(13 years ago)
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Baroness Verma
Baroness Verma
My Lords, the Bill will bring together provisions of the main legislation on charities in England and Wales into a single piece of legislation; simplify the structure of the existing legislation, making it more accessible to the lay person; and replace the Recreational Charities Act 1958, the Charities Act 1993 and relevant provisions of the Charities Act 2006.
As a consolidation Bill, it brings together provisions of the main charity legislation into a single piece of legislation. Importantly, it does not and cannot introduce new policy, nor open up existing policy for amendment.
The Bill has been drawn up by the Law Commission, working closely with the Office for Civil Society in the Cabinet Office and the Charity Commission. As a Law Commission consolidation Bill it will go through the special parliamentary procedure for Law Commission consolidation Bills, with the detailed parliamentary scrutiny undertaken by the Joint Committee on Consolidation Bills.
Although Ministry of Justice Ministers usually take consolidation Bills through Parliament as Law Commission sponsors, in this case it was decided that a Minister with responsibility for the relevant policy area should pilot the Bill through Parliament. I am pleased to be piloting this Bill through the House of Lords.
Due to the fragmentation of charity legislation over many years, it has become increasing difficult to navigate the law in this area, not least because the Charities Act 2006 made extensive amendments to the Charities Act 1993. Although lawyers and government officials can be expected to keep track of the moving legislative landscape, the same cannot be said of the huge army of volunteer trustees who are the lifeblood of charities large and small throughout England and Wales.
During parliamentary scrutiny of the Bill that became the Charities Act 2006, the Joint Committee on the Bill recommended that charity law be consolidated. It summed up the complexity of the legislative landscape well when it said that,
“small charities—run by volunteers from the proverbial kitchen table—will have to study three different Acts and the relationship between them in order to know the current state of statute law”.
During debates on the Bill, the Joint Committee’s recommendation was endorsed by several noble Lords, who agreed that charity legislation should be consolidated to make it easier to follow.
Although the Bill does not seek to make changes to policy regarding charity law, some minor changes to the existing legislation are being dealt with in a pre-consolidation amendments order. The order, which is made under a specific power in Section 76 of the Charities Act 2006, was considered by this House on 27 April this year. It makes minor changes to the existing legislation which will facilitate the consolidation but which cannot be made in the Bill itself.
As is usual practice, the Cabinet Office conducted a full consultation on the proposed Bill and the pre-consolidation amendments order. Respondents were broadly in support of the consolidation and no substantive concerns were raised about the Bill itself. To address points raised by respondents, some additions were made to the pre-consolidation amendments order where these were within the scope of the power in Section 76 of the 2006 Act. A number of minor drafting changes were also made to the Bill in the light of those responses.
There have been calls by some parties, including some of the consultation respondents, to include in the Bill the 2006 Act provisions relating to fundraising. This was carefully considered but rejected for two good reasons. First, the Bill consolidates the law relating to charities. The fundraising provisions go much wider, covering fundraising for charitable, philanthropic and benevolent purposes, and professional fundraisers and commercial companies undertaking charity promotions. They are therefore beyond the scope of a Bill to consolidate the law relating to charities.
Secondly, there is some doubt about when the public charitable collections provisions of the Charities Act 2006 will be implemented. The provisions create a new regime for licensing and regulating charitable collections conducted in the street or house-to-house, replacing existing legislation that dates back almost 100 years. It has not been possible to implement the new regime for several reasons. Questions have been raised about whether the regime, instead of being deregulatory as intended, will add to the regulatory burden of charities—something that we are very keen to avoid. There is also the issue of cost-effectiveness. The new regime would give the Charity Commission a major new role, but with no new funding to deliver it, at a time when pressure on resources means that the commission has to focus on its core regulatory functions. Finally, the new regime would remove decision-making powers from local authorities, running counter to our plans to devolve more power to local communities. We now believe that the most sensible course of action will be to consider the regulation of public charitable collections as part of the wider review of the Charities Act 2006, which is due to begin later this year.
It is worth saying a bit more about the review of the Charities Act 2006. The review, which is required under Section 73 of the Charities Act 2006, will be a good opportunity to look at the effectiveness of the 2006 Act and the underlying policies, and to consider whether other changes to the legal and regulatory framework for charities could usefully be made.
This consolidation Bill will provide a very clear basis from which to conduct the review—that is, once the legislation is more clearly laid out, it will be easier to assess how well implementation of the legislation is working. Any suggested policy changes or substantive amendments to existing charity law will be considered as part of the review. There are some who will say, “Let’s wait to consolidate until the review of the Charities Act has concluded”. However, any recommendations for legislative change that come out of that review would require primary legislation and could not be achieved through a consolidation Bill. They could also happen only after proper consultation with the charity sector, which would take time, and there is no telling at this stage whether or when there would be the opportunity to legislate. I agree with the noble Lord, Lord Phillips of Sudbury, who in welcoming this Bill was reported as saying that if we waited for the perfect moment to consolidate, perhaps we would wait for ever.
The Bill represents a small but important step in making charity law simpler to navigate and supports the Government’s aim of making it easier to set up and run a charity as it will make charity law more accessible to the lay charity trustee. We have a window of opportunity to tidy up what has become a confusing and messy legislative landscape and I commend this Bill to the House.
Lord Phillips of Sudbury
My Lords, I thank my noble friend for the way in which she has introduced this Bill and in so doing thank those responsible for it, particularly the Law Commission, the Charity Commission, the Office for Civil Society and the Consolidation Committee under the chairmanship of the noble and learned Lord, Lord Carswell. Consolidation is an often thankless task and I sympathise with the poor old parliamentary draftsmen who on such occasions get nothing but brickbats. He, she or they have done a sterling job in pulling together the 200 plus pages that constitute the Bill.
As my noble friend said, it is vital that Parliament never loses sight of the nature of the charity and voluntary sector which is, as its name implies, made up of volunteers. Ninety-five per cent of all charities in this country have no paid staff and the overwhelming majority of trustees are volunteers—there is just a tiny handful of exceptions. I suspect that every Member of this House is trustee of at least one, and in many cases, many charities. The charity sector is the jewel in our national crown. It is that which keeps us going in hard times; that which keeps us from getting cynical; that which gets us out and about contacting fellow citizens whom we would normally come nowhere near.
The Minister said why the Bill does not consolidate the fundraising provisions in Part 2 of the Charities Act 1992 and in the Charities Act 2006. I will read in Hansard what my noble friend said but at first hearing it sounded a convincing explanation of why the consolidation has not occurred. It has disappointed very many people. I am sure that my noble friend Lord Hodgson of Astley Abbots will have something to say about that when he speaks. Certainly, the Charity Law Association is very disappointed about that important aspect of charity law not being within this Bill. I do not instantly see why it could not have been consolidated and if it proves the case that on review large parts of it are abandoned or changed, you can as well change this consolidation Bill as you can change the 2006 Act.
I know that the Minister is keen to address any issues that are raised in this House, particularly those which will clarify even further the consolidation Bill. Make no mistake, it will make a huge difference. Many solicitors I know who try to help local charities but know very little about charity law will be extremely grateful for this legislation. As the Minister said, the basis on which consolidation measures are brought forward is that they do not change substantive law. I will, therefore, refer in detail to the opening clauses of the Bill in that regard. To enable the Minister, her very helpful Bill team, the parliamentary draftsmen and this House to get to grips with my rather gritty points. I am afraid that I need to set out my observations in unremitting detail. I have hitherto raised these issues with the noble and learned Lord, Lord Carswell and the Bill team.
In short, the key definitions in the Bill are not as clear as they could and should be. They affect the whole interpretation of the Bill. Key to this are the unnecessary distinctions made in the first three clauses between “charitable purpose” and “charitable purposes”. Clause 1(1)(a) refers to “charitable purposes” in defining what is meant by “charity”. Clause 2 is headed, “Meaning of ‘charitable purpose’”. Clause 2(2)(a) refers to “charitable purposes”. The heading to Clause 4 begins, “Charitable purpose”, and the heading to Clause 11 is “Charitable purposes”. Clause 3 takes the biscuit and has it both ways. The heading is, “Charitable purpose: purposes which can be charitable purposes”. Clause 11 purports to define “charitable purposes”,
“In the rest of this Act”.
That implies that there are different definitions of “charitable purposes” in Clauses 1 to 10 from those in Clauses 11 to 358, plus the 11 schedules. Schedule 11, which contains an index of defined expressions, hedges its bets and refers to “charitable purpose or purposes”, directing the reader to Clauses 2(1) and 11.
For those in the Chamber who are still listening and think that I am splitting hairs, I say that we lawyers thrive on hairs. Furthermore, the courts will aver that we parliamentarians do nothing in vain; we may do it vainly, but not in vain. The difference between singular and plural must be taken as having significance—and I believe that it does.
I return to Clause 3, which is crucial and contains the 13 main purposes of a charity. Noble Lords will recollect that the clause heading is, “Charitable purpose: purposes which can be charitable purposes”. I can find no reference in the 2006 Act, or in any other pieces of legislation consolidated in the Bill, to the quizzical qualification, “can”. What can one make of something that “can” be a charitable purpose? The headings to Clauses 2 and 3 seem mutually inconsistent, the former being the same as Clause 2 of the 2006 Act and the latter containing that brooding word, “can”.
I turn now to another issue. I wonder whether the Bill is clear enough in mentioning only in Clause 1(1)(a) the need for a charity to have exclusively charitable purposes. Although it may be arguable, if one follows through the interlocking of the first three clauses of the Bill—with a towel around one’s head, I may say—that the need for a charity to be established for charitable purposes only works through the remainder of the clauses, I prefer the approach of the Charities Act 1993. There, the general interpretation section at the end—Section 97—defines “charitable purposes” as,
“purposes which are exclusively [charitable purposes as defined by section 2(1) of the Charities Act 2006]”.
That last phrase was inserted by the 2006 Act.
I draw the attention of the Minister and the House to an obscurity that exists in relation to what law is being applied in the Bill. Clause 2 makes it clear in two places that it is, unsurprisingly, the current law of England and Wales. In Clause 3(1)(m)(i), one finds a reference to “the old law”. I think I know what the draftsman means, but I am not sure how many other people will, and I would like to be sure that what I think it means is what it means. Finally, I cannot resist pointing out that Clauses 4(1) and 4(5) are superfluous, particularly in the light of Clause 2(1)(b).
I apologise profusely for the turgid nature of my contribution to this debate, but at least there are 10 colleagues in the Chamber who have had to suffer my meanderings. I am grateful for the opportunity.
Lord Hodgson of Astley Abbotts
My Lords, I declare interests as president of the NCVO and chairman of the Armed Forces Charities Advisory Company. I add my thanks to the Minister for bringing forward this Bill and my congratulations to all those who have been involved in its preparation. I do so on the grounds of the important principle, which has been referred to already, that there is nothing more infuriating or dispiriting than starting off to research new legislation which you find is amending previous legislation and which, when you get to it, amended earlier legislation and so on ad infinitum. It reminds one of those archaeological programmes where they slice away the side of a street and you find what was thrown on to it in about 1200, then layer on layer below.
That makes the law unfriendly and, as my noble friend Lord Phillips has said, it is particularly important that charity law should be as user-friendly as possible for the simple reason that most charities are run on voluntary effort. Of course, some will require the expert advice available from firms such as that where my noble friend Lord Phillips was previously a senior partner. However, as far as possible, DIY is a good principle for charities and that is facilitated by consolidation.
In at least two senses, however, I find this a slightly strangely timed Bill. First and most importantly, this being the year of our Lord 2011, the Charities Act 2006 is about to start the quinquennial review which, as my noble friend said, was written into Section 73 of that Act. It is and will be an extensive review because it requires the examiner to look at,
“public confidence in charities … the level of charitable donations … the willingness of individuals to volunteer”,
and,
“the status of the Charity Commission as a government department”.
It is clear from the word on the street that considerable changes will be suggested to the examiner when they set to work, so I fear that this consolidation Bill, while welcome in one sense, will not be the last word and that we shall be reploughing this ground before too long.
The second and more proximate reason for my surprise is the forthcoming charity tribunal hearing on the issue of public benefit. As noble Lords will recall, the 2006 Act ended the presumption of public benefit and required all charities to show that they had a public benefit requirement in their operation. That has always been controversial, as it takes you straight into the heartland of private schools and private hospitals. When we debated the 2006 Bill, some noble Lords found it counterintuitive that schools charging fees of £30,000 could be charities. For the record, I do not find that counterintuitive at all as you do not strengthen the weak by weakening the strong. Yet the strong have a contribution to make to our society in the form of bursaries, useful facilities, teacher exchanges and so on.
A further difficulty about the public benefit test is the rather obscure nature of the test case. The noble Lord, Lord Phillips, can expound on this at great length and has done so. It is the case of Re: Resch. which, as a non-lawyer, I find difficult to understand. It is about an Australian private hospital—a fee-paying institution—set in the grounds of a state, or free, hospital. That whole area of public benefit is quite obscure and difficult to deal with and one objective that we had in 2006 was to ensure that the thing was not further confused or compounded by introducing political angles into that tricky area from either end of the political spectrum. That was why the Charity Commission was given the role of establishing the public benefit test.
Lord Phillips of Sudbury
The noble Lord cited my name on Re: Resch., and he is quite right that it is a leading Privy Council case, but it is wonderfully obscure. He may remember that, during the debates on the 2006 Act, I moved an amendment to try to give the Charity Commission a little help in giving guidance and making judgments on public benefit. In many ways, it is a pity that we left it nude and relying on a paucity of very unsatisfactory cases.
Lord Hodgson of Astley Abbotts
The noble Lord, Lord Phillips, is one of the prime charity solicitors, and if he says Re: Resch. is obscure, who am I to disagree? I bow to his expert opinion. As he said, the Charity Commission was left with the task, and we now have a reference by the Attorney-General to the charity tribunal for a determination on the public benefit test. The hearing is later this month, so we are holding this Second Reading debate on the cusp of potentially significant changes for the charity sector. Some noble Lords may say that is all about private hospitals and private schools—that they deserve what is coming to them—but I think a word of caution is required because, as has been pointed out, the decisions made in those proceedings will affect not just fee-paying independent schools but potentially all fee-charging charities. That will include playgroups, nurseries, care homes, healthcare charities, museums, theatres, amateur sports clubs, advice centres, veterinary care charities, heritage and visitor attractions, housing associations and alms-houses. It has a very substantial possibility of changing the sector. When coming in to the House, noble Lords may have seen the huge queues outside Westminster Abbey of people wanting to go in to see the abbey today. It will be affected by the tribunal’s determination. While I absolutely support the Bill, I think we are holding this debate at an unusual point in the development of charity law.
As my noble friend pointed out, this Bill is a consolidation measure containing no new legislative proposals. I will not repeat what the noble Lord, Lord Phillips, said on the points that he made. The guts of the Bill are in Clauses 3 and 4 and are to do with the public benefit test and the test for charitable purposes. I entirely support what my noble friend said about the charitable purposes clause. I was surprised that Section 2 in the 2006 Act, which is headed “Meaning of ‘charitable purpose’” and seems absolutely clear, is replaced by a clause headed “Charitable purpose: purposes which can be charitable purposes”. That does not clarify anything; it seems to obscure things. That issue needs to be chased down.
Secondly, the words “under the old law” which, as my noble friend pointed out, now appear at the end of Clause 3(1)(m)(i), are a further confusion. Perhaps the Minister will explain why Section 2(8) in the 2006 Act, which contained the definitions of charity law and existing charity law, seems to have dropped out of the Bill. Maybe they appear somewhere else or have proved otiose or redundant, in which case, I am perfectly happy, but it would be helpful to have some words on that in due course.
One of the glories of consolidation Bills is that they provide a brief opportunity for reflection on where we got it wrong in the past and the direction of travel for the future. The Minister and my noble friend Lord Phillips referred to fundraising, which has proved a tricky subject and is clearly still in need of further treatment.
There are three brief issues that I would like to signpost this afternoon. The first is the role of the charity tribunal. The idea of the charity tribunal was to provide a quick, user-friendly, cheaper alternative to High Court proceedings so that small charities were not burdened by the risk that they would have to undertake if they appealed against Charity Commission hearings. I am afraid that it has not worked. There have been very few cases. Those that there have been have been highly legalistic in their approach and we are back with Silks, lawyers and everything else. The idea that we had for a simple remedy has not been fulfilled. One problem was the terms of the old Schedule 4, which is very prescriptive. We tried to persuade the then Labour Government that it would be a good idea to remove the schedule, but we were not able to do so. It is now reproduced wholesale in Schedule 6. If we are to make the tribunal as effective as we had hoped that it would be, a whole fresh eye is needed.
The second problem concerns dealing with the emergence of social investment. Recent years have seen the emergence of people who wish to make investments for social as well as financial purposes. They have an interest in making an investment and want to see a financial return but they also have a social purpose. The present proposals for charitable investments to be able to get improved results if they are successful—for example, as regards prisoner reoffending, getting people into work and ending school exclusions—would mean that the charities would get a better return.
There are implications for this whole area, including individuals. We have the counterintuitive idea that you may give the money to a charity to do something but you may not invest in it. That cannot be sensible. People who invest in charities or one of these schemes would get back their money or perhaps a modest return. That surely would be a sensible way of increasing the volume of money available for the sector. For charitable trusts, this would mean tackling the issue of permanent endowment, which cannot be spent. Therefore, many charities find it impossible to support schemes which are entirely in line with their objectives because of the issue whereby they cannot invest in schemes where there is a social return characteristic. That is a new area which has come to the fore in recent years. As we move forward we need to take time to think about it.
The last and greatest issue is of course the future regulatory structure. This afternoon, we have talked about charitable trusts. But there is now a welter of different corporate forms. You might be a charitable trust, a company limited by shares, a company limited by guarantee or a community interest company—a CIC. You could be an unincorporated association or an industrial and provident society, and you are shortly going to be able to become a charitable incorporated organisation—a CIO. Each of those forms of company or structure has different regulatory requirements as regards governance and fundraising. I am not sure that we have begun to think about how we get some coherence into the whole sector. I think that we can look at those issues in the future.
In conclusion, I entirely support this Bill. The UK charitable sector is glorious in its diversity. Therefore, this Bill has my strong support. But it is not the end of the road. Important decisions lie ahead if we are to find the right way to engage our fellow citizens in this critical area.
Lord Sheikh
My Lords, at the outset I should declare an interest as I have formed and entirely fund the Sheikh Abdullah Foundation, a small charity set up in my father’s memory which undertakes charitable work in the United Kingdom and overseas. I have also previously spoken in your Lordships’ House on the subject of the charitable sector. Charities are a fundamental barometer of the cohesion of our society and bring people together for a common cause. I feel that by performing charitable work people attain considerable satisfaction, and the work adds meaning to their lives. There are more than 170,000 charities in this country, an estimate of around 1 million charitable trustees, and our record for charitable donations is the best in Europe. We should therefore be justifiably proud of our charities.
I warmly welcome this Bill. As those of us who are heavily involved in charitable work will be only too aware, the law on the affairs of the third sector have become increasingly complicated in recent years. We should be grateful to the Law Commission, which, working with the Office for Civil Society and the Charity Commission, has undertaken the considerable workload of preparing this consolidation. The fact that the Table of Origins accompanying the Bill runs to 49 pages suggests that the Bill is long overdue—and it is a large Bill, with over 350 clauses. None the less it is important, and the House will want to ensure that its provisions meet the ambitious tests that the Government have set themselves in bringing it forward. I believe that the Government are right to seek to bring together the principal provisions for charities into one piece of legislation, and to take this opportunity to simplify the structure of the provisions, making it easier for those who wish to practise charitable actions to understand and navigate. That will command widespread support right across the entire charitable sector, where the current system is complicated and inaccessible other than to experts.
In part, this Bill arises from a commitment given during the passage of the Charities Act 2006 to consolidate measures into a single piece of legislation. The current legislative basis is fragmented, with key provisions contained in the Recreational Charities Act 1958, the Charities Act 1993 and the Charities Act 2006, all of which have been subsequently amended. The Charity Commission is undertaking a review of its services and this may well result in a reduced role for the commission as part of reducing charity regulation.
Many people in the United Kingdom donate their time and energy to assist the work of various charities as trustees, volunteers and fundraisers. We should do all we can to ensure that their efforts are not undermined in any way by unnecessary complexity. The National Council for Voluntary Organisations has estimated that nearly 31 million people in this country volunteer informally, with over 20 million volunteering formally. We also have the big society deregulation taskforce, chaired by my noble friend Lord Hodgson, which is likely to suggest a number of measures to reduce regulatory burdens on voluntary activity. The Government are also working to implement my noble friend Lord Young’s recommendations on reducing health and safety burdens on organisations.
Cutting red tape and making it easier to volunteer is crucial in encouraging us to volunteer, and I look forward to the implementation of the national citizen service in this regard. The setting aside of £100 million in a voluntary sector transition fund will help many organisations in an environment of reduced public spend. I am also encouraged by the Government’s determination to ensure that charities and social enterprises will have greater opportunities to deliver public services.
Making it easier for people to donate to charity is welcome and the big society bank is an extremely exciting development. By expanding the social investment marketplace and helping to attract extra private sector investment, it is expected that the bank will generate hundreds of millions of pounds for charities, social enterprises and voluntary groups to help fund social projects across the country. The Bill will also assist the Government in the implementation of their big society agenda. We should take this opportunity to applaud the changes in the 2011 Budget such as the innovative 10 for 10 proposal, whereby if one leaves 10 per cent of one’s estate to charity, the inheritance tax will accordingly be reduced by 10 per cent. The Government should be commended on their commitment to civil society, and the charitable sector plays a critical role in delivering that agenda.
One of the key measures of the success of this Bill will be its ability to enable the charitable sector to get on with the excellent job it is doing and to devote less energy to the details of charitable law. We need to ensure that those who donate to charity can have confidence that their resources are being put to optimal use. It is estimated that over 50 per cent of the population make monthly donations to charity, and they want to see that their contributions are making a real difference for the particular cause they support.
Yet even in the area of donations we have not managed to optimise the opportunities. The Charities Aid Foundation has estimated that around £750 million each year goes unclaimed from the gift aid scheme. I welcome the action that the Government have taken on gift aid. In this year’s Budget the Chancellor announced reforms to the gift aid scheme in order to try to encourage more people to donate to charity. Under the new regulations charities will not have to declare gift aid when claiming it on small sums adding up to £5,000 over the course of a year. I hope the Minister will take the opportunity to reassure the House that the Government will ensure that, in the new framework, we can expect a silver service from the Charity Commission.
We should make it easier to establish and run a charity so that administration consumes fewer resources and the real value can reach those in need of charitable support. Our charities do excellent work and it should be our ambition to create the framework for them to go even further. This is what underpins the Government’s approach, and the Bill is but one part of that.
Too often, the good intentions expressed in this House do not translate into good law in the world outside. The Bill is an opportunity to get this right and to make a crucial difference to the charitable sector. In that context, I hope that the Government have given consideration to how best to engage people in the work of charities. Trustees are busy, working together. They have an average age of 57; only one in three is under the age of 50, and only 2 per cent under 30. Experience may bring benefits, but I hope that the Minister agrees that it would be good to encourage a greater number of younger people to get involved in charitable governance.
As the size of the charitable sector increases, there is more pressure on recruitment. We need to make sure that those who want to get involved in the work of charities can find a quick and simple way to match their interests with available opportunities. The perception of a complex regulatory framework can act as a deterrent, but the Bill has a chance to fix that—by consolidating provisions it should make the legislation more understandable and easier to navigate.
The current charitable landscape is encouraging and the Government have decided to address the concerns about complexity around the legal framework at an opportune time. I fully support the Bill.
Baroness Smith of Basildon
My Lords, although shorter than usual, this has been an enjoyable debate. It has shown this House at its best and the depth of knowledge, commitment and expertise of its Members. I thank the Minister for her detailed and helpful introduction and explanation of the consolidation Bill.
I welcome this consolidation. As we have heard, it brings together the provisions of the existing main charity legislation. The Recreational Charities Act 1958—I am not entirely clear what a recreational charity is as opposed to any other charity—the Charities Act 1993 and the relevant, although not all, provisions of the 2006 Act are brought together into one piece of legislation. I welcome the assurance of the noble Baroness, Lady Verma, that there are no new policy issues involved and that no changes have been introduced. This is exactly what it says on the tin—a consolidation Bill designed to simplify existing legislation.
Like all noble Lords who have spoken today, I thank the Law Commission and congratulate it on its work, as I do the Office for Civil Society, the former Office of the Third Sector and the Charity Commission, which also consulted on this prior to the official formal consultation.
As noble Lords will know, the consultation was launched in September 2009 and closed in December 2009. I should confess to your Lordships’ House that at that time I was the Minister for the third sector, with responsibility for this legislation. I was keen to see progress before the last election but in those few months between the end of the consultation and the dissolution of Parliament in April 2010, there was no time in the legislative timetable—which was certainly of regret to me. Another year has passed before we have found time for debate but I certainly welcome the legislation being brought forward.
On the consultation, I was keen to refamiliarise myself with the consultation responses and am disappointed that they are no longer available on the website. It may be helpful for further consideration of the Bill, and would have been helpful for today’s debate, if they were made available. Having said that, I understand, and the Minister made it clear, that there was broad support for the Bill. As far as I am aware, there were no substantive objections to issues in the Bill before us today.
There have clearly been widespread concerns that, since the first legislation was introduced in 1958, charity legislation has over time become more complicated. That can be a deterrent and put off those who wish to contribute to society through charities and charitable work. The noble Lord, Lord Hodgson, described the previous legislation as “unfriendly”. That is a good description for those trying to wade through the legislation or to set up a charity or conduct themselves as trustees. It is right to pay tribute, as other noble Lords have done, to not just those who work for charities and the wider sector but also the, in many cases, unsung trustees. Being the trustee of a charity can be a huge responsibility. We should be grateful to them, many willingly and some not so willingly taking on these roles out of a sense of duty and responsibility. We have an obligation as legislators to make it as easy for them as possible to take on the responsibilities that they wish to and to play a role in society. Consolidating the law in a way that seeks to reduce complexity and bring the laws together in one place can be extremely helpful.
One general point that other noble Lords have made is that we should not be overly confident that this is going to make life much easier for charities. Looking through the Bill and its schedules, it is long and detailed, with huge implications and responsibilities. It will not be that much more easily understood by the lay person, however much we in your Lordships’ House try to make it so. Those noble Lords in the House for Questions yesterday may have heard the Question asked by my noble friend Lord Boateng: whether those who wish to set up charities should be able to do so without needing a lawyer. I noticed at the time that the noble Lord, Lord Phillips of Sudbury, gave a wry grin at that comment. That wry grin was explained when he spoke on some of the clauses of the Bill: it is almost impossible for the lay person to understand charity law in detail or to navigate their way through without a lawyer.
Charity law has, of necessity, to be detailed. It seeks to protect the donor and the public, and also seeks to regulate the charity’s activities, protect its integrity and that of its trustees. Looking at the Table of Origins and the involvement of different Government departments, the legislation is a response to issues that have arisen. This is a hugely complicated area but the legislation exists to bring order and, I hope, logic to that complexity. As welcome as this is—I warmly welcome the legislation coming forward at this point—there still remain some uncertainties for charities which I hope the Minister will be able to comment on. The noble Lord, Lord Hodgson, referred to some of these as well.
I commented that the Bill brought together existing legislation, including the relevant provisions of the Charities Act 2006—as other noble Lords have mentioned. I was grateful for the Minister’s explanation at the beginning as to why, as part of this consolidation, we have not got to the parts of the 2006 Act that have not been activated and which would make the Charity Commission the lead regulator for public charitable collections. As the noble Lord, Lord Phillips, said—I agree with his comments and will also look at Hansard carefully—there seems to have been a change of policy by the Minister on that issue. I would be interested to know, if the Government’s intention is not to proceed with those provisions in the 2006 Act, whether there will be a further consultation with those charities. My understanding is that as part of this consultation a number of organisations welcomed those provisions and wanted to see them included in the legislation. The Minister seemed to say that it was unlikely that they would come forward. If that is the case, will there be a further consultation on this? She will also be aware—and her own comments hinted at this—that one reason why that is not included today is because cuts in the Charity Commission’s budget make it difficult for it to undertake further responsibilities. If that is the prime reason, the House would appreciate some further information, but I may have misunderstood that.
The other provision from the 2006 Act that has not yet come into force is on the charitable incorporated organisations. It is in this legislation and is widely welcomed; there is no dispute over how widely welcomed it is. I may be missing something, but could the Minister explain why the CIOs are in this legislation while the other measures that we mentioned on fundraising are not? Is that a policy decision or a funding decision for the Charity Commission rather than a technical legal point?
I agree with the noble Lord, Lord Hodgson of Astley Abbots, about the uncertainty around the 2006 review of the Charity Acts. The commitment is that the review would take place in 2011. I fully understand, as the noble Lord, Lord Phillips of Sudbury, said, that there would be a reluctance to delay consolidation legislation, because that would mean that much-needed legislation would come through the statute books. But there may be changes and suggestions for changes following the review that will make this legislation out of date very quickly. That is the concern. After we have gone to the effort, in which all the organisations have been involved, of ensuring that we have comprehensive legislation, if the review takes place this year it will be out of date within the year. Given that the commitment has been made to have the review on the legislation go through now, can the Minister assure me that following the review, should changes be sought that benefit charities and civic society, the necessary parliamentary time will be made available as quickly as possible to ensure that we do not have legislation on the statute books advising charities that will be out of date so quickly?
The third uncertainty, although I shall not overly dwell on it, is about the funding difficulties faced by charities for both national and local funders and the impact that it is having on their ability to deliver and provide support for the big society. We have heard the comment from the noble Lord, Lord Phillips of Sudbury, that almost every Member of your Lordships' House is involved in a charity in one way or another, which is perfectly true. So your Lordships' House is only too aware that the charities and the wider third sector have been the backbone of the big society, although it has not been called that, for many years. There is now an increasing anxiety and uncertainty of what that means for them, and how they can continue to fulfil that role against a backdrop of funding cuts. Those charities will broadly welcome the legislation before us today because they know that it seeks to address some of their concerns and the problems that they have with legislation and simplify the legal requirements on them. We also welcome it and hope that the co-operation and support shown in the legislation continue in other areas of government policy, in recognition of the enormous power for good and the practical support that charities provide to communities across the country.
Baroness Verma
My Lords, I start by thanking the noble Baroness and all noble Lords for the warm welcome for this Bill. I absolutely agree with the noble Baroness that this House has been seen at its best today, with the breadth of knowledge and expertise—and especially the way in which my noble friend Lord Phillips navigated us around some of the most complicated legal speak that I have ever come across.
Charity is a subject that resonates with all Members of this House, where we have such a broad range of knowledge and experience of the charitable sector, as we have seen from this afternoon’s contributions. I thank all those who have spoken and will try to respond to all the points raised. I am grateful for the speech of my noble friend Lord Hodgson of Astley Abbots. I know that he played a significant part in this House’s scrutiny of the Charity Act 2006 and was one of those who called for the consolidation of charity legislation at that time. He is now taking forward important work in leading the cutting red tape task force, which is shortly to make its recommendations on how we can cut the thicket of red tape that holds charities back. I understand that the task force has looked at certain barriers to social investment as part of its work, and I look forward to seeing his recommendations on this fairly complex area.
The Government are committed to encouraging and facilitating social investment wherever appropriate, and to making the regulation of charities less burdensome while preserving trust and confidence in the sector. The review of the Charities Act 2006, which is due to start later this year, will present the right opportunity to consider the charity law implications of these recommendations.
I note my noble friend’s points about making permanent endowment much easier. I sympathise with his concerns about the complexity of the schedule of appeal and review rights in the Charities Act 1993. That is not something that we can address in the consolidation Bill but it is an issue that shall be considered as part of the review of the Charities Act 2006. There certainly appears to be a case for simplifying the current complicated system.
My noble friend also raised the issue of public benefit. As the matter of public benefit is now before the Upper Tribunal, I do not really want to comment at this stage other than to say that we would welcome clarification of the law. The review of the 2006 Act will be able to take tribunal decisions into account.
I turn to my noble friend Lord Phillips of Sudbury’s point. I am grateful for the knowledge and experience of charities of my noble friend, who was a key contributor to the Charities Act 2006 and who has applied his keen eye to the Bill and the pre-consolidation amendments order that we considered in Grand Committee last week. I hope that I will be able to provide him with some reassurance on the points that he raised during last week’s Moses Room debate on the pre-consolidation amendments order, particularly his concerns about the pre-consolidation amendments to Section 79 of the Charities Act 1993. I have written to him with a response on his points about Section 79 but would be happy to arrange a meeting with the Bill team and the drafter if he has any remaining concerns on those points.
I have some sympathy with my noble friend’s frustrations that in places the drafting of the Bill inherits some of the complexity of the existing legislation. However, one must bear in mind the main constraint of the consolidation process itself, which is that it must not involve any change in the law other than those that can be achieved by way of the power to make pre-consolidation amendments. What to the untrained eye might appear to be a straightforward improvement in drafting could in fact change the meaning, which we must be careful to preserve.
I am sorry that my noble friend is disappointed by the decision to exclude the fundraising provisions of the Charities Acts of 1992 and 2006. As I said in my opening speech, the decision not to include those provisions was taken for good reasons. I know that in its response to the consultation on the draft consolidation Bill the Charity Law Association called for the inclusion of the fundraising provisions, but it is important to point out that some of the other consultation respondents agreed with the decision to exclude those provisions.
I recognise that both my noble friends Lord Phillips and Lord Hodgson also have a number of detailed points about the Bill itself, notably about Part 1 relating to the meaning of “charity” and “charitable purposes”. I understand that my noble friend Lord Phillips has written to the noble and learned Lord, Lord Carswell, the chairman of the Joint Committee on Consolidation Bills, and that the points that he has raised are receiving proper attention, so I hope that he will not be too disappointed if I do not deal with those detailed and complex points today.
My noble friend Lord Sheikh rightly pointed out that this country has a proud record of many thousands of volunteers who work tirelessly for charity and social enterprise day in, day out. I welcome his warm welcome to the Bill and congratulate him on the work that he does. My noble friend is right that the big society sits at the heart of highlighting the ability of individuals to engage and deliver such necessary and valuable contributions. He also mentioned gift aid. Her Majesty’s Treasury leads on all tax issues, including gift aid. The Government recognise the importance of gift aid, which is now worth nearly £1 billion a year to charities. The Budget announced a package of measures to support charities. This included the introduction of a new gift aid small donations scheme from 2013. That will permit a gift aid-style payment to be claimed on many small donations without the need for a charity to obtain gift aid declarations. These measures will increase funding to charities by around £600 million over the lifetime of this Parliament.
The noble Lord also talked about support for volunteering and giving. The Government have issued a giving Green Paper, which sought to encourage a debate on making social action the norm for all ages. The Office for Civil Society is also working on creating a civic service, encouraging civil servants to volunteer, and a range of initiatives related to the European Year of Volunteering this year.
The noble Baroness, Lady Smith, asked about consultation responses. A summary of them is now available on the Cabinet Office website, as of this morning. She also asked about CIOs. They will be implemented later this year, although availability of the CIO to existing charities will have to be phased to help the Charity Commission manage the demand. She also spoke of Charity Commission funding. All government departments are facing tough decisions about priorities; the Charity Commission is no exception. It is currently undertaking a strategic review to focus on key priorities for its future work, including seeking the views of the public and other stakeholders. The public consultation phase of the commission’s strategic review has now been completed, and is now focusing on the detail of the changes it will need to make.
The commission’s strategic review will feed into the statutory review of the Charities Act 2006, which is due to begin later this year and will consider potential changes to the legislative framework for charities and the commission. The commission’s chief executive has said about its strategic review:
“I am quite convinced that even with the reduced resources we can be a very good and effective regulator, but we are going to have to be smart and we are going to have to be tough about what we do and don't do”.
In conclusion, I once again thank all noble Lords for giving their time and consideration to this Bill. This is clearly a subject close to many of your Lordships’ hearts, and I welcome the well informed comments that have been made. I look forward to the full and thorough review of the Charities Act 2006 later this year, which will pick up on many comments made by noble Lords today. In the mean time, I hope that noble Lords will agree that the consolidation Bill is a positive step to tidying up what has become a confusing area of legislation. The Government are firmly committed to making it easier to set up and run a charity. I look forward to the recommendations from the taskforce of the noble Lord, Lord Hodgson, on cutting red tape in the sector. I am also pleased that, later this year, the first ever legal structure designed specifically for the needs of charities, the charitable incorporated organisation, will be available.
I, too, will read Hansard very carefully tomorrow. If there are points—I am sure that there must be—that I have failed to address this afternoon, I undertake to write to noble Lords and place a copy of the letter in the Library.