EAC Report: Development Aid
Lord Phillips of Sudbury Excerpts(12 years, 2 months ago)
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Lord Phillips of Sudbury
My Lords, I, too, thank the noble Lord, Lord MacGregor, and his committee for producing an extremely challenging and interesting document. It was not an easy document to produce. I agree more with the Government's response to it—like the noble Lord, Lord Hannay—but both documents are a great contribution to an informed public debate.
My own view of aid has been formed by circumstance. I was lucky enough in the 1980s to act as solicitor for some of the great aid charities, such as Oxfam, Save the Children, Action Aid and so on. I went on a field trip with Oxfam to Brazil to try to understand the realities of the delivery of aid, and I found, as the noble Lord, Lord Stern, hinted at the end of his remarks, that those realities were extremely challenging. Not enough credit has been given in the debate tonight to the extraordinary difficulty of getting aid to where it needs to go. The circumstances in some states are so chaotic, dangerous and lacking in any sort of infrastructure or organisation that there is an inbuilt risk that, whatever you try to do, it will in the end be frustrated. That is inseparable from aid in many of the most underdeveloped countries.
I also thank my son-in-law, a long-standing employee of DfID. He is currently in Tunisia, having just come back from Afghanistan. I have also visited my family in the Congo, where I again saw first-hand what redoubtable challenges have to be faced, day in, day out.
We need to be proud not only of DfID but of our great aid charities, because you cannot discuss one without embracing the other. They are true partners in most parts of the world: there are places where government can go in terms of aid, and there are places where charities can go. To collaborate as they do—and could do more—has been an essential aspect of the full impact of British aid in the third world. I emphasise that fact. The partnership is both complementary and doubles up the value of each.
We should never forget the huge voluntary input into the great aid charities. One is apt to assume that they are made up entirely of employees, but they are not—take Voluntary Service Overseas as an example. My son went out to central east India with Save the Children. There is a huge voluntary input of time, expertise and tenaciousness because it is extremely successful in tapping the great British sympathy for the underdeveloped world. A number of noble Lords have referred to the state of British public opinion. If there was evidence of huge cynicism about aid, one would be more worried about some of the conclusions in the report, but I do not think that is the truth. Indeed, a recent EU Commission survey of attitudes to aid in the different member states of the European Union shows that twice as many people in this country believe in the value and honesty of aid over those who are sceptical. That is not to say that one does not have to worry about certain media outlets or that a great deal more could not be done to uphold public faith in the aid system, whether governmental or NGO. One can and must.
I shall say a word about self-interest, which again has been referred to—very little has not by this time of night. The report makes it clear that aid is in our country’s interest. The self-interest runs deep because the impact of aid can be felt a long way downstream, and then diffusely. But I, along with many noble Lords who have spoken in the debate, have no doubt that the benefits to this country are clear both politically in terms of trade and, above all, if one can use that old-fashioned word, morally.
I want to raise two specific points on the report. First, I refer to paragraph 50, which sets out the seventh recommendation:
“It is important for donors to ensure that opportunities for corruption are as limited as possible by setting in place systems of audit and control as rigorous as local conditions permit”.
Thus far, I agree entirely with the report. It is very wise to take account of local conditions. However, the paragraph goes on by saying,
“and to withhold development aid altogether where corruption is rife”.
I cannot go with that because it seems to be a gospel of despair and casts off those most in need. It is rather like saying to the police, “Patrol the streets but don’t go into that very rough area where you might get into trouble”. The mark of the quality of our aid programme is precisely how we deal with the most bereft and abandoned parts of the world, so pulling out entirely seems utterly wrong. One suggestion I would make, although it may already have been implemented to some degree, is that where Government-to-Government aid is impossible because the recipient Government are so corrupt, one could use the NGOs as the almost exclusive delivery point of the aid we wish to give the country to help it out—remembering, of course, the policy priorities of DfID.
I have to reject that part of the report, and I am afraid that I also find the Government riposte that deals with administration rather wanting. Under the heading:
“Managing an increasing programme with a falling administrative budget”,
they say this:
“We are grateful for the comments provided by the Committee on this. We would like to reassure the Committee that cuts to the administrative budget will not hamper the focus on results or the struggle against corruption and explain why this is so”.
This is just the repetition of a delusion which, if one has been in this House for long enough, one comes across almost every month: the pretence that significant cuts can be made without any repercussions on the ground. I dare say it is possible occasionally, but in this field it is permanently impossible unless—which I am sure is not the case—we have idle and incompetent members of DfID looking at the question of administering the budget to ensure that aid gets to where it is meant to go.
We need much stronger enforcement of the laws that exist to discourage and punish corruption wherever we can. Your Lordships may remember the Act of 2000 which brought onshore criminal acts committed overseas which formerly were not prosecutable here. The body which reported on the Act about three years ago discovered that there had not been a single prosecution under it thus far. To rely on the Serious Fraud Office effectively to police this part of our law is hoping for too much because it has had serious cuts. I have been in touch with the gentleman who runs the Serious Fraud Office. It is at its wits’ end to know how it can deal with crime onshore, let alone crime offshore. I hope that when the Minister comes to sum up she may address some comments to the importance of at least enforcing the laws that we have—the bribery law which we recently passed through this House and so on. Let us not forget, and any lawyer will tell you this, that there is no more difficult area of law to enforce than anything to do with financial corruption. One has only to consider the way in which capital moneys are shifted around the globe in blatant disregard of laws not of one land but of many. Aid has become a playground of crooks and shysters and their expensive advisers. Let us not pretend that we do not have to put resources into ensuring that this aid gets to where it has to go. If that means a form of process conditionality on aid, I for one would say let us have it. Let us have an agreement by recipient Governments that we can put in one or two of our own people to follow an audit trail within their Government in the hope that we can ensure that what was intended and agreed when the aid was put forward has been honestly carried out in practice.
The noble Lord, Lord Lawson, in effect said that you have to choose between the amount of aid and the outcome of aid. That is a wholly false dichotomy. One has of course to have careful regard to how much aid one commits to—and I am totally signed up to the 0.7% commitment, varying, as the noble Lord, Lord McConnell, said it does, with the ups and downs of your own economy—but the idea that one can either look hard-headedly at the amount or look pragmatically and effectively at the outcomes but that you cannot deal with both seems to be an untenable proposition. One has to work at both ends of the equation. I again thank the noble Lord, Lord MacGregor, for introducing this debate.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Phillips of Sudbury Excerpts(12 years, 10 months ago)
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Lord Thomas of Gresford
I shall add that he was saying it in the context of a married woman, who had no separate identity in those days. She was regarded as a part of her husband.
Lord Thomas of Gresford
I do not know if my noble friend is agreeing with the proposition, but in these more enlightened days we would all agree that the law on that particular aspect was an ass.
Lord Phillips of Sudbury
I do not quite follow my noble friend’s reasoned argumentation, because Amendment 176ZB, put forward by my noble friend Lady Linklater, does not prohibit short sentences but states that if a short sentence is imposed a court must give reasons. That seems in line with what the Minister was saying previously.
Lord McNally
That is why the amendment is not necessary. Since a number of noble Lords had referred to the damaging elements of short sentences, I thought that it was worth putting on the record that, as a lay man in all this, I have had pointed out to me by people with considerable experience areas where the short sentence is effective. I certainly acknowledge that my noble friend said as much in her introduction. Her amendment is not an attempt to prohibit short custodial sentences; rather it seeks to create a kind of presumption that a short custodial sentence will not be imposed unless the alternatives are considered and found to be inappropriate. Such a statutory provision already exists. Section 152 of the Criminal Justice Act 2003 places restrictions on imposing discretionary custodial sentences. Section 152(2) sets out what is sometimes called the “custodial threshold”, the test that has to be met before a custodial sentence can be imposed:
“The court must not pass a custodial sentence unless it is of the opinion that the offence, or the combination of the offence and one or more offences associated with it, was so serious that neither a fine alone or a community sentence can be justified for the offence”.
That is the current situation. I suggest to my noble friend that the current requirement is stronger and more wide-ranging than that proposed in this amendment.
I welcome a reminder of the importance of imposing short custodial sentences in essence as a last resort. I see, as I have always done, the full importance of rehabilitation. However, I do not think that this amendment adds significantly to the current law. I hope that the noble Baroness will feel able to withdraw her amendment.
Charities Act 2006 (Principal Regulators of Exempt Charities) Regulations 2011
Lord Phillips of Sudbury Excerpts(13 years, 5 months ago)
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Baroness Verma
My Lords, I shall take together this order and the Charities Act 2006 (Changes in Exempt Charities) Order 2011. The two instruments relate to the regulation as charities of three classes of state-funded educational charity: academies, sixth-form colleges, and foundation and voluntary schools.
The changes in the exempt charities order will reconfer exempt-charity status on sixth-form colleges and foundation and voluntary schools. Academies are charities and will become exempt charities from 1 August 2011 by virtue of the Academies Act 2010.
The principal regulator regulations will appoint principal regulators for all three groups of exempt charities, with the duty to promote their charity law compliance. Exempt charities have not been regulated in the same way as other charities. The general law of charity applies to exempt charities, but they are exempt from many provisions of the Charities Acts, cannot register with the Charity Commission and are exempt from its supervisory powers. The categories of exempt institutions, in so far as they are charities, are mostly set out in Schedule 2 to the Charities Act 1993.
Historically, exempt status was usually conferred by legislation on charities that were already regulated, so additional supervision by the Charity Commission was considered unnecessary. However, this was challenged in 2002 by the then Prime Minister’s Strategy Unit, which found that the position was anomalous, confusing for the public, and potentially risked the integrity of charitable status.
Most respondents to a public consultation in 2003 agreed that exempt charities benefiting from the advantages of charitable status should come under some form of regulatory oversight as charities, but concerns were expressed that duplication or new regulatory burdens should be avoided.
The Charities Act 2006 marked a new approach. Wherever possible, a body that already has oversight responsibility will become the main or “principal” regulator for an exempt charity or group of exempt charities. Principal regulators have a new duty to promote charity law compliance in the charities for which they are responsible. They have two key roles: first, providing tailored advice for their sector or signposting to relevant guidance to help trustees meet their legal obligations; and, secondly, stepping in where something goes wrong. In serious cases, it is likely that the Charity Commission will also need to be involved.
The aim of the principal regulator approach is for smarter regulation that maintains trust and confidence in charities but avoids regulatory duplication by using the regulator’s existing processes and procedures to promote charity law compliance. Where it is not possible to identify a principal regulator for a charity or group of charities, they will cease to be exempt and, if their income exceeds a £100,000 annual income threshold, will be required to register with the commission.
Although that is not the case for any of the charities we are considering today, since 2006 there has been phased implementation of this new approach. In some cases the 2006 Act itself removed exempt status from groups of charities, but it also provides the Minister for the Cabinet Office with a power in Section 11 to remove, or to confer, exempt charity status from a charity or class of charities. This power can be exercised only if the Minister is satisfied that the change is desirable in the interest of ensuring appropriate or effective charity regulation of the charities or charity concerned. In addition, the 2006 Act provides the Minister with the power in Section 13 to appoint a principal regulator for an exempt charity or class of exempt charities.
The 2006 Act increases the extent to which exempt charities are subject to the Charity Commission’s regulatory jurisdiction in Sections 12 and 14 and Schedule 5. But importantly, the Charity Commission cannot exercise its regulatory compliance powers in relation to an exempt charity without first consulting the exempt charity’s principal regulator—in Section 14 —and it cannot open a statutory inquiry into an exempt charity unless invited to do so by the principal regulator listed in Schedule 5.
I will now summarise the changes that these instruments will bring about, which were announced to Parliament in a Written Ministerial Statement on 30 March this year by the Minister for Civil Society, Nick Hurd MP, and the Under-Secretary of State for Education, the Minister responsible for schools, my noble friend Lord Hill.
Taking each of the three categories in turn, I will deal first with academies. Academies will, from 1 August this year, be exempt charities when Section 12(4) of the Academies Act 2010 is commenced. As of 1 July there were 801 academies in England. There are no academies in Wales.
During the debate on the Academies Act 2010 it was proposed that the Young People’s Learning Agency should be appointed as the principal regulator of academies. However, following the review of public bodies, the YPLA will, subject to parliamentary approval, be succeeded next year by the Education Funding Agency, an executive agency of the Department for Education. Therefore it is now considered more appropriate to appoint the Secretary of State for Education as principal regulator of academies, because he has existing funding and regulatory roles.
In practice, the YPLA and its proposed successor, the EFA, would carry out much of the necessary information gathering which would then be used to report to and advise the Secretary of State on his principal regulatory role. The principal regulator regulations therefore appoint the Secretary of State as principal regulator of academies.
The second category is what I have referred to as foundation and voluntary schools. In fact, it includes the following bodies: the governing bodies of foundation, voluntary and foundation special schools, foundation bodies established under Section 21 of the School Standards and Framework Act 1998, and connected institutions.
There are believed to be over 8,100 of these charities in England, and 175 in Wales. Historically they have been exempt charities, but in January 2009 they ceased to be exempt, although transitional provisions pending a final decision on their status have meant that they continue to be treated as if they are exempt. These transitional provisions are due to expire on 1 September, having already been extended twice.
In 2010 the Cabinet Office consulted on the proposal to reconfer exempt charity status on foundation and voluntary schools, and appoint an appropriate principal regulator. Responses strongly supported the proposal to reconfer exempt charity status, although views differed over which personal body should be appointed as principal regulator.
The Department for Education regulates these charities under education law, so is ideally placed to take on the role of principal regulator. This ensures compliance with charity law while avoiding regulatory duplication, in line with the Government’s commitment to reducing the burden of regulation on schools.
The changes in the exempt charities order reconfers exempt charity status on these foundation and voluntary school charities. The principal regulator regulations appoint the Secretary of State for Education as principal regulator of these charities in England and Welsh Ministers as principal regulator of these charities in Wales.
Following detailed analysis by the Cabinet Office, working with the Charity Commission, the Department for Education and Welsh Assembly Government, these arrangements are considered to provide the most appropriate regulatory oversight of foundation and voluntary schools as charities, while keeping the burden of regulation to a minimum.
The third and final category is sixth-form college corporations. There are currently 94 sixth-form college corporations in England and none in Wales. They were created following amendments made to the Further and Higher Education Act 1992 by the Apprenticeships, Skills, Children and Learning Act 2009. It was always intended that they would be exempt charities, as this was the status of the institutions that became sixth-form college corporations in April 2010. For this reason, the commission has not required sixth-form college corporations to register.
As with foundation and voluntary schools, the Department for Education has an existing regulatory oversight role under education law. It is ideally placed to take on the principal regulator role, promoting compliance with charity law through existing procedures without additional regulatory requirements. The Charities Act 2006 (Changes in Exempt Charities) Order confers exempt status, as was intended from the outset, and the principal regulators regulations appoint the Secretary of State for Education as their principal regulator.
I should add that we also propose to appoint the Secretary of State for Education as principal regulator of certain exempt charities connected to academies and sixth-form colleges. This will have to be done separately by a negative procedure statutory instrument, as regrettably these charities were overlooked when the instruments before us were laid.
The duty imposed by the Charities Act 2006 on principal regulators of exempt charities is forward looking. This means that they are required only to promote compliance by the charity trustees with charity law obligations arising on or after, or ongoing on, the commencement date. Principal regulators will not be required to take action relating to matters which occur before the commencement date and in connection with which no charity law obligation is continuing at that date.
The Office for Civil Society and the Charity Commission have worked closely with the Department for Education, the YPLA and the Welsh Assembly Government on these proposals, and key representative bodies of the schools and colleges have been kept informed of progress. No significant concerns have been raised about the forthcoming changes or the instruments that will give effect to them.
For exempt charities under the principal regulator regime, there will be little, if any, noticeable impact on a day-to-day basis. They will continue, as now, under their existing regulatory regime, albeit with their regulator also promoting charity law compliance.
For academies and sixth-form colleges, the YPLA will continue to have a role. The principal regulator regulations make provision for this by amending the Apprenticeships, Skills, Children and Learning Act 2009 to enable the YPLA to assist, advise or provide information to the Secretary of State for Education as principal regulator. An impact is likely to be felt only when something goes badly wrong and the regulators need to intervene.
The Charity Commission is currently developing memoranda of understanding to formalise the details of the relationship between the principal regulators and the commission. It is also setting up a committee of principal regulators which will meet annually to share best practice.
The impact of the changes made by these instruments will be reviewed within three years of commencement. Although a statutory review of the 2006 Act will begin later this year and will include an evaluation of the changes made by the Act to exempt charities, this will be too soon to properly consider the impact of the changes made by these instruments.
These instruments will ensure that academies, foundation and voluntary schools and sixth-form colleges are regulated appropriately and effectively as charities but through existing oversight mechanisms to ensure that regulation is proportionate. I therefore commend this order to the Committee.
Lord Phillips of Sudbury
My Lords, I am grateful to my noble friend the Minister for that introduction. I broadly welcome the regulations. I have one specific, rather gritty point to put to her. I have given notice of it to her officials, so I hope that it may be possible for an answer to be available today. I have one general point on which I would be very interested in her response and then another general point which needs to be made in the light of the regulations.
I shall deal with the gritty point as quickly as I can. It arises out of the statutory instrument dealing with principal regulators. Regulation 7 introduces a new section, Section 71A, into the Apprenticeships, Skills, Children and Learning Act 2009. New subsection (1) gives a discretion to the Young People’s Learning Agency to provide the principal regulator, the Secretary of State, with information that he or she may need in order more effectively to carry out his or her duty as regulator. We have already heard today that the YPLA is likely to be replaced in not too long a time by the education funding agency. I hope that that does not mean that we shall need further amending legislation to substitute EFA for YPLA. But why only a discretion? Surely the YPLA should be under an obligation to provide assistance, information or advice to the principal regulator, so long as it is a reasonable request. The Minister might like to comment on that.
My first general observation relates to the particular character of a government department as a principal regulator. There is growing anxiety within the charity sector about the preservation of what is an absolutely fundamental characteristic of any charity: its independence. It is often not understood among the wider public that one of the bedrock guarantors of the integrity of each and every charity—however small or large it is, whether it has trustees appointed by outsiders or not, and whether it is funded from a particular source or not—is that it has absolute independence and responsibility for its own affairs. Its trustees have one sole purpose in life, which is to forward its charitable purposes to the best of their ability for the benefit of the public.
Having the Secretary of State for Education as the principal regulator is sure to involve conflicts of interest all along the way. Whatever Government are in power, they will have their own agenda. The voluntary sector is a very important part of the provision of education generally. The measure seems to warrant a little more thought. I do not for a moment propose to question the Secretary of State for Education being principal regulator in these statutory instruments, but the concern is germane and relevant. Perhaps the Minister will take back to the Government the need for some informal, internal consideration of the independence factor, as I call it.
Lord Phillips of Sudbury
There was a cock-up in prior legislation that led to the need for the second of these statutory instruments to confirm that sixth-form college corporations should have exempt status re-conferred on them. There is no question or doubt that their exempt status was removed from them unintentionally. I commend whoever wrote the helpful Explanatory Memorandum on the delicate language employed therein. It explains:
“Sixth form colleges which are charities had their exempt status removed by the ASCL Act. It is unclear whether this was intentional”.
Wonderfully clear it was not. I make this point not to make fun of those who were party to the error. The parties most responsible for it were in this place, because it is we who churn out, day in and day out, tidal waves of primary and secondary legislation. It is we who fail to scrutinise adequately that tidal wave, and it is we, therefore, who did not see when the ASCL Bill was introduced that by an unintentional side wind these sixth-form college corporations were deprived of their valuable exempt status. It seems as though they have been in a sort of ghostly limbo until now, but at least we are putting them out of their misery.
I wanted to raise this issue because it is not often that such a blatant example of the weight of interlocking legislation is clearly shown to be false in its outcomes. I put it to the Committee that charity law has become barbaric. Happily, when I started practising law, nine times out of 10, such matters would never darken the doors of a lawyer’s office, but those days are long gone. We are, even in these instruments, creating another web in which to catch the unwary, forcing the prudential into seeking expensive advice and generally making the voluntary sector a victim of our excessive endeavours.
Baroness Verma
I am grateful for the extremely knowledgeable contributions of noble Lords this afternoon. I start by thanking my noble friends Lord Phillips and Lord Hodgson, and the noble Baroness, Lady Royall, for their warm welcome to these regulations. Many questions have been thrown at me; I shall try to respond to them in the order in which they were asked. I thank my noble friend Lord Phillips for prior notification of his questions. I passed his notes to the civil servants. I hope that, through my response, he will be reassured that we have taken his concerns seriously. I am pleased that my noble friend Lord Hodgson’s train arrived on time so that he was able to tease out of me further details of an extremely complex area of law.
In response to my noble friend Lord Phillips, the YPLA is fully committed to supporting the Secretary of State in his or her role as the principal regulator. The consultation went across all the agencies, all of which agreed that the Secretary of State would be ideally positioned to be the regulator. The YPLA has worked closely with the EFA, the Department for Education, the Cabinet Office and the Charity Commission on the development of the Secretary of State’s role as the principal regulator. Much of what the YPLA will do will be to support the Secretary of State as part of the existing day-to-day functions of the regulator. In practice, I am not sure that we should see the YPLA refusing any reasonable request from the Secretary of State for advice and information. I hope my noble friend is reassured that the YPLA, when it is replaced by the EFA, will continue to fulfil its role of supporting the Secretary of State.
I come to independence, on which I think my noble friend is about to challenge me.
Lord Phillips of Sudbury
I am grateful for what the noble Baroness said but why can the regulations not just say that the YPLA “shall” provide reasonable assistance, information and advice. Why not “shall” instead of “may”?
Baroness Verma
Since this is a legal and technical matter, perhaps I could write to my noble friend. I know that such words can change the law very quickly, and I shall not be drawn into that trap by my noble friend today.
On the issue of independence, both the Charity Commission and the Cabinet Office are satisfied that the appointment of the Secretary of State for Education and the Welsh Minister as principal regulators will not give rise to an inherent conflict of interest. The commission and the principal regulator will work together to ensure that a charity’s independence is maintained. The functioning roles already have accountability. There is no conflict, since assurance is largely derived from the funding function and both roles require similar levels of assurance.
We all accept that the law on exempt charities is an incredibly complex area with a complex history. More than anybody else in this Committee, my noble friend is aware of the difficulties that this law raises. I accept that we would rather be in a better position, but we are where we are and it is difficult to unpick some of the complexities. As a result, we should go for a simpler legal regulatory framework for exempt charities. It has always been intended for exempt charities to be exempt. When the ASCL Bill was enacted, it was agreed that this would be done through exempt-charity SIs. That is what these instruments do.
My noble friend Lord Hodgson spoke on the MOUs. Principal regulators are not expected to be experts in charity law. It is not their job to be, nor is it their duty to promote charity law unless charity law compliance requires it. Expertise in charity law lies with the Charity Commission. That is why the commission has investigation and enforcement powers in relation to exempt charities.
My noble friend also asked why the Education Funding Agency is not the regulator. As I said to my noble friend Lord Phillips, the EFA will be an agency of the Secretary of State. It will not have a separate legal personality, so it cannot be appointed as the principal regulator.
Charities Bill [HL]
Lord Phillips of Sudbury Excerpts(13 years, 7 months ago)
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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 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.
Charities (Pre-consolidation Amendments) Order 2011
Lord Phillips of Sudbury Excerpts(13 years, 7 months ago)
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Baroness Verma
My Lords, the draft order before us today is a technical order that makes minor amendments to charity law. It will be made in preparation for the consolidation of charity legislation via the Charities Bill 2011, which was introduced to this House on 3 March.
The aim of this order is merely to tidy up some minor points in the existing legislation before charities legislation is consolidated. It might help if I first give a little background to the Charities Bill itself before explaining the purpose of this order. The purpose of the Charities Bill is: to bring together provisions of the main legislation on charities in England and Wales into a single piece of legislation; to simplify the structure of the existing legislation, making it more accessible to the lay person; and to replace provisions in the Recreational Charities Act 1958, the Charities Acts 1993 and relevant provisions of the Charities Act 2006.
Due to the fragmentation of charity legislation, it has become increasingly difficult to navigate the law in this area, not least as the Charities Act 2006 made extensive amendments to the Charities Act 1993. The Bill will fulfil a commitment given during the passage of the Charities Act 2006 in response to noble Lords who requested that charity legislation should be consolidated to make it easier to follow, particularly for non-expert charity trustees. The Law Commission, which is responsible for consolidation Bills, responded favourably to a request from the Cabinet Office, and the result is the Charities Bill, which was introduced last month.
Neither the order nor the Bill itself makes any substantive changes to charity law. The types of amendments that the order makes fall into the following categories: correcting minor mistakes in the existing legislation or remedying missed consequential amendments; removing inconsistencies in the existing legislation; modernising the language of the existing legislation; repealing provisions in the existing legislation that are now considered obsolete; clarifying the effect of the existing legislation; and consequential provisions relating to other provisions of this order.
I will give a couple of examples to assist the Committee. One example of correcting a minor mistake is in paragraph 4 of the schedule to the order relating to the Charities Act 1993, which provided that,
“In the exercise of its functions the commission shall not be subject to the direction or control of any Minister of the Crown or other government department”.
The use of the words “or other” in this context gives the impression that a Minister of the Crown is a government department. Clearly this is not the case, as while a Minister of the Crown may be in charge of a government department, he or she is not a department per se. The amendment in this order avoids this misinterpretation while retaining the allusion to the fact that the Charity Commission is a government department.
Paragraph 31 deals with various inconsistencies relating to rights of appeal to the Charity Tribunal. For example, a right of appeal exists where the Charity Commission requires a charity’s accounts to be audited, but does not currently exist for certain charity group accounts. The amendment in paragraph 31(g) removes that inconsistency.
An example of how the language used has been updated is in paragraph 7 of the schedule, which now uses the word “provide” instead of the original word “furnish”, as in providing documents instead of furnishing them. Paragraph 15 of the schedule removes an obsolete reference to the Incorporated Society of Valuers and Auctioneers, which merged with the Royal Institution of Chartered Surveyors in January 2000.
An example of how the order clarifies legislation is contained in paragraph 18 of the schedule. In the context of a section that refers to both the Audit Commission and the Charity Commission, the reference to “the Commission” is changed to the “Charity Commission” to avoid any potential confusion. The structure of the legislation has also been improved to make it easier to follow. However, this has led to the need for some pre-consolidation amendments. For example, paragraph 11 of the schedule facilitates the splitting of Section 18 of the 1993 Act into a number of separate sections in the consolidation Bill. Section 18, which provides the Charity Commission with various powers to act for the protection of charities, is long and complex, so splitting it up should make the text easier to navigate.
The order also makes consequential amendments, in particular changing various cross-references, that will result from splitting up Section 18. The draft order was consulted on in 2009 as part of the wider consultation on the draft Charities Bill, and we received positive responses. I hope noble Lords will agree that the order is a useful tool for clearing up some outstanding issues in charity law before the Charities Bill completes its passage through Parliament. There will be a review of the Charities Act 2006, starting later this year. This will provide an opportunity to look again at the legal framework for charities in England and Wales, and to consider whether the policies that lie behind the legislation are working in practice.
As a consolidation Bill, the Charities Bill represents a small but useful step forward in simplifying the legislative framework for charities 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 it would be a shame to lose this chance. This order will pave the way for the consolidation of charity law. I beg to move.
Lord Phillips of Sudbury
My Lords, I thank my noble friend the Minister for the way in which she gave a tour d’horizon of this statutory instrument. As she rightly says, this is a prelude to the consolidation Bill, which starts in this House next Thursday, although I do not think that anyone will be there—I notice that the Commons is not sitting on that day.
A very important aspect of the debates on the Charities Bill that led to the Charities Act 2006 was that we were to have a consolidation measure. I was, I think, foremost in urging that and in getting the Government to put it into the Bill so that we could be quite sure that it would happen. As my noble friend again so rightly says, the danger with our efforts here is that, while they might be just about comprehensible to the specialist lawyer, the Charity Commission, the parliamentary draftsmen and the civil servants involved, they are a closed book to everyone else. Given that 95 per cent of our charities have no paid staff, and that all trustees are volunteers, it is a very serious predicament. Although the consolidation measure is more than 300 pages, it will go some little way to making life a tad easier for those who are doing the job on the ground.
I should like to refer to two aspects of this statutory instrument. Noble Lords may agree that there can be few pieces of legislation more sleep inducing than the Charities (Pre-consolidation Amendments) Order 2011. Indeed, so arcane is most of the language that you have to be a bit of an egg-head to plunge into its depths.
Lord Phillips of Sudbury
I beg the noble Lord’s pardon. I thought that the noble Lord, Lord Davies, had uttered a witticism.
Lord Davies of Oldham
My Lords, I was merely expressing approval of the fact that it is the noble Lord who is displaying his egg-head qualities.
Lord Phillips of Sudbury
I should like the Minister to give a little explanation of paragraph 10 of the schedule to the order, and I have given her notice of that. The paragraph goes to the heart of the relationship between this order, the consolidation Bill and the Houses of Parliament. To be frank, try as I did, I could not perfectly understand where things were left by paragraph 10. My understanding is that, if in Section 17(2) of the 2006 Act the Minister is given the power to make an order, it is superfluous then to go on to say,
“and a draft of the order shall be laid before Parliament”.
That follows. However, I became a little lost with the omissions and additions later in paragraph 10, and if the Minister is able to cast enlightenment on that I shall be most grateful.
My only other point is more substantial and concerns paragraph 24 of the schedule to the order, which relates to Section 79(2) of the 1993 Act. This is an important provision in the Act. At the start, paragraph 24 says that in Section 79(2) the word “ratepayers” is to be omitted. This provision is designed to ensure that parochial charities have a governing body or a group of trustees that is fit for purpose in the 21st century. Section 79(2) of the 1993 Act, as amended by the 2006 Act, says that the Charity Commission may allow the appointment of trustees to parochial charities in the circumstances described in Section 79(2). Paragraph 24(1) says that “ratepayers” shall be deleted from the description of those persons who shall have power in future to appoint trustees, or at least it does not eliminate their powers to appoint but it affects the right of the commission to make an order appointing additional charity trustees. My problem with paragraph 24—and I read it many times—is that sub-paragraph (2) seems to be wholly superfluous. It says:
“Nothing in sub-paragraph (1) affects any appointment of a charity trustee made before the commencement of that sub-paragraph”—
that is, before the consolidation Act comes into effect. As I said, that is wholly superfluous because one cannot make retrospective legislation other than in rare circumstances and with the greatest possible clarity and want of ambiguity. That is my first point.
Gaza
Lord Phillips of Sudbury Excerpts(14 years ago)
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Lord Phillips of Sudbury
My Lords, ever since I came to this House in 1998, I have heard members of the Front Bench say that the Government are calling for Israel to do this, to desist from that and all the rest of it. Israel has been in a decades-long breach of international law not only on its pulverisation of Gaza but on its colonisation of the West Bank. When are we actually going to do anything?
Baroness Verma
My Lords, my noble friend knows that only through dialogue will we resolve matters. The UK is only one of many partners involved in making sure that peace is able to be brought forward.
Afghanistan
Lord Phillips of Sudbury Excerpts(14 years, 4 months ago)
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Baroness Verma
My Lords, the £200 million is being allocated to Afghanistan alongside the budget. We are determined to ensure that we are there to eliminate poverty.
Lord Phillips of Sudbury
My Lords, I declare an interest as I have a son-in-law who is about to go to Afghanistan as a manager of aid for DfID. This is an intractable situation; the history of Afghanistan is uniquely difficult. Is it not about time—to get anywhere on hearts and minds, which is at the heart of aid—that one had dialogue with the Taliban?
Baroness Verma
My Lords, first of all, I wish my noble friend’s son-in-law well. We are trying our level best to support the Afghan Government to increase their capacity to be able to engage with all people in Afghanistan.