Charities Bill [HL]

Baroness Verma Excerpts

Thursday 5th May 2011 Lords Chamber

Moved by

[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.

--- Later in debate ---

[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.

Bill read a second time.