for guiding this Bill so ably through the other place, and I put on record my thanks to all peers in the other place, including Lord Hodgson and so many others, who contributed to the thorough scrutiny of this Bill, ensuring it reaches us in good shape.

Both the Law Commission and the Charity Commission have provided their expertise to enable the Bill to reach this stage, and I am grateful for their continued support as it continues its passage through Parliament. I am delighted that the Bill has received cross-party support and has been warmly welcomed by the charity sector. I hope it continues to receive deserved recognition through the remaining stages.

It is important to remind the Committee, as did the Chair, that this Bill follows the special procedure for non-controversial Law Commission Bills. This means that the Bill is limited to implementing those recommendations from the Law Commission’s report. Under this special procedure, the Bill was introduced into the other place, where it was subject to considerable scrutiny, and the Government made some necessary amendments to the Bill. I am grateful to all those involved in making these changes as they will help fulfil the Bill’s aims more efficiently.

Charities legislation can be complicated, uncertain and unduly burdensome. That unfortunately forces many charities to obtain expensive legal advice, and distracts them from carrying out their charitable purposes. Not only does overly complex legislation negatively impact charities, but it hinders the Charity Commission in carrying out its important regulatory role. The changes in this Bill are therefore necessary for both the charity sector and its regulator, providing charities with more flexibility, time, and resources to focus on their charitable purposes while reforming unnecessary or overly bureaucratic processes.

At the same time the Bill maintains appropriate regulatory oversight, protections and safeguards, ensuring the protection of charities from abuse. Certainty and clarity in the law is of the utmost importance, and the Bill will provide trustees with increased flexibility to act in their charity’s best interests. There is no doubt that we owe both our charity sector and our regulator a clear and simple legal framework. I hope that hon. Members will agree that the Bill strikes a sensible balance between protecting charities’ assets and avoiding unnecessary expense and regulation.

This is a highly technical Bill implementing several important changes, and I will shed light on some of its main contents to help Members understand its positive impacts. This Bill will simplify processes for amending governing documents that are currently cumbersome and inconsistent across different charity structures. It will do that by creating a new, clearer statutory power for all unincorporated charities to amend their governing documents by resolution. That will align amendment mechanisms as far as possible across the different legal structures that charities can take. It will also be more straightforward for royal charter charities to make amendments to their governing documents, providing a new power to amend any provision, subject to Privy Council approval.

The Bill will also make it easier to use funds from a failed fundraising appeal for other similar purposes, which has long been a challenge faced by many charities. That will save time and resources for charities where a fundraising appeal has failed, for example, by preventing them from having to search for and contact donors of small donations to ask them if they would like their donation returned because a fundraising appeal did not reach its goal or raised too much money for its specific purpose.

The Bill also makes changes to trustees’ powers in relation to permanent endowment—assets held by the charity with a restriction on the use of capital. Trustees will be able to exercise greater flexibility in making decisions that are in the best interests of their charity, allowing them to better utilise their permanent endowment, whilst protecting the enduring nature of such funds. Alongside greater flexibility, a clearer definition of permanent endowment has been provided. It includes a new power for trustees to borrow from their permanent endowment and streamlines the existing power available to trustees to release those funds.

The Bill also makes changes relating to ex gratia payments—payments that charities feel morally obliged to make, but lack a legal power to do so. For example, if someone left money to a charity in their will, but gave their solicitor instructions to grant some of the amount to a family member instead, but then died before the will had been changed, legally the charity must take the money, but it may feel morally obliged to honour the gift to the family member. Currently it would need to decide whether to make the payment at a trustee meeting, and then wait for Charity Commission, Attorney General or court approval before making such a payment. That is time consuming and can involve costs that are disproportionate to the value of the payment itself. The changes in the Bill will allow charities to make relatively small ex gratia payments without seeking Charity Commission consent. The changes will also allow trustees, if they so wish, to delegate the decision to make these payments to the charity’s staff.

Currently, there are a number of burdensome statutory requirements around disposals of land by charities. The measures in this Bill will tackle those challenges by creating a simpler process and paves the way for secondary legislation to broaden the pool of advisers at a trustees’ disposal.

The Charity Commission will also be provided with supplementary powers in respect of misleading, offensive or very similar charity names to remove anomalies and prevent an inappropriate name appearing on the register of charities.

There is no doubt that charities cannot function without the vital role of trustees, almost all of whom are volunteers. The Bill will, subject to appropriate safeguards, allow charities to source goods from trustees, when doing so would be in the charity’s best interests, by resolving a gap in the current law. The Charity Commission will also be able to authorise trustees to be paid for specific work they have carried out for the benefit oftheir charity in limited circumstances.

In relation to saving administrative costs when it comes to incorporations and mergers, this Bill will ensure legacies in wills can be automatically transferred to a merged charity and will automatically confer trust corporation status on corporate charities in their capacity as trustees of charitable trusts.

On reducing burdens on trustees, protection will be provided to them to avoid charities being discouraged from pursuing litigation due to the risk of trustees personally having to pay the costs of charity tribunal proceedings.

Collectively, the measures will ensure that charity law works effectively for those delivering vital charitable services, especially given the huge pressure the sector has faced during the course of the pandemic. The measures will also ensure appropriate regulatory oversight and safeguards are in place to maintain public trust in this important sector.

The many notable benefits of the provisions I have outlined will have positive impacts on the sector. Small charities will especially benefit from the simplified legislation and reduced administrative burdens as they may not have access to legal advice. The changes will also make life easier for trustees by reducing administrative burdens and easing some of the regulatory pressures they face. Trustees will be able to act with confidence in their charity’s interests. In turn, we anticipate public trust to flow from charities working unhindered and able to focus fully on their charitable mission.

I reiterate that this Bill brings in welcome reform to charity law. It has widespread support and, as I have outlined, it is the product of extensive consultation and has been subject to rigorous scrutiny. I am honoured to have the pleasure of bringing this Bill before this Committee and the House. I hope the Committee will give this Bill its full support, so we can proceed swiftly with its remaining passages and begin working with the Charity Commission on its implementation. I commend the Bill to the Committee.

14:10
Jeff Smith Portrait Jeff Smith (Manchester, Withington) (Lab)
- Hansard - - - Excerpts

It is a pleasure to serve with you in the Chair, Sir Gary, and I am pleased to speak on the Opposition’s behalf. I thank the Minister for his introductory remarks and echo his thanks to everyone involved in the passage of the Bill through the Lords and in cleaning it up into the good state that we see it today.

Like probably all of us in this Committee, I am a member or supporter of several charities. For the record, I refer the Committee to my entry in the Register of Members’ Financial Interests and note that I am a trustee of Drug Science.

The charity sector’s contribution to society could not have been shown more clearly than during the coronavirus pandemic, with countless organisations and volunteers doing fantastic work to support vulnerable people. Charitable groups and organisations have ensured that rough sleepers have had access to food and shelter, delivered food to those in need and supported the vulnerable and those who had to shield during the darkest days of the pandemic. I pay tribute to all volunteers and staff in the charity sector, which forms such an important part of our civil society. Charities play a vital role in our communities and will continue to be vital to Britain’s covid recovery in the months ahead.

During the Bill’s passage through the Lords, there was agreement on all sides that the new measures represent important progress towards allowing charities to amend how they operate and making it easier for them to achieve their core purpose. The Bill seeks to make a series of changes that will make it easier for charities to navigate the law and to carry out their functions effectively, while retaining important safeguards.

I will not repeat the detail that the Minister outlined, but the Opposition support the Bill, which takes on board the majority of the Law Commission’s recommendations and makes several significant changes for charities, reducing red tape and making it easier for them to amend their governing documents, such as small changes to charitable purposes, to dispose of land efficiently, to use their resources more effectively and to avoid disputes over whether a trustee has been correctly appointed or elected.

The Law Commission’s “Technical Issues in Charity Law” report, which informs the changes in the Bill, was published in September 2017. Labour backs our charity sector and backed the report. We wonder whether these changes could have been brought to the House more swiftly, but we are pleased that the Government have finally brought the Bill forward.

Approximately 169,000 charities are registered with the Charity Commission in England and Wales, with a combined annual income of over £83 billion. The sector employs 3% of the total UK workforce, and more than 944,000 trustees are supported by over 6.2 million volunteers. All those charities and the millions of people who support their work might have benefited if the recommendations has been brought into law more quickly, but the Labour party supported the Bill’s passage in the Lords and will of course be doing the same in the Commons. We do so because the recommendations will fundamentally make running a charity easier and more efficient.

Among other things, the Bill clarifies certain powers of the charity tribunal, expands the Charity Commission’s role to deal with misleading, offensive or duplicate charity names, allows charities to amend their governing documents or royal charters more easily, permits more flexibility in the use of permanent endowments and makes it simpler for charities to combine their operations.

The implementation of the Law Commission’s recommendations is estimated to deliver cost savings for charities of at least £28 million over a 10-year period. The uncertainties in the law and the unnecessary regulation that discourage participation, delay charities’ activities and compel them to spend money on expensive legal advice will be removed, which will make life easier for charities to fulfil their charitable purposes.

However, in supporting the Bill, I ask the Minister to clarify why the Government did not accept all the Law Commission’s recommendations. In particular, recommendation 40, which states that

“it should be possible to obtain authorisation to pursue ‘charity proceedings’ under section 115 of the Charities Act 2011 from either the court or the Charity Commission in circumstances where the Charity Commission would face an actual or apparent conflict of interests”.

Rachael Maskell Portrait Rachael Maskell (York Central) (Lab/Co-op)
- Hansard - - - Excerpts

My hon. Friend is making an excellent speech. I too wanted to pick up on recommendation 40, because the Government’s response refers to non-legal remedies without setting out what they are. As a result, how to seek proper restitution must be made clear to trustees and charities.

Jeff Smith Portrait Jeff Smith
- Hansard - - - Excerpts

I am grateful to my hon. Friend for making that point, and I hope that the Minister will respond in his summing up. The sector was widely supportive of the suggestion, which would provide reassurance for those seeking authorisation and ensure that the Charity Commission is not compromised when making judgments in such cases.

Will the Minister also expand on the Government’s decision not to adopt recommendation 43, which sought to remove the requirement that the Charity Commission obtain the consent of the Attorney General before making a reference to the charity tribunal on a question concerning charity law or its application to a particular case. Organisations from across the charity sector share the view that the Charity Commission is well placed to highlight potentially challenging issues within charity law and that the current requirement for consent presents an unnecessary barrier to ensuring that issues of charity law can be considered and addressed by the tribunal.

On the topic of the Charity Commission, Members will have seen the Digital, Culture, Media and Sport Committee’s hearing last Tuesday regarding the rather shambolic appointment—and now resignation —of Martin Thomas as chair of the Charity Commission. It is remarkable that the appointments system did not pick up the allegations of inappropriate behaviour, despite the charity in question formally reporting the incident to the very regulator that Martin Thomas was appointed to head up, so perhaps the Minister will set out how the Government plan to tighten the system to avoid a similar situation.

As I said earlier, the changes set out in the Bill mean that charities can spend less time jumping through excessively bureaucratic hoops and more time focusing on their core mission. They will also help to protect the public by, for example, stopping them being misled by a charity that deliberately adopts a name similar to that of another charity. We accept that phased implementation will allow charities to put processes in place to manage the new regime.

Like the Law Commission and the Charity Commission, Labour supports the sensible measures in and principles of the Bill and recommend that it be read a Second time.

14:18
Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

I thank my opposite number, the hon. Member for Manchester, Withington, and the hon. Member for York Central, who has extensive and significant knowledge in the charitable sector and civil society overall—I applaud her work over many years.

I am pleased that the Bill has such obvious support across the House and in the other place, and I look forward to taking it through the Commons. We share the ambition that charities should not be weighed down by disproportionate or unnecessary burdens, so that they can focus on their charitable objectives and on what they do best. Charities are a force for good in society and, as the hon. Member for Manchester, Withington said, England and Wales alone have 167,000 registered charities, all of which carry out excellent and indispensable work to help those in need. By working closely with the Law Commission and the Charity Commission to provide consistency and clarity in law through this Bill, charities can feel confident that we have understood their concerns and that we are on the right path to help them fulfil their purposes.

To address some of the points raised by the hon. Gentleman, he was right to express a sense of urgency here, because we are trying to address quite a number of issues. We would all like to move at speed, but this is an incredibly complex area of law. We have had the challenges of dealing with covid, but there has been extensive stakeholder engagement. I understand the sense of urgency, but this is a complex area, and we wanted to ensure that we did things correctly.

On recommendation 40 of the Law Commission’s “Technical Issues in Charity Law” report, the Government stand by their decision to reject it and set out its reasoning in their response. The removal of the safeguards in section 115 of the 2011 Act would be a disproportionate response to the unlikely possibility of an application being brought to the Charity Commission that created a conflict of interest. Such a scenario, if it ever arose, could in any event be addressed in other ways. However, I am happy to discuss the matter with hon. Members or to write to them if they have outstanding concerns.

On recommendation 43, the Law Commission recommended that the Charity Commission should be able to make a reference to the charity tribunal without first having to get consent from the Attorney General. The Government rejected that recommendation on the basis that the Attorney General has a duty on the Crown’s behalf to protect charitable interests in England and Wales, and the mechanism assists the Attorney General in fulfilling that duty. The Government concluded:

“The Attorney General’s consent for references to the Charity Tribunal is an important element in the system which should not be removed.”

The matter was thoroughly debated during the Bill’s passage through the other place, and the amendment to insert recommendation 43 was not accepted.

Charities have played an unprecedented role throughout the course of the pandemic, and the measures in this Bill will enable them to carry on doing their vital work in communities throughout the country without unnecessary controls. I thank hon. Members for their contributions today, and I hope this Second Reading Committee will support the Bill.

Question put and agreed to.

14:22
Committee rose.

Charities Bill [ Lords ] (First sitting)

Committee stage
Tuesday 25th January 2022

(2 years, 2 months ago)

Public Bill Committees
Read Full debate Charities Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 25 January 2022 - (25 Jan 2022)
The Committee consisted of the following Members:
Chairs: Sir Gary Streeter, † Derek Twigg
† Afolami, Bim (Hitchin and Harpenden) (Con)
† Bailey, Shaun (West Bromwich West) (Con)
† Clarkson, Chris (Heywood and Middleton) (Con)
Furniss, Gill (Sheffield, Brightside and Hillsborough) (Lab)
Greenwood, Margaret (Wirral West) (Lab)
† Hart, Sally-Ann (Hastings and Rye) (Con)
Howell, Paul (Sedgefield) (Con)
† Huddleston, Nigel (Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport)
† Jupp, Simon (East Devon) (Con)
† Maskell, Rachael (York Central) (Lab/Co-op)
† Mishra, Navendu (Stockport) (Lab)
† Moore, Damien (Southport) (Con)
† Russell-Moyle, Lloyd (Brighton, Kemptown) (Lab/Co-op)
† Smith, Jeff (Manchester, Withington) (Lab)
† Wheeler, Mrs Heather (South Derbyshire) (Con)
† Wild, James (North West Norfolk) (Con)
† Winter, Beth (Cynon Valley) (Lab)
Kevin Maddison, Katya Cassidy, Committee Clerks
† attended the Committee
Public Bill Committee
Tuesday 25 January 2022
[Derek Twigg in the Chair]
Charities Bill [Lords]
09:25
None Portrait The Chair
- Hansard -

Before we begin, I have a few preliminary points. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings. Mr Speaker has asked that Members wear face coverings in Committee except when they are speaking, unless they are exempt. The Hansard Reporters would be grateful if Members could email any electronic copies of speaking notes to hansardnotes@parliament.uk.

Resolved,

That the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 25 January) meet—

(a) at 2.00 pm on Tuesday 25 January, and

(b) at 11.30 am and 2.00 pm on Thursday 27 January.—(Nigel Huddleston.)

Ordered,

That the Bill be considered in the following order, namely, Clauses 1 to 24, Schedule 1, Clauses 25 to 40, Schedule 2, Clause 41, New Clauses, New Schedules, remaining proceedings on the Bill.—(Nigel Huddleston.)

None Portrait The Chair
- Hansard -

We will now begin line-by-line consideration of the Bill. The selection and grouping list shows the order of debate. We have grouped some clause stand part debates together to avoid repetition. Only one amendment has been tabled; the decision on that will be taken when we come to the clause that the amendment affects.

Clause 1

Alteration of Charitable Company’s Purposes

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Nigel Huddleston)
- Hansard - - - Excerpts

It is a pleasure to serve under your chairmanship, Mr Twigg, I believe for the first time. I want first to briefly acknowledge the task before us. These Committee sittings will enable line-by-line scrutiny of the Bill, which has been drafted to improve charity law and to pass time and cost savings on to the charity sector. I am pleased that we have reached this stage in the Bill’s passage, and I am grateful for the support the Bill has received and the scrutiny it has been subjected to thus far.

Clause 1 changes the definition of a “regulated alteration”, meaning that only alterations to the substance of a charity’s purposes will require Charity Commission approval. There will no longer be a requirement to obtain Charity Commission consent to simply change the wording of a charity’s purposes where the overall meaning remains unchanged. This change creates consistency in the processes for amending a charity’s governing document across the different legal forms that charities can take.

Jeff Smith Portrait Jeff Smith (Manchester, Withington) (Lab)
- Hansard - - - Excerpts

It is a pleasure to see you in the Chair, Mr Twigg. I thank the Minister for his introduction.

The Opposition agree with the measures in clause 1. They will reduce bureaucracy and allow charities to focus on the work that they do, which is the essence of the Bill. Charities do great work for society and our communities. We owe it to them to provide a legal framework that is clear and manageable—especially for the large number of small charities with limited staff and resources—but with sufficient safeguards for charities and for the system. We also owe charities an efficient framework that allows them to concentrate not on bureaucratic technicalities but on doing their work, and the clause is an example of the proposed changes in the Bill that will allow them to do that.

I am going to make the same point that I made the last time the Minister and I were in Committee together, on the Dormant Assets Bill. There is a temptation for Opposition spokespeople to get up every time a clause is moved, essentially repeat the Minister’s remarks in brief and then say, “We agree,” but I will avoid that temptation. We agree with the Bill. It is well put together, we appreciate the safeguards in it, and we agree with the measures in it. The Bill is not controversial, so I will not respond to every clause; I will do so just in the few areas where we have particular points to make. Generally speaking, the Opposition are content with all the clauses.

The Bill is highly technical. It is the result of extensive consultation and discussion. I join the Minister in thanking the House of Lords for its scrutiny of the Bill and for looking thoroughly into the proposals. It is clear to me, having read the Hansard reports of all the Bill’s stages, that the Lords looked carefully at the detail in the Bill and explored some of the Law Commission recommendations that were not included in it. I referred to that on Second Reading, particularly with respect to clause 40—I know that the Minister has written to my hon. Friend the Member for York Central about that—and clause 43. Since that debate was had in the Lords, I do not intend to repeat it today.

I thank the Law Commission for its thorough work in bringing forward the proposals in the Bill. It is supported throughout the sector. I thank the charities sector for its engagement and advice. The Opposition have not tabled any amendments. It is customary for very few substantive amendments to be proposed to Law Commission Bills, so we have not tabled any. We did not feel strongly enough about any proposals that were included or missed out to necessitate an amendment.

Having made those introductory remarks, let me say that I agree with clause 1 and I hope that we will speed through the rest of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

I thank the hon. Gentleman for the tone that he has adopted throughout. He is absolutely right; my modus operandi in politics is, “If things aren’t party political, don’t make them so,” and that is very much the case with charities. I thank both Opposition Members and Government Members for all their work. There is a great deal of expertise here, and the Bill gets to us in a good place because of the level of scrutiny that has taken place. I am more than willing to take questions now or as the Bill progresses. I also commit to moving at speed, but respectfully, through the Bill. I appreciate the hon. Gentleman’s comments. I have broken his rule by standing up to say, “I agree”—I will try not to do that.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Amendments to constitution of CIOs

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 2 aligns the process for charitable incorporated organisations—CIOs—to amend their governing documents with the process in place for charitable companies. Specifically, CIOs will have greater control over the date that an amendment comes into force, offering them the ability to make changes at a time to suit their organisational objectives. The clause also sets out the considerations that the Charity Commission must make when deciding whether to consent to any alteration to a CIO’s purposes.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Powers of unincorporated charities

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 3 introduces a new power in section 280A of the Charities Act 2011, which replaces sections 267 to 280 of the 2011 Act, creating a simpler and more consistent process for unincorporated charities to amend any provision in their governing documents. Charity Commission consent is still required for certain amendments. Important safeguards, such as Charity Commission consent for regulated alterations—changes to a charity’s purposes, for example—remain in place to ensure that any amendments are in the best interests of the charity and its beneficiaries. Trustees can appeal to the charity tribunal against a Charity Commission decision to withhold consent for such an amendment.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Power to amend Royal charter

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 4 allows charities established or regulated by royal charter to amend their governing documents more easily, by providing them with a new power to amend any provision in their charter where there is no express power to do so in the charter. Any amendments will be subject to approval by Her Majesty by Order in Council.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

Orders under section 73 of the Charities Act 2011: parliamentary procedure

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 5 repeals part of section 73 of the Charities Act 2011, so that when a charity amends its governing document using a section 73 scheme, which is given effect by secondary legislation, that secondary legislation will be subject to the negative parliamentary procedure by default. That is instead of distinguishing between section 73 schemes under private Acts, which follow the negative procedure, and schemes under public general Acts, which currently follow the affirmative procedure.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

Cy-près powers

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clauses 7 and 8 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

On failed fundraising appeals and so-called cy-près schemes, clauses 6 and 7 expand the circumstances in which funds from a failed fundraising appeal can be applied to other purposes. The current law requires charities to contact donors to offer to return their donation if a fundraising appeal does not achieve its target. The Bill allows charities to use funds for a different but similar purpose if the funds cannot be used for the original purpose. Any use of funds over £1,000 would need approval from the Charity Commission. This change protects donors’ wishes while reducing administrative burdens on charities.

Clause 8 confirms that any power to make schemes in respect of a charitable trust extends to charitable companies, charitable incorporated organisations or any other charity, thereby creating more consistency among different legal forms of charity. This excludes charities subject to special scheme-making procedures, such as those governed by royal charter or statute.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clauses 7 and 8 ordered to stand part of the Bill.

Clause 9

Definition of “permanent endowment”

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clauses 10 to 13 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clauses 9 to 13 set out a clearer definition of “permanent endowment”, removing ambiguity and providing a definition that is more in line with the sector’s understanding of the term. The Bill confirms that the existing power to release permanent endowment under the Charities Act 2011 is available to all charities, making it available without Charity Commission consent in respect of funds up to a value of £25,000—that is up from the existing £10,000 limit—and with Charity Commission consent for funds above that value.

The Bill provides a new power for trustees to borrow from their permanent endowment, creating the ability to use permanent endowments for loss-making social investments. These changes provide trustees with more options to make the best use of their assets. There are, of course, appropriate safeguards in place, such as thresholds for the amount of permanent endowment that can be borrowed, and a maximum time period within which the funds must be paid back.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clauses 10 to 13 ordered to stand part of the Bill.

Clause 14

Special trusts

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 14 repeals part 14 of the Charities Act 2011, which deals with special trusts, because most of it is now redundant. The content of section 287 of the 2011 Act, which sets out the definition of special trusts, is retained but transferred to section 353 of that Act.

Question put and agreed to.

Clause 14 accordingly ordered to stand part of the Bill.

Clause 15

Small ex gratia payments

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clause 16 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clauses 15 and 16 allow charities to make relatively small payments where there is a moral obligation to make a payment but no legal power to do so. This can be done without seeking Charity Commission approval if the payment falls below the threshold set out in the Bill, which is dependent on the size of the charity. The requirement for prior authorisation from the Charity Commission, the Attorney General or, in some cases, the court to make these small payments can be burdensome, and the cost disproportionate to the size of the payments.

The clauses also rephrase the test that charities must use in deciding whether to authorise ex gratia payments. That will allow charities to delegate decisions about ex gratia payments to their staff if they wish to do so.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Clause 16 ordered to stand part of the Bill.

Clause 17

Scope of Part 7 of the Charities Act 2011

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clauses 18 to 20 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

These clauses address some unnecessary administrative burdens, clarifying and simplifying the law around the buying and selling of charity land, and removing ineffective and burdensome statutory requirements.

Clause 17 clarifies which land held for or on behalf of a charity is affected by the requirements in part 7 of the Charities Act 2011. Clause 18 makes changes to the exceptions to those requirements. It also removes redundant provisions as a consequence of the repeal of provisions in the Universities and College Estates Act 1925.

Clause 19 removes the automatic requirement for charities to advertise the disposal of land as advised in a surveyor’s report. It instead allows trustees the freedom to consider a surveyor’s advice and decide the best choice for their charity.

Clause 20 lays the groundwork for secondary legislation to expand the range of advisers a charity can call upon when seeking advice on land disposals. The current restrictions on who can advise charities in land transactions place on charities unnecessary cost burdens that can be disproportionate to the value and complexity of the land disposal. Clause 20 anticipates future changes to expand the list of advisers, allowing charities to seek a more tailored approach to disposals of land, as trustees will have more flexibility to choose the most appropriate adviser for their transaction.

Jeff Smith Portrait Jeff Smith
- Hansard - - - Excerpts

The Opposition agree with the clauses, which are sensible measures with sufficient safeguards that should produce a clearer and easier legal framework for buying, selling, leasing and mortgaging charity land.

We note that the Government decided to reject the recommendation to remove the statutory requirement to give public notice of land disposals. We are not against that decision, but I wonder whether there is scope for keeping that under review, and whether we might move from a less all-encompassing system, with a blanket rule for all disposals, to something more risk based. We do not propose that that should be part of the Bill, but I ask the Minister to keep that under review for future legislation.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

I thank the hon. Gentleman for his comments. As we have seen in this tidying up of legislation and rules relating to charities, there is a need for constant and periodic review. We will of course take into account the views of the Law Commission and the Charity Commission, as well as the Opposition’s comments. If further tidying up is required in future legislation, we are always open to it.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Clauses 18 to 20 ordered to stand part of the Bill.

Clause 21

Advice etc from charity trustees, officers and employees

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 21 provides clarity on whether an individual associated with a charity—an employee, officer or trustee, for example—can act as the designated adviser in land disputes. There is no reason why charities should not have access to any relevant in-house expertise that is available to them.

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Clause 22

Residential tenancies granted to employees

Question proposed, That the clause stand part of the Bill.

09:45
Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 22 allows charities to grant short-term residential tenancies to employees without Charity Commission consent by changing the definition of a “connected person” in section 118 of the Charities Act 2011. This change will make it easier for charities to use their assets to run their organisations more efficiently—to facilitate an employee’s work by allowing them to stay on site in the short term, for example—without having to seek permission from the Charity Commission.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Clause 23

Information to be included in certain instruments

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 23 protects buyers of charity land by resolving gaps in the wording of contracts concerning charity land transactions. This minor and technical change is necessary to save time and costs for purchasers, who currently have to check that statutory requirements have been complied with. That can deter buyers and increase costs for the charities that are selling the land.

Question put and agreed to.

Clause 23 accordingly ordered to stand part of the Bill.

Clause 24

Amendments of the Universities and College Estates Act 1925

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss that schedule 1 be the First schedule to the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 24 and the associated schedule 1 simplify the Universities and College Estates Act 1925, and remove layers of administration for charities that fall under that Act. These minor technical changes clear up bureaucracy in land transactions for those charities.

Lloyd Russell-Moyle Portrait Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
- Hansard - - - Excerpts

I refer the Committee to my entry in the Register of Members’ Financial interests in relation to universities and charities. I rise to say that, generally, these technical amendments are positive and reduce burdens on universities. However, I do think that there is a wider philosophical discussion to be had—probably not for this Bill, but more broadly—about the role of universities in disposing of land that they might not have acquired themselves but were given. Often that land is given at public expense, and includes heritage assets. Universities should not see those assets as pure money transactions but as heritage transactions. They have a wider duty to the public to look after and maintain those assets, and ensure that they are disposed of in a way that continues that maintenance.

I support the reduction of bureaucracy for universities and charities, but it is important to put on the record that universities should consider not just the business importance of their estate, but its wider social importance.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

As the hon. Gentleman would expect, in my role as the Minister for Heritage, I agree with the principles that he set out. I do not believe that that is strictly the purpose of the Bill, which is very much about procedure, but he has put his comments on the record. I think most hon. Members would agree with the intent and thrust of what he said about universities’ responsibility to look after their heritage assets.

Question put and agreed to.

Clause 24 accordingly ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 25

Working names etc

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clauses 26 to 28 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Part 3 of the Bill includes clauses 25 to 28, which relate to the Charity Commission’s power to direct a charity to change its name. The adoption by a charity of a name that is similar to another charity’s name, or that is offensive, can lead to the public being misled, donations being made to the wrong charity and reputational damage for individual charities and, indeed, the entire sector.

Clause 25 extends the Charity Commission’s existing power to direct a charity to change its name to cover working names. Working names are names that charities are known by, but which are different from their registered name. Comic Relief, for example, is a working name of a charity called Charity Projects. The change closes a loophole that would allow charities to continue to operate with an inappropriate working name. The definition of “working names” has been considered in great detail and clarifications have been added to the explanatory notes in response to questions and comments from the Charity Law Association.

Clauses 26 and 27 allow the Charity Commission to delay registering a charity on the basis of an inappropriate name. They also allow the Charity Commission to delay changing a charity’s name on the register in order to give enough time to address the issue properly. This is subject to a maximum delay period. Clause 28 ensures that the Charity Commission can also direct an exempt charity to change its name, as it can for charities that are not exempt. The Charity Commission would be required by the Charities Act 2011 to first consult with an exempt charity’s principal regulator before making such a direction.

This group of changes provides the Charity Commission with clear and effective powers in the rare cases where a charity adopts an inappropriate name. I commend the clauses to the Committee.

Jeff Smith Portrait Jeff Smith
- Hansard - - - Excerpts

My hon. Friend the Member for Brighton, Kemptown jogs my memory in relation to the register of interests. I did declare in our Second Reading Committee that I am a trustee of the charity Drug Science. I perhaps ought to put that on the record in Committee as well.

The Opposition support the measures in clauses 25 to 28. They are sensible safeguards that will not only make life less bureaucratic for charities, but will actually have a role in protecting the public from being misled. They are important parts of the Bill. However, there was some concern from charity lawyers that, because the working name proposals were not part of the original report, they may not have been given as much consideration as other parts of the Bill—in terms of unintended consequences and so on. The Opposition support the measures in the clauses, but we would ask for some kind of post-legislative review to make sure that they are working correctly.

Lloyd Russell-Moyle Portrait Lloyd Russell-Moyle
- Hansard - - - Excerpts

I rise generally to support clause 25, but I wish to put on record a note of caution about historic charities that might have competing or similar names. The Charity Commission must act with caution in those cases. My background is in youth organisations, of which there are a number that take the name “Scouts”. They might not be part of the official UK scouting group we know or be affiliated to the international World Organisation of the Scout Movement, but they are Scouts in the sense of the Baden-Powell scouting groups. The same goes for the Woodcraft Folk and others.

It is important that the Charity Commission does not act in a heavy-handed manner, but ensures that it is responsive and light-touch only when there is deliberate confusion taking place, not when a bigger organisation might just not like what a smaller organisation is doing, even though they have both been active for many years. I think it is important that the Charity Commission hear that. I am sure the Minister with his other hat on would agree with that as well.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

In answer to the first question, the hon. Member for Manchester, Withington is right that clause 25 is not based on a formal proposal in the Law Commission’s consultation. Instead, the recommendation arose from the consultation and was then discussed with the Charity Law Association. That was the genesis of this proposal, and it is not an unusual occurrence in Law Commission projects and reports for that to happen.

With regard to the criteria, as the hon. Member for Brighton, Kemptown mentioned, the message of reasonableness and being sensible is key. The Charity Commission does have operational guidance, which caseworkers use to determine whether they consider a name to be offensive. The Commission has to date not needed to issue a direction that a charity had to change its name because it was considered offensive. We do not consider that the proposed changes will change the frequency or likelihood of a controversy where a charity’s name is found to be offensive, but I am sure that the hon. Gentleman’s comments, which seem eminently sensible, have been noted.

Question put and agreed to.

Clause 25 accordingly ordered to stand part of the Bill.

Clauses 26 to 28 ordered to stand part of the Bill.

Clause 29

Powers relating to appointments of trustees

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 29 allows the Charity Commission to confirm that the election of a trustee that may previously have been considered defective or uncertain should be treated as if a valid election had taken place. It will create consistency with the commission’s powers to determine a charity’s members and provide certainty going forward.

Question put and agreed to.

Clause 29 accordingly ordered to stand part of the Bill.

Clause 30

Remuneration of charity trustees etc providing goods or services to charity

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clause 31 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 30 addresses an anomaly in the current law under which trustees can be paid for services provided to their charity for both goods and services but not for goods alone. Allowing the remuneration of trustees for the provision of goods gives charities the opportunity to use their in-house contacts and to potentially source goods at better than market rates, saving valuable funds.

Clause 31 gives the Charity Commission powers to order a charity to pay a trustee for work they have completed for the charity where it would be unjust not to pay the trustee for that work. Such payments are rare and currently require authorisation by the court: although they will continue to be rare, the clause means the commission can provide authorisation, which will avoid the time and expense of going to court.

Question put and agreed to.

Clause 30 accordingly ordered to stand part of the Bill.

Clause 31 ordered to stand part of the Bill.

Clause 32

Trustee of charitable trust: status as trust corporation

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 32 represents a minor technical change that automatically confers trust corporation status on any trustee of a charitable trust that is a body corporate. It will be particularly useful in a variety of scenarios, including incorporations and mergers. It will save charities time and expense, as the current routes to obtaining trust corporation status are time-consuming and cumbersome.

Question put and agreed to.

Clause 32 accordingly ordered to stand part of the Bill.

Clause 33

Gifts to merged charity

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 33 enables gifts to a charity that has since merged to go to the new merged charity. It will mean that charities no longer have to maintain a shell charity on the register simply to collect gifts for a charity that has ceased to operate. It will save them and the Charity Commission an administrative burden.

Question put and agreed to.

Clause 33 accordingly ordered to stand part of the Bill.

Clause 34

Vesting declarations: exclusions

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clause 35 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 34 changes the types of property that are excluded from transfer during a merger. It is a technical change that clarifies charity law on mergers and removes redundant and outdated sections, including pre-1925 language on mortgages.

Clause 35 is a minor change to ensure the language in section 306 of the Charities Act 2011 is consistent with the new definition of “permanent endowment” brought in by clause 9 of the Bill. These technical changes remove administrative barriers, meaning a simpler and more cost-effective process for charities seeking to merge.

Question put and agreed to.

Clause 34 accordingly ordered to stand part of the Bill.

Clause 35 ordered to stand part of the Bill.

Clause 36

Costs incurred in relation to Tribunal proceedings etc

Question proposed, That the clause stand part of the Bill.

10:00
Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 36 allows the charity tribunal to make authorised costs orders to protect trustees from individually carrying the costs of charity proceedings. An authorised costs order will confirm in advance that the cost of proceedings can properly come from a charity’s funds, preventing trustees from being discouraged from raising genuine grievances.

Question put and agreed to.

Clause 36 accordingly ordered to stand part of the Bill.

Clause 37

Public notice as regards Commission orders etc

Question proposed, That the clause stand part of the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 37 extends the Charity Commission’s discretionary power to give public notice, or require a charity to give public notice, for an order under the Charities Act 2011. This power will now extend to instances where the Charity Commission is required to give consent, for example, if a charity wishes to change the purposes in its governing document.

Question put and agreed to.

Clause 37 accordingly ordered to stand part of the Bill.

Clause 38

“Connected person”: illegitimate children

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clause 39 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clauses 38 and 39 remove language that is outdated from the definition of a connected person. They also allow for secondary legislation to change this definition in the future. The ability to amend the definition of a connected person through secondary legislation provides the Secretary of State with the flexibility to ensure the regulatory regime is effective in modern times.

Question put and agreed to.

Clause 38 accordingly ordered to stand part of the Bill.

Clause 39 ordered to stand part of the Bill.

Clause 40

Minor and consequential provision

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss that schedule 2 be the Second schedule to the Bill.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

Clause 40 gives effect to schedule 2, which contains minor and consequential amendments resulting from the Bill. Where appropriate, these amendments have been referred to and explained above under the clauses to which they relate.

Question put and agreed to.

Clause 40 accordingly ordered to stand part of the Bill.

Schedule 2 agreed to.

Clause 41

Extent, commencement and short title

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

I beg to move amendment 1, in clause 41, page 30, line 15, leave out subsection (7).

This amendment would remove the privilege amendment inserted by the Lords.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss clause 41 stand part.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

The amendment removes the privilege amendment inserted in the Lords. For Bills starting in the House of Lords, a privilege amendment is included to recognise the right of this place to control any charges on the people and on public funds. It is standard practice to remove such amendments at this stage of the Bill’s passage through the House of Commons.

I also speak to clause 41 in this group. Clause 41 makes provision about the extent, the coming into force and the short title of the Bill. Clause 41 will come into effect on the day on which the Act is passed. Other provisions will come into force when the Secretary of State makes regulations by statutory instrument. The Department for Digital, Culture, Media and Sport will work with the Charity Commission on an implementation plan to bring the provisions into effect in stages after Royal Assent.

Jeff Smith Portrait Jeff Smith
- Hansard - - - Excerpts

I will speak very briefly because this is really a technical clause. The Opposition agree with the Government’s amendment and with clause 41. The Minister referred to the implementation plan; Baroness Barran said at Committee stage in the Lords that the Government would publish an implementation plan before the Bill completes its passage through the House. Given that we are now at the end of the Committee stage and we do not yet have a date for Report and Third Reading, I will put on record my request to the Minister for an update on the progress of an implementation plan.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

I note the hon. Gentleman’s comments. DCMS is working with the Charity Commission on the Bill’s implementation. We will announce further information in due course. If I am able to provide more information shortly, I will give it to the hon. Gentleman and others.

Amendment 1 agreed to.

Clause 41, as amended, ordered to stand part of the Bill.

Question proposed, That the Chair do report the Bill, as amended, to the House.

Nigel Huddleston Portrait Nigel Huddleston
- Hansard - - - Excerpts

I would like to thank you, Mr Twigg, all the officials, stakeholders, the charities themselves, the Commissions and everybody involved in the Bill’s progress today. I thank the Opposition, as well as Members on this side of the House, for the co-operation and attention they have given to this very important Bill. It will make a meaningful difference to the charities impacted.

Jeff Smith Portrait Jeff Smith
- Hansard - - - Excerpts

May I briefly echo the Minister’s comments? It is a highly technical Bill and an awful lot of work has gone on behind the scenes by the Law Commission, the Lords and the Clerks, which we should put on record. I thank all who have been involved, and also thank members of the Committee for their attendance today.

Question put and agreed to.

Bill, as amended, accordingly to be reported.

10:07
Committee rose.

Charities Bill [Lords]

Bill, as amended in the Public Bill Committee, considered.
Third Reading
Queen’s and Prince of Wales’s consent signified.
00:00
Nigel Huddleston Portrait The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Nigel Huddleston)
- Parliament Live - Hansard - - - Excerpts

I beg to move, That the Bill be now read the Third time.

This Bill will increase efficiency in the charities sector by reducing unnecessary administration and bureaucracy, therefore enabling more funds to be used for charitable purposes. It will simplify a number of processes and promote consistency in the law by implementing the majority of the recommendations set out in the Law Commission’s “Technical Issues in Charity Law” report.

There is no doubt that the work of charities touches almost every aspect of British civic life. They inspire, mobilise and unite people to help others, including the most vulnerable in society. Not only do charities provide us with opportunities to volunteer and donate to important causes, but they publish meaningful research to increase awareness of the challenges in society. There is no greater example of the strength of community than that to be found in our great network of charities—we have more than 165,000 registered in England and Wales alone. That is why it is so important for us to recognise some of the challenges faced by charities and bring in regulatory change that will enable them to continue to make a difference.

As charity law can be complex and bureaucratic, it often means that charities incur expensive legal costs, in turn giving them fewer resources and less time to focus on their charitable purposes. The Bill strikes a careful balance between tackling administrative frustrations and maintaining sufficient safeguards to protect charities and their donors. The Bill makes a number of important changes that will be of benefit to the sector. For example, it will simplify the process by which charities amend their governing documents and make it easier for charities to repurpose funds from a failed fundraising appeal.

The Bill also provides trustees with tools to make better use of their permanent endowment, and removes administrative burdens associated with land transactions and mergers. Trustees will also be able to apply for advanced assurance from the courts that the costs of litigation can be paid from a charity’s funds, rather than a charity being discouraged from seeking legal action because the costs would be borne by the trustees personally.

The Bill contains other measures, including some about changes to the names of charities. All these changes are balanced against the need for important safeguards, such as Charity Commission oversight, and will save charities the time and resources involved in having to negotiate through overly burdensome regulation. That is why I am pleased that this important Bill is completing its passage today.

I also recognise the need to give charities a clear timeline, alongside a staggered implementation period, so they are not overburdened by several changes at once. That is why we aim to phase in reforms over a 12 to 18-month period, to ensure that charities have time to prepare for implementation and can fully benefit from the changes. A phased implementation approach is also important for the Charity Commission. We will publish a more detailed implementation plan following Royal Assent. The aim of the Bill is to help charities carry out their purpose even more effectively.

I am honoured to have taken the Bill forward based on the proposals from the Law Commission, to which we are grateful. I must also extend my gratitude to my noble Friend Lord Hodgson of Astley Abbotts and to all those who have contributed to the Bill’s formation. That includes all of the leading experts who have provided input on the legal reforms. The Bill has been rigorously scrutinised and is the product of careful consideration and consultation. I would like to thank all right hon. and hon. Members for their contributions, support and interest in the Bill. I am also thankful to the members of the Second Reading Committee and the Public Bill Committee, who provided support and scrutiny, and in particular the Chairs, my hon. Friend the Member for South West Devon (Sir Gary Streeter) and the hon. Member for Halton (Derek Twigg). I am also grateful to the Opposition, across both Houses, for giving the Bill due consideration and scrutiny, and I am glad we have support from the charities sector, which has been reflected well across the House.

Finally, I wish to put on record my thanks to all those who have carried out exceptional work to enable the Bill to reach its final stages: colleagues from the Law Commission, the Charity Commission, parliamentary counsel, the Department for Digital, Culture, Media and Sport’s policy and legal teams, my private office, and all the parliamentary staff and co-ordinators. I now look forward to seeing the Bill’s successful implementation. I commend the Bill to the House.

14:17
Jeff Smith Portrait Jeff Smith (Manchester, Withington) (Lab)
- Parliament Live - Hansard - - - Excerpts

I thank the Minister for his introduction. The Opposition are proud to support our charity sector, which does such fantastic work for individuals, communities and society. The contribution of charities to our society could not have been shown more clearly than during the coronavirus pandemic, as organisations and volunteers have done fantastic work to support vulnerable people around the country. We owe it to them to provide a legal and operational framework that is clear, efficient and manageable, especially for the large number of small charities with limited staff and resources, and that allows them to concentrate not on bureaucratic technicalities but on doing their work. During the passage of this Bill there has been agreement on all sides that the new measures detailed in it are important progress towards allowing charities to amend the ways they operate and making it easier for them to achieve their core purpose.

The Bill seeks to make a series of changes that will make it easier for charities to navigate the law and carry out their functions effectively, while retaining important safeguards. So the Opposition are pleased today to support the Bill, which takes on board the large majority of recommendations put forward in the Law Commission’s report and makes a number of significant changes for charities. It reduces red tape, including by making it easier for charities to amend their governing documents, such as through small changes to charitable purposes; and by making it easier to dispose of land efficiently, to use the resources of the charity more effectively and to avoid disputes over whether a trustee has been correctly appointed or elected.

I do not intend to detain the House for long, but I do wish to thank the Law Commission and the charity sector for their great work on the Bill. I thank the Lords for their careful scrutiny of what is quite a technical and involved Bill: they did a great job of scrutinising the measures in the other place. I am also grateful for the Minister’s engagement and particularly for his writing to me yesterday to set out an indicative timescale for the implementation of the measures in the Bill. I look forward to more detail on the implementation plan as it comes forward. With that, I am happy to offer the Opposition’s support on Third Reading.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.

Public Service Pensions and Judicial Offices Bill [Lords] (Programme) (No. 2)

Ordered,

That the Order of 5 January 2022 (Public Service Pensions and Judicial Offices Bill [Lords] (Programme)) be varied as follows:

(1) Paragraphs (4) and (5) of the Order shall be omitted.

(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings on the motion for this Order.

(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the motion for this Order.(Mr Simon Clarke.)

Royal Assent

Royal Assent
Thursday 24th February 2022

(2 years, 1 month ago)

Lords Chamber
Read Full debate Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 25 January 2022 - (25 Jan 2022)
11:07
The following Acts were given Royal Assent:
Finance Act,
Advanced Research and Invention Agency Act,
Dormant Assets Act,
Charities Act.