Charities (Protection and Social Investment) Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Viscount Bridgeman

Monday 6th July 2015 Grand Committee

[Viscount Bridgeman (Con)]

My Lords, while supporting the sentiments behind these two amendments, I have a small difficulty with the drafting. Surely in proposed new subsection (5) of both amendments, engaging fully implies aspirations towards an ideal. I feel that this does not lie easily with the word “minimum” in proposed subsection (6) of the two amendments. For example, a school that very reluctantly complies with the minimum requirements may be well aware that it is not engaging fully. The local community and, indeed, the Charity Commission, may feel the same way. Therefore, if these two amendments find favour with the Government, I suggest that they should be redrafted so that the two proposed subsections are absolutely compatible.

[Lord Hodgson of Astley Abbotts]

My Lords, these are well-meaning amendments. Who cannot be swayed by the brilliant call from my noble friend Lord Moynihan for consistency and for building on the memories of 2012, and, indeed, by the noble Lord, Lord Wallace of Saltaire, talking about the importance of music and the arts? However, my noble friend Lord Lexden has sounded a cautionary note. I fear that putting all this into statute may open a Pandora’s box. I am not against opening a Pandora’s box but, before doing so, let us be clear that that is what we are going to do and what may follow as a result.

Just to give some brief background, the Committee is aware that the roots of charity came from the dissolution of the monasteries. Before that, the church educated people, promoted religion and acted as, in modern terms, a social services department by looking after the sick, the destitute and the disabled. When that ceased to be done by the church, it was done by the private sector, if I may call it that. Those three purposes were presumed automatically to be charitable. There was a fourth category—such other activities as may be presumed to have a public benefit. That meant that for the vast majority of charities up to 2006 there was a presumption of public benefit. If one struck out every charity that had anything to do with education, religion and social services, a whole heap of charities would be removed and we would be left with a small number that depended on the definition of “public benefit”.

The public benefit test was introduced in 2006, when the Labour Government’s Bill removed presumption and made every charity show that it was providing a public benefit. I am not saying whether that was a good or a bad thing; it is just what happened. It meant that the public benefit test went from being concerned with a very small number of charities to being the keystone of the arch. Every single charity now had to live with that. That was a very big change and the question of how that public benefit test should be set and enforced occupied many hours of the debates on the Charities Bill, as it was in 2004 to 2005. I was a newcomer in the House at that time and I listened to lengthy speeches. The noble Lord, Lord Wedderburn, from the Labour Benches made a 45-minute speech on what is a religion, to the increasing worry of his Whip and his Minister, the noble Lord, Lord Bassam, who rightly thought that we were never going to leave that group of amendments. I promise that I shall not speak for 45 minutes this afternoon.

The conclusion reached was that there was no ideal solution and that the least worst option was to give responsibility to the Charity Commission and to keep charities as far as possible away from the political fray. Lord Phillips of Sudbury, who is no longer with us but who then led the charge on these things, was the Peer who introduced the amendment that now forms Section 13(4) of the 2011 Act, which reads:

“In the exercise of its functions the Commission is not subject to the direction or control of any Minister of the Crown or of another government department”.

The conclusion of that long debate was that the public benefit test should be put to the Charity Commission and that the commission should be given a wraparound of avoiding political interference.

I accept the point made by my noble friend Lord Moynihan that the initial public benefit guidance from the Charity Commission after the 2006 Act was unduly financially oriented. I think that everyone now recognises that there was too much emphasis on scholarships and bursaries and not enough on the hearts and minds that both these amendments are driving at—namely, the provision of sporting facilities, arts and music. Of course, following the independent schools tribunal, the guidance has now been revised and things are not quite as they were.

The Pandora’s box that could be opened is that if my noble friend were inclined to accept these amendments the Charity Commission would no longer be truly independent. You cannot be a little independent—you are either independent or you are not. Others might have their own ideas of what could be added to the list of things that the Charity Commission should consider and would have to take into account in considering the public benefit test. I need not remind the Committee that the OSCR—the Office of the Scottish Charity Regulator—has a different public benefit test. It requires that when the public benefit test is set, it should have particular regard to institutions that charge fees. That might be something to consider in this country in order to match the public benefit test in England with that in Scotland. I am concerned about how this might develop and, once the stitch is removed, how this theme might run through the charity sector. Slowly and inexorably, charities might find themselves moving towards the political stage, with all that that entails.

My noble friend made an important point about the uneven application of consistency. We have come across private schools that have been not unwilling but unable to provide the sorts of issues that my noble friend Lord Moynihan mentioned—a point also made by my noble friend Lord Lexden. A rural prep school that is badly endowed and has no local community is going to find it very hard to deal with the sorts of provisions that appear in these two amendments.