Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Wednesday 15th January 2014 Lords Chamber

[Lord Phillips of Sudbury]

My Lords, I am in a cleft stick; I have indeed got 15 minutes on the Clock, but my noble friend will accept that I have been interrupted five times now, which takes a wee bit out of one’s available argument time. I will keep this as short as I can. It is unfortunate—let us put it that way—that we have a letter at the 59th minute of the 11th hour which is, at best, unclear.

I know that a number of my colleagues have different points to make. It has been said, time and again, that there should be a level playing field between non-charitable NGOs and charitable NGOs. Well, yes and no. First, we have a whole lot of improvements for the non-charity NGOs. Secondly, however, the reason we persist in seeking this important change is precisely because charities are basically different in kind, not just because they have a separate branch of law and a separate regulator.

The bureaucratic consequences for charities having to meet the demands of two regulators will be significant. Although the thresholds have been raised, which is important, the number of charities that will still be swept up by this legislation is far greater than many Members of this House may think. It will be many thousands. It does not take a great deal to rack up £20,000 if you are a charity with a few branches around the country.

Secondly, given that the vast majority of charities have no paid staff, the people who will have to implement this complex bureaucratic stuff are not professionals but volunteers. Simply tooling up a charity that is wholly run by volunteers to cope with this new regime and all that it means will be a massive and demoralising task for so many of them. Frankly, volunteers do not want to spend their precious hours getting to understand the legislation that we are in the process of putting on the statute book and then trying to get to grips with it in practical terms, filling in the forms and all the rest of it. The consequences, I put it to the House, will still be huge, despite the number of charities that are, on the face of it, taken out of the purview of these provisions by the raising of thresholds and the rest of it. I cannot emphasise that too strongly.

Let us suppose that you are a trustee of a charity. You will not have a paid chief executive, so it may be a senior volunteer who comes to you and says, “Look, Mr Phillips, we have this new legislation. We do not think we are touched by it because we do not think we will reach the threshold, but what do you want us to do?”. I am afraid an awful lot of trustees will say—

[Lord Hodgson of Astley Abbotts (Con)]

Not only the Charity Commission opposes this amendment; the Electoral Commission does, too. Also, we have a situation where the Government have given way on the review period. We argue there is going to be a review of this piece of legislation, so if the matters that the noble Lord is so concerned about come to pass, the review will pick them up. We are now in supposition territory. I hope that the noble Lord will reflect on that before deciding what to do with his amendment.

[Lord Phillips of Sudbury]

I certainly will. I am grateful for that point, because I was going to say that a review of this will be essential in light of what happens at the next general election. Indeed, the noble Lord, Lord Hodgson, tabled an amendment that I think—

[Lord Hodgson of Astley Abbotts]

It is a government amendment.

[Lord Phillips of Sudbury]

It is now a government amendment, so we are going to get it—and that is vital because we will learn a great deal after that. I will just finish the point that volunteer trustees, perfectly understandably, are going to be cautious about this new legislation. The last thing in the world they will take a risk with is the prospect that things may get a bit out of hand or may not be perfectly understood, and that they, the trustees, will end up being personally liable. As I am sure everybody hearing this debate knows, they are personally liable. It does not matter if they are a limited-liability charity.

All in all, therefore, these are some of the reasons—I think other contributors to the debate will add others—that we should avoid the huge confusion that will follow if we subject charities to both charity law and electoral law. For good reason, I will not detain the House now beyond saying that this is still a very important issue that touches a hugely important part of our civic society—the very part of our civic society that does so much to uphold and vivify election campaigns. I beg to move.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Monday 16th December 2013 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

I too am grateful to the noble and learned Lord, Lord Hardie, for giving us a chance to discuss this very important matter this afternoon. I have not participated in the Committee stage of this Bill so far, so I need to declare an interest as a trustee of various charities, which are in the register of interests, and as the official reviewer of the Charities Act, appointed by the Government 18 months ago.

I would like to ask my noble and learned friend for some reassurance on the implications of Clause 26(2); in particular, I am following through the remarks of my noble friend Lord Tyler about unintended consequences. The noble Baroness, Lady Mallalieu, referred to round-robin meetings at general election campaigns, and I want to use that as a practical example. If a charity were to invite all parliamentary candidates in a particular constituency to one of the round-robin meetings, I presume that it would not then be caught, because it is not promoting or procuring the electoral success of one or more particular registered parties. However, suppose it was decided by the charity specifically not to invite one party: does that then mean that it is caught because—by leaving one party out—it is promoting or advocating the policies of the rest?

The particular concern that has risen in my correspondence was from black, minority and ethnic charities, which may not wish to invite—for obvious reasons—the British National Party to one of their round-robin meetings. They are concerned that, by so doing, for perfectly obvious reasons, they may inadvertently fall into the trap of, or the category caught by, the provisions of Clause 26(2). This is a narrow but important point for these quite vocal minority charities, and I hope that in due course, perhaps by writing to us, my noble and learned friend will put on record whether these people’s fears are groundless.

[Lord Phillips of Sudbury]

It may help my noble friend to know that, in the most recent guidance put out by the Charities Commission, entitled Charities, Elections and Referendums, there is quite a large section on public meetings and who is invited to them. It is profoundly commonsensical, so he will have some reassurance. It will not, of course, apply to non-charitable NGOs, but at least it applies to charities.

[Lord Hodgson of Astley Abbotts]

I am grateful to my noble friend. Of course, we are now talking about the Charity Commission: the question is, will the advice from the Charity Commission and that from the Electoral Commission be joined up? This is an issue which we shall come back to later, with amendments. I do not doubt what my noble friend has said, but the heart of the problem is the confusion about whether the thinking is joined up and what might fall through the cracks between the two sets of guidance.

Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Monday 26th November 2012 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I shall speak also to Amendments 84B and 116A. This issue has arisen since we went through this part of the Bill in Committee. I seek some ministerial reassurance. It concerns common investment funds and common deposit funds. These provide means by which charities—particularly smaller charities—can access financial expertise that they could not do on their own, in essence by entering into some form of pooling arrangement. The advantage, therefore, is that they can hire a more sophisticated and expert manager than they might be able to do on their own because they are small and, by pooling, they can also possibly obtain reduced fees.

I declare an interest as chairman of the Armed Forces Charities Advisory Committee, which is a common investment fund with some £200 million under management and acts for several hundred small, individual service charities from the Army, the Navy and the Air Force. In part, I am the author of my own misfortune because the investment activities of these groups are undertaken by FSA-regulated firms but the actual vehicles are regulated by the Charity Commission. In my review of the Charities Act, I recommended that they should be transferred to the Financial Services Authority, because they are clearly investment vehicles and, although the Charity Commission is a splendid body of men and women, it is not equipped to undertake financial regulation. I have concerns about the future of those groups in our brave new world.

Briefly, common deposit funds are often seen as money market funds, but they are not, because they are not unitised. Each depositor has an aligned deposit for the individual charity. They do not pay out all the interest; they can therefore accumulate modest reserves over time. The amendment enables them to lend at longer maturities; they do not have to lend it all at very short maturities. In consequence, because they always have a leaner operating structure, they can offer better rates of interest to their participating charities. For example, at the end of September 2012, the average common deposit fund interest rate was 1.075%, compared to general availability of 0.627%. That is an improvement of about 0.5%, which is obviously valuable to charities in these days of very low interest rates. They are widely used; there are 160,000 registered charities, but there were 44,000 depositors in those funds at the end of September, and 93% of them have less than £100,000 as the deposit.

What is the problem? The problem is that it is a very small group indeed. There are only four deposit funds and no more will be created. The reassurance I seek from my noble friend is that the FCA will be sympathetic to that group amid all the other pressures that it will face after it becomes empowered. Will it be prepared to consider innovation even-handedly, or will one size fits all be the default option? If it were to impose one size fits all, which would probably be to treat them as money market funds, the funds would have to unitise. They would have to pay out all their reserves and therefore not be able to offer the improved interest rates that they can now.

These three amendments are an attempt to fly some air cover over common investment funds and common deposit funds. The amendments apply to both CIFs and CDFs. They would require the FCA or the PRA to consult on any rule which applies to CIFs and CDFs, to have regard to any representations made and to carry out an impact assessment considering the differences between CIFs, CDFs and CISs. Amendment 116A gives the Treasury the power to exempt CIFs and CDFs from any relevant provisions made under FiSMA 2000. The effect of inserting a consultation clause at the bottom of page 102 is to oblige the FCA to consider the particular features of those two instruments and to empower the Treasury to exempt them from rules that the FCA and the PRA may wish to make under the alternative investment fund managers directive, where it is willing to do so.

As I said, they are modest amendments for a small group of funds, but they are designed to protect them because they are performing a very useful service. I regard how they are in fact treated in the brave new world as a true test of all the FCA’s fine words about facilitating innovation. I look for my noble friend’s reassurance on that, and I beg to move.

[Lord Phillips of Sudbury]

My Lords, I support, dot and comma, everything that the noble Lord, Lord Hodgson, said. The three amendments in this group are couched in prudent terms that give discretion to the FCA to recognise the fact that, to use the adage, one size does not fit all. If there is in this world one great gulf, it is between some of the more sophisticated, City-type deposit funds and, at the other side of the sea, those of charities. The discretion is confined expressly to charities, or funds, I should say, established under the Charities Act 1960, the Charities Act 1993 or the Charities Act 2011, which, in my view, provides the necessary reassurance that this cannot be a horse that runs wild. I hope, therefore, that the Government will feel free to accept this group of amendments.

[Lord Newby]

My Lords, I have just discovered that I need to declare an interest in relation to these amendments. I have been looking at the small number of existing CDFs, and I see that one of them is the Church of England Deposit Fund, which I suspect is a significant part of the Church of England’s investment. This almost certainly means that my wife’s pension depends on this fund doing well. So, speaking personally, I have every incentive to ensure that these funds are appropriately regulated. In any event, I was minded to declare an interest.

I shall take the amendments in turn. In his report on the review of the Charities Act 2006, my noble friend recommended that:

“Regulation of Common Investment and Common Deposit Funds should pass from the Charity Commission to the FSA, as the Commission does not have the expertise to regulate what are primarily financial products (albeit only available to charities)”.

He has set out today why he has concerns that the regulatory approach by the PRA or FCA may not be appropriate for these very specific structures. The amendments would require the regulators to set out, as part of their consultation, where they see rules or requirements having a particular impact on CIFs or CDFs, and gives the Treasury the power to disapply requirements that apply to collective investment schemes. I will briefly set out why I think that these amendments are not appropriate or necessary, while agreeing absolutely with the thrust of my noble friend’s sentiments about them.

First, we do not believe that they are appropriate because they pre-empt the decision on whether the regulation of CIFs and CDFs should be transferred to the FSA, and later the new regulators. The Government have not yet responded to my noble friend’s report, and I do not want to use this debate on one of his proposals to pre-empt the full and proper response to the report as a whole which the Government will publish soon. In addition, in his report my noble friend notes that the Treasury,

“is already considering how best to reform the regulation of CIFs and CDFs as part of their work to implement the Alternative Investment Fund Managers Directive (AIFMD), and as part of this are considering possible legislative opportunities”.

That is, of course, correct and the Government will therefore set out their position on this matter when they consult on their approach on implementing the AIFMD early in the new year and respond to my noble friend’s report at that point.

I do not think that these amendments are necessary or appropriate even if the regulation of these funds moves across to the FCA. They are not necessary because the regulator already has to take a proportionate approach, sensitive to the needs and goals of different types of financial institutions and the needs and objectives of different consumers. Earlier on Report we debated and approved two government amendments requiring the FCA to have regard to the differing expectations of different consumers and to the desirability of exercising its functions in a way that recognises the differences in the nature and objectives of different businesses. While we were talking at that point principally about various social investment vehicles, the thoughts and principles which underlay our tabling of those amendments apply equally to these amendments; namely, that this is a specific small sector that needs to be dealt with differently from the rest of regulation and that the FCA needs to know from the start that it is expected to show sensitivity and proportionality in dealing with these different and rather unusual categories. That is what our amendments seek to achieve and we are confident that they will have that effect.

The regulators will have other tools to consider the needs of individual institutions, such as the ones that we are talking about under these amendments. For example, they can issue a waiver from a rule, meaning that a particular firm does not have to comply with a requirement, or issue a modification to a rule that enables the applicant to comply with an amended rule that better fits its own circumstances. All applications for waivers or modifications are considered on their individual merits, and there is no reason why rules that apply appropriately to other, larger and different sorts of funds should necessarily apply to the funds that we are discussing now, because the waiver can be brought into effect. There is therefore no need to give the Treasury the kind of power envisaged by Amendment 116A, which would cut across the independence of the regulator. I hope that I have been able to persuade my noble friend that we are sympathetic to what he is seeking to achieve and that we believe that the amendments we have put into the Bill will achieve the objectives that he is seeking. I hope that, in the light of that, he will feel able to withdraw his amendments.

Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Monday 12th November 2012 Lords Chamber

[Lord Hodgson of Astley Abbotts]

I was not aware that I said that everything in the City was perfect. I said that integrity lies at the heart of the financial services industry, as indeed it lies at the heart of most commercial endeavour. I said that there were clearly areas where the City had fallen short, but I pointed out to my noble friend and to the noble Lord, Lord Peston, that the significant influence function committee has very considerable powers that it has been exercising with increasing strength in recent years. Therefore, I doubt that we need amendments such as this.

[Lord Phillips of Sudbury]

I am a bit confused. If the noble Lord absolutely agrees with me on the primacy of integrity, he cannot have read proposed new Section 1B(4) of FiSMA or he would not be content to oppose these amendments. New Section 1B(4) clearly states that the three objectives are equal but one is more equal than others—namely, competition. If he agrees with me and if one is going to be more equal than others, it should be integrity.

[Lord Hodgson of Astley Abbotts]

My Lords, I am not on the Front Bench, but as I read it, proposed new Section 1B(4) gives equal weight to these objectives. It states that in,

“so far as is compatible with acting in a way”,

the three are equal. I agree that integrity is extremely important, but we are not in a position where we want to avoid the other objectives, which have a real place in the creation of a dynamic City that is competitive on the world stage.

[Lord Phillips of Sudbury]

I hesitate to trouble the House with a further intervention—

Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Tuesday 6th November 2012 Lords Chamber

[Lord Phillips of Sudbury]

My Lords, I wonder whether the noble Lord, Lord Eatwell, has taken sufficient account of the provision in proposed new Section 9A(1)(b) that allows the court to review the strategy at any time. There is reference later in the proposed new section to revision of the strategy. I would have thought that those provisions covered precisely the concern that he correctly raised.

[Lord Hodgson of Astley Abbotts]

My Lords, I am slightly concerned at the proposed obligation to conduct an annual review. The role of directors is constantly to keep a strategy under review and to see whether it is still relevant. However, to impose this would impose a burden. A proper strategy review is an extremely expensive and far-reaching undertaking. It would be far better to have a backstop of a three-year requirement and rely on the good judgment and good sense of the directors, in particular the non-executives, to call for more frequent reviews as and when they are needed. It is inconceivable that we would go through the sorts of events that we have been through since 2008 and that non-executives would sit and say, “We do not need to look at the strategy”. It is part of their role to do that and we should rely on their judgment, not on process, with a backstop of the three years, as proposed.

Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Tuesday 10th July 2012 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, my name is down to four amendments, Amendments 104, 120, 137 and 139, and I support very strongly what my noble friend Lord Phillips has just said. I take issue with him on only one technicality. He talked about “not for profit”. I think the words should be “not for profit distribution” because these small organisations must be able to accumulate reserves for the bad times, for the contracts that do not go quite as well as—

[Lord Phillips of Sudbury]

I am grateful to my noble friend for making the point. He is absolutely correct.

[Lord Hodgson of Astley Abbotts]

Apart from that, I agree with the thrust of his remarks.

I chaired the task force that produced Unshackling Good Neighbours, and I am glad to be able to tell my noble friend that we have already had the Government’s response and are meeting on 26 July to produce our follow up. The problem with this is not making the recommendations but making sure that they are followed through. As I have told the House before, I am completing the review of the Charities Act 2006 for the Government and will be publishing a report on that next week. The terms of reference for that review required me to consider the barriers to the growth of social investment.

This is a very interesting area. The market is immature and therefore carries with it some dangers, such as overexpansion, perhaps of too much money being raised before there are projects sufficiently ready to absorb that money, and of overoptimism. There is a weight of expectation about what can be done that we have to make sure is not disappointed. As my noble friend made clear, this idea has the capacity to transform the financing structures in the charity and voluntary sector and so radically increase the amount of funding and the number of people who will give support to those sorts of endeavours. As I have said elsewhere, how do we persuade someone who would give £50 to invest or lend £500? How do we turn this social investment chrysalis into a butterfly?

There are lots of regulatory challenges, and not all of them are in my noble friend’s department. Not all of them are actually for the Government; they are also for the professions and the sector. As my noble friend said, we need to send signals from this area because this is the keystone that will set in train other serious changes. Therefore, the enabling provisions contained in Amendments 104, 120, 137 and 139 are important because they recognise, and ask the regulator to recognise, the distinctive features of social investment and regulate appropriately in an even-handed way. The hour is late. I could go on for a lot longer, but this is important, and I very much support what my noble friend said.

Amendment 104ZA is tabled in the name of the noble Baroness, Lady Hayter. That amendment is not suitable, because it requires the FCA to promote the growth and development of social finance and social investment. The role of a regulator is not to promote but to enable. It can promote good behaviour and good approaches, but it should not promote a particular form of finance, because that could lead to the disillusionment that I have referred to. I quite understand her good intentions, but they do not help us. Nevertheless, I very much support Amendments 104, 120, 137 and 139, and I hope that my noble friend will be receptive to this important part of the big society and localism, on which we as a party and a Government have placed such stress.

--- Later in debate ---

[Lord Phillips of Sudbury]

My Lords, that is a strictly out-of-court request at the moment. However, if the Committee will indulge the noble Lord, Lord Lucas, and myself, I will give him a short answer.

I am concerned, and those who have supported the amendment and the whole of the social investment sector are deeply concerned, that there is no single recognition in 168 pages of its special nature—not one single indication. I agree with them—others have made the point—that that is a profound omission given where we are, the financial sector we have got and the innovative drive and importance—potentially more than actually—of this new social sector.

[Lord Hodgson of Astley Abbotts]

Does the noble Lord not accept that we have a very immature sector still? We have not got the right corporate forms that will combine the different streams of investor, whether it be a Government, a charity which is running the scheme, a grant-giving charity or private investors, who may be corporate or private individuals. We must be very careful not to put too much weight on the structure too early because if we arouse expectations about what it can deliver and it crumbles away, not only will the sector be disappointed but—dare I say it with my noble friend on the Front Bench?—the regulator will say, “I told you so”. We need to be very careful about that.

[Lord Phillips of Sudbury]

I wholly agree. That consideration is not at all incompatible with the intent of this group of amendments—indeed, my noble friend has strongly supported the group. It is partly because I share his concern about the immaturity of this new branch of the financial sector that I want it to be incorporated within the regime that will follow on from this massive piece of legislation.

At this time of night and with this tiny number of people present, the Minister can be safe in the expectation of there not being a vote called, but I say to him that we must, by hook or by crook, have included in the Bill by Report some form of words which recognises this new sector and gives it proper allowance and scope to develop and thrive, because, as everybody agrees, including the Government, it has the potential to be hugely important in the future. If the Minister will agree to meet between now and Report, which I hope will be after the Summer Recess, we may be able to concoct something which satisfies the new financial sector and those of us who supported the amendment. I do not think that that is beyond the wit of man. I beg leave to withdraw the amendment.

Charities Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Wednesday 23rd November 2011 Lords Chamber

[Lord Phillips of Sudbury]

My Lords, I am grateful for what my noble friend the Minister said in respect of the amendment in her name. I can only concur with and applaud it, because, in my view, the Bill as drafted, given the limitations of consolidation statute, was none the less a big elephant trap for any non-charity lawyer who waded into the same, not realising that the definition in Clause 2 was subtly but significantly different from the definition in Clause 11 of the same phrase. It may seem odd for a charity lawyer to have, as a near-passion, the wish to try and keep charity law as simple, direct and plain as possible; but that has always been my position. It was during the course of the Charities Bill in 2006, when I led for these Benches, and remains an abiding passion in an age that seems to get more and more complicated and trammelled by regulation and so on. Therefore, I am glad at least that we have got this in the Bill. I perfectly understand the limitations of these consolidation statutes and therefore cannot complain that something more has not been done. I am grateful that it will be on the agenda of my noble friend Lord Hodgson; whom I congratulate, if that is the right word, on being appointed to undertake this review. I am glad that I was the author of this review clause in the 2006 Act. The noble Lord can blame me.

[Lord Hodgson of Astley Abbotts]

I will.

[Lord Phillips of Sudbury]

I am sure. We will all assist him as best we can because I know that he, too, wants to try to make charity law as accessible as possible to the volunteers who are the heart and soul of the charity sector. We will have a lot of excitement when we come back to this House with a new Bill that will, I hope, do a bit of deck clearing. With that, I silence myself.

[Lord Hodgson of Astley Abbotts]

My Lords, I will not detain the House for long, but I am very happy to confirm what my noble friend has said from the Front Bench. The terms of reference that I have been given are widely drawn. While obviously a lot of our time will be spent on the big issues that affect the sector, we shall want to make sure we do as much tidying up as we can of some of the more specific and technical points, of which this is one.

Already some of the professional bodies such as the Charity Law Association are in touch about some of the things they would like cleared up. I am sure there will be no shortage of views and things for us to do. I very much hope that we get a lot of input, not just from the usual suspects in the sector, but also views from the general public because it is important they should have some say in how their charity sector is structured in the future. Certainly we will make sure—I would be much too frightened not to—that my noble friend’s point is addressed some time between now and next July.

Charities Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Phillips of Sudbury

Thursday 5th May 2011 Lords Chamber

[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.