Academies Bill [HL]

Debate between Baroness Thornton and Lord Hodgson of Astley Abbotts

Monday 28th June 2010 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I shall be very brief on Amendment 165, because it is an alternative route to heaven for academies. It would permit them, instead of becoming charities, to become community interest companies. It is a probing amendment which may repay some study, and I look forward to hearing what my noble friend has to say about it.

The Companies (Audit, Investigations and Community Enterprise) Act 2004—inelegantly entitled, I agree—has in it a bit on community enterprise. Part 2 of the Act, which comprises Sections 26 to 63, establishes the concept of community interest companies. If the Minister’s officials care to look through those clauses, they may be able to or wish to advise him that it could be a useful structure for the new academies to adopt. I shall not weary the Committee tonight with a recitation of how they would all fit together, except to say that Section 35 sets up a community interest test, rather like the public benefit test, while Section 27 establishes a regulator of CICs, as they are known, with extensive powers, and Section 30 caps dividends and distributions, so they are not profit-making in the normal sense of the word. There are a number of less important aspects, which might have value in this approach.

CICs cannot be charities, so they would be travelling a totally separate road. They come under Companies Act regulations. However, this could be a useful alternative—not compulsory, but a possible alternative—to becoming an exempt charity with some of the issues that we have just been debating in the previous group of amendments. This amendment seeks to explore the possibility. I beg to move.

[Baroness Thornton]

My Lords, I know that the noble Lord, Lord Phillips, will probably have something to say on this. The noble Lord, Lord Hodgson of Astley Abbotts and I had several happy hours in the Chamber discussing community interest companies and how they should be formed. The noble Lord is correct—it was a matter of some significant discussion at the time that a community interest company could not be a charity. However, a main feature of a community interest company is the asset lock. That is why it is such a valuable company form for social enterprises. I am not sure how that could be applied as an alternative form to a charity. This is a complex issue, and I am sure that the noble Lord, Lord Phillips of Sudbury, is about to make it even more complicated, because I know that he has very firm views on this, but I cannot see how the asset lock would work here.