Charities Bill [HL]

Lord Parkinson of Whitley Bay Excerpts

Report stage
Tuesday 14th December 2021 Lords Chamber

Moved by

[Lord Parkinson of Whitley Bay]

1: Clause 12, page 13, line 37, at end insert—
“(4) In section 348 (regulations subject to affirmative procedure etc)—(a) in subsection (1), after paragraph (c) insert—“(d) regulations under section 285(3) (power to amend period or multiplier specified);”;(b) in subsection (2), for “or (c)” substitute “, (c), (d)”.”Member’s explanatory statement
This amendment provides for the power to make regulations added by Clause 12 to be subject to affirmative resolution procedure.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, I rise to speak to Amendment 1 in my name. As this was a Law Commission Bill, scrutinised through the Special Public Bill process, I thank the noble Lords who sat on the Special Public Bill Committee which examined it, chaired ably by the noble and learned Lord, Lord Etherton. It consisted of my noble friends Lord Cruddas, Lord Bellingham, Baroness Fullbrook and Lord Sharpe of Epsom, the noble Lord, Lord Ponsonby of Shulbrede, and the noble Baronesses, Lady Goudie and Lady Barker, and was ably assisted by our clerk, Alasdair Love. I thank them and all those who gave evidence to the committee.



Amendment 1 responds to an amendment tabled by the noble and learned Lord, Lord Etherton, in Committee. I am grateful to him for his suggested amendment, and for the time that I have had to consider the policy behind it. The Government accept that the two thresholds in Clause 12—to vary the proportion of permanent endowment which may be borrowed, and the period over which such borrowing must be repaid—are of a different nature from the other financial thresholds contained in the Bill. Those other financial thresholds are concerned with monetary sums. They set the level at which it is appropriate for trustees to make their decision independently, or for the Charity Commission to oversee that decision. We maintain that in relation to the powers to vary those financial thresholds, and thus change where that balance is to be struck, the negative resolution procedure provides a proportionate level of parliamentary scrutiny.

However, Clause 12 does not indicate where regulatory intervention is required in the same way. It does not set out monetary sums. Instead, it places a percentage limit on how much a charity can borrow from its permanent endowment and specifies the period over which such borrowing must be repaid. Therefore, any variation of these thresholds has a slightly different implication. The financial thresholds elsewhere in the Bill can be adjusted to reflect changes in the value of money. By contrast, any amendment of the Clause 12 thresholds would not be about changes in the value of money.

We have carefully considered the various arguments regarding the right level of parliamentary scrutiny in relation to these powers, including the fifth report of the Delegated Powers and Regulatory Reform Committee of your Lordships’ House. We have been persuaded that it is appropriate for an additional level of parliamentary scrutiny to be put in place for any future changes made to the thresholds in Clause 12. Amendment 1 would therefore require any variation of the maximum proportion of permanent endowment from which a charity may borrow, and the period over which any such borrowing must be repaid, to be subject to the affirmative resolution procedure rather than the negative procedure. We consider that this amendment will help to maintain the balance between protecting donors’ funds and wishes and providing flexibility for trustees to make the best use of opportunities to fulfil their charitable purposes.

As a result of this change to Clause 12, it is also necessary to make consequential amendments to Clause 39 of the Bill. I will briefly explain these amendments. Amendment 1 inserts subsection (1)(d) into Section 348 of the Charities Act 2011 to confirm that any amendment to the delegated powers in Clause 12 is subject to the affirmative resolution procedure. Later in the Bill, Clause 39 makes other amendments to Section 348 of the Charities Act 2011. The Clause 12 amendment to Section 348 means that the wording in Clause 39 needs to be rearranged. Amendments 5, 6 and 7 are consequential amendments to change references to subsections in Section 348 to accommodate Amendment 1. I beg to move.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, we support these government amendments. The Minister has explained them very clearly. I have nothing to add. He is just following up on recommendations in the fifth report of the Delegated Powers and Regulatory Reform Committee.

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[Lord Ponsonby of Shulbrede (Lab)]

My Lords, the view of the Labour Party, the official Opposition, is that we will abstain if this amendment is put to a Division.

I heard the speeches of the noble Lord, Lord Hodgson, at Second Reading, in Committee and on Report. He makes a very strong case, which he has made again today. As my noble friend Lord Rooker said, the traditional way that both Houses deal with Law Commission Bills is to essentially nod them through. That was, and is, the agreement between the usual channels regarding this Bill as well. However, the best that I can do for the noble Lord, Lord Hodgson, is to abstain, because there is merit in the underlying preceding agreement which the usual channels have had. That is the reason I take a different view from the noble Lord, Lord Thomas, who has expressed his support for the amendment.

We on these Benches will be abstaining. I will leave it to the Minister to make his own case.

[Lord Parkinson of Whitley Bay (Con)]

I thank my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment and for outlining the case again. Before I respond to it, I certainly associate myself with the comments of the noble Lord, Lord Thomas of Gresford, that my noble friend should be congratulated on all his work in this field. The Bill we are debating tonight is in very large part the result of his long-standing interest and considerable work in reviewing charity law.

On this issue, we have from the outset been at odds: where my noble friend sees obduracy, I see consistency. The noble Lord, Lord Rooker, is absolutely right: we can amend these Bills, even in the Law Commission procedure—we have just made some amendments in the previous group—but what is important is that we proceed on the basis of consensus and avoid areas of political disagreement. On this, the Government have been clear from the outset that we were not minded to accept the single recommendation from the Law Commission; and my noble friend has been equally consistent that he thought it was an important one. But we have made clear throughout the passage of the Bill our position on the role of the Attorney-General and the value placed on the Attorney-General’s oversight of references to the tribunal.

With respect to the noble Lord, Lord Rooker, and his advice that I take this away: I have taken it away and discussed it with the Attorney-General and her office on numerous occasions through the passage of the Bill so far, and I have had some helpful discussions with my noble friend, the noble and learned Lord, Lord Etherton, who is the chairman of the Special Public Bill Committee, and others, but our position remains as my noble friend Lord Hodgson knows it. Let me explain why that is.

Section 326 of the Charities Act 2011 provides the Attorney-General with the power to refer to the Charity Tribunal any question involving

“the operation of charity law in any respect, or … the application of charity law to a particular state of affairs.”

The Charity Commission has an equivalent power to make a reference to the tribunal where the question has arisen in connection with the exercise by the commission of any of its functions, but only with the consent of the Attorney-General under Section 325(3). These rights were considered by Parliament during the passage of the Charities Act 2006, which now appear in the consolidated 2011 Act, and it was agreed that this provision was necessary. The Attorney-General has an historic duty, on behalf of the Crown, to protect charitable interests in England and Wales. The Attorney-General’s consent for references to the charity tribunal is an important element in the system of checks and balances which should not be removed.

My noble friend says the Government have not made clear what specifically the Attorney-General’s role is. It is part of the Attorney-General’s role to assess whether a referral to the tribunal is in the interests of the public. This oversight also provides a second pair of eyes in ensuring that the costs associated with such a referral are not put on charities or on the public unnecessarily. So the Attorney-General works alongside the Charity Commission and provides a second opinion on referrals to the tribunal.

While this particular consent function is narrowly drawn, it is only one tool in a wider portfolio for performing her constitutional role as defender of charitable interests in the wider public interest. The Attorney-General’s wider role means that she has a unique perspective and is able to take into account considerations of societal issues and the wider repercussions for charities. In recent years, we have had Attorneys-General in both your Lordships’ House and another place. As such, the Attorney-General’s oversight reaches beyond charity law and regulation.

It should be remembered that the reference procedure is a unique declaratory power which enables the Charity Commission and the Attorney-General to seek rulings on what might be hypothetical questions. Outside this procedure, hypothetical questions are rarely entertained by the courts, for good reason. It is therefore right and proper that a public interest consideration is applied in the exercise of this unusual procedure. The value of the Attorney-General’s unique perspective has been recognised and commented on by the courts.

With this in mind, the Government oppose my noble friend’s Amendment 2, which would do away with the Attorney-General’s consent function altogether. We believe that by removing this mechanism completely, an important part of the Attorney-General’s oversight of charity law would be lost. So my noble friend will not be surprised to hear me say again that I am afraid we still disagree on this issue, as we did at the outset, and I would hope that he may yet withdraw his amendment.

It is important to note how rare these cases are. The Charity Commission and the Attorney-General have worked together on two references that the Attorney-General has made to the tribunal since the 2006 provisions were put in place, and there has been only one reference that the Charity Commission has sought the Attorney-General’s consent to pursue, which the Attorney-General, as my noble friend outlined, refused to give earlier this year. That is the context we find ourselves in for this debate.

[Lord Thomas of Gresford (LD)]

Is it not the case that, if the amendment were to pass, the Attorney-General would have the power to intervene at any stage in the public interest if the public interest became involved? I do not see why she has to give her consent before the reference to the tribunal can be made.

[Lord Parkinson of Whitley Bay (Con)]

That consent function, my Lords, is something the Government consider important; it is part of the assessment of whether it is in the public interest for the reference to the tribunal to begin, with all the costs and time that it would involve. That is part of the reason why the Government cannot accept my noble friend’s amendment.

While supporting the Attorney-General’s role, we are also aware of concerns raised by noble Lords regarding the time taken for the Attorney-General to make a decision on whether to grant consent in the particular case to which my noble friend referred. His amendment is grouped with Amendment 4 in the name of the noble and learned Lord, Lord Etherton, which provides that the Attorney-General must make her decision on an application for a reference to the tribunal within 60 days, otherwise consent would be deemed to be given. His amendment also requires that the Attorney-General publish a comprehensive statement explaining the reasons for any refusal of consent.

Regrettably, however, the noble and learned Lord’s amendment does not acknowledge that there may be good reasons beyond the Attorney-General’s control that require additional time in her decision-making. There may be times, for instance, when a case requires further information to be submitted, either by an individual charity or the Charity Commission, to enable the Attorney-General to make a fully informed decision. There may be mediation under way between parties involved which needs to conclude before a decision can be made, or a case could be particularly complex and require further investigation and deliberation. Given how complex these rare cases normally are, a strict 60-day time limit following which consent is automatically given would amount to the effective removal of the Attorney-General’s consent function by the back door. I have outlined the reasons why we do not agree that the consent function should be removed. Doing it in that way would also be inappropriate.

It is regrettable that a decision on whether to grant consent to a reference in the case involving the Royal Albert Hall took so long, but one complex case does not justify a change in the law. I thank once again my noble friend Lord Hodgson and the noble and learned Lord, Lord Etherton, for his Amendment 4.

[Lord Rooker (Lab)]

I just want to be clear about this. I fully take on board the point that it is one case, but the Attorney-General is in a different position to other Ministers. With other Ministers, we can get access to their diaries, what meetings they have had, so we can see who has lobbied them. How do we know who, if anybody, lobbied the Attorney-General during that period of nearly four years? How do we know that, with the Attorney-General being unlike other Ministers?

[Lord Parkinson of Whitley Bay (Con)]

My Lords, the Attorney-General is a Member of Parliament. Previously, they have been Members of your Lordships’ House; the current Attorney-General is a Member of another place. She is therefore subject to the same parliamentary scrutiny and the methods available to Members in another place to ask her those questions. This is a reflection of her particular role, but she is not a remote person; she is a Member of Parliament who can be asked questions. She makes her view known, as she has in this case, but we do not think that this case alone should warrant a change in the law.

[Lord Thomas of Gresford (LD)]

Does the Attorney-General claim the same prevention of disclosing that there is when she gives advice to the Government for when she gives or refuses consent under this provision? If it is different, why has she not given more reasons for it in the case of the Albert Hall?

[Lord Parkinson of Whitley Bay (Con)]

My Lords, no, I do not think that the Attorney-General claims client confidentiality in the same way. Her role overseeing charity law is part of her function as parens patriae. However, we think that it is important to maintain the consent function. As I have said, she is a Member of Parliament, so these questions could be posed to her.

The Attorney-General has set out her reasons why she does not think it would be in the public interest for reference to be made. Noble Lords may disagree with that, and they may ask her about that, but I reiterate that I do not think that one case, however long or complex it may be, should warrant a change in the law. It is for that reason that I hope my noble friend may yet withdraw his amendment.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, this has, as ever, been an interesting debate and I am very grateful to the noble Lords, Lord Grabiner, Lord Rooker and Lord Thomas of Gresford, for their support and, indeed, to the noble Lord, Lord Ponsonby, for the half-loaf that he offered. I am very grateful for that as well.

I do not propose to go on about this. My noble friend has talked about the oversight of charity law. I think we have seen what has been happening with the oversight of charity law. The noble and learned Lord, Lord Etherton, produced quite an elegant half-loaf of a 60-day limit and a requirement to explain because the Attorney-General is performing a declaratory, not an advisory, role, which we discussed. The Attorney-General cannot even make that move to help a past Master of the Rolls with his elegant diplomatic solution.

It is late. Let us finish. If your Lordships support my amendment, you are voting for transparency, clarity and sunshine. If you vote against it, I am afraid you are voting for obscurity, obfuscation and concern that charity law may not be developing as even-handedly as it should. I have now been on this case for 10 years. I owe it to all the people who have been to talk to me, who say that this needs to be sorted out, that on this occasion I wish to test the opinion of the House.

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Moved by

[Lord Parkinson of Whitley Bay]

5: Clause 39, page 29, line 20, leave out “(c)” and insert “(d) (inserted by section 12)”
Member’s explanatory statement
This amendment is consequential upon the amendment of Clause 12 in the name of Lord Parkinson of Whitley Bay.

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Moved by

[Lord Parkinson of Whitley Bay]

8: Schedule 2, page 35, line 3, in column 1, leave out “under section 226”
Member’s explanatory statement
This amendment removes an unnecessary reference to section 226 of the Charities Act 2011.

[Lord Parkinson of Whitley Bay (Con)]

Amendments 8 to 12 are in my name. I shall outline them as briskly as I can, and I think it makes sense for me to speak to them in reverse order.

Amendment 12 is a concessionary amendment, responding to the amendment tabled by the noble and learned Lord, Lord Etherton, in Committee on 18 November. He highlighted an issue that had arisen during the Committee’s evidence-gathering: that the Bill, as currently drafted, does not offer the right to appeal Charity Commission decisions made under new Sections 280A and 67A that the Bill would insert into the Charities Act 2011. Having had time to consider the policy and implications that lay behind his amendment, I am happy now to bring forward this government amendment by way of concession.

The Government agree that appeal rights should exist in respect of Charity Commission decisions to withhold consent under new Section 280A. New Section 280A replaces existing powers under Sections 267 to 280 of the Charities Act 2011 for certain types of unincorporated charities to transfer property and alter their purposes. Two of these existing powers, under Sections 268 and 275, carry the right to appeal a Charity Commission decision to withhold consent. It is appropriate, therefore, that an appeal right is afforded to decisions under new Section 280A where Charity Commission consent is withheld. This would create an appeal right that is as close as possible to the appeal rights connected to those sections that will be repealed and replaced.

The Government acknowledge that affording the right to appeal Charity Commission decisions to withhold consent under new Section 280A, and not to extend that appeal right to cover decisions to give consent, is not exactly matched to the equivalent appeal rights given to charitable companies and charitable incorporated organisations under Sections 198 and 226 of the Charities Act 2011. It is, however, consistent with the existing appeal rights under Sections 268 and 275 of the 2011 Act.

These types of amendments that require Charity Commission consent for unincorporated charities under new Section 280A are wider than for charitable companies and charitable incorporated organisations. It is important also to note that the new power under new Section 280A is broader than the existing powers for unincorporated charities. The right to appeal Charity Commission decisions to withhold consent under new Section 280A will therefore be a slightly broader appeal right than at present. There is operational concern that any wider broadening of appeal rights to cover both the giving and withholding of consent would not be proportionate for the tribunal and the Charity Commission. In a similar vein, this concern is echoed in the suggestion to introduce what would be a completely new right to appeal Charity Commission decisions under new Section 67A, which allows trustees to apply funds from a failed or surplus fund-raising appeal for new purposes. Where those funds exceed £1,000, Charity Commission consent is required.

Decisions regarding the use of funds from a failed fundraising appeal can often involve internal disputes within a charity, and these cases are generally low-risk for the sector at large but can be contentious for individuals. There will often be one party left disgruntled with whatever decision the Charity Commission makes. Opening up new appeal rights in respect of these decisions is expected to invite a disproportionate administrative burden on the Charity Commission and the tribunal, given the types of issues usually at stake in such decisions. The context of a charity using funds from a failed appeal for different purposes is also a narrower decision to be taken by trustees and is less likely to have the same impact as a charity changing its general purposes.

Sections 280A and 67A should not, therefore, be treated in the same way. A judicial review is considered the most appropriate route to challenge a Charity Commission decision under Section 67A. Amendment 12 therefore inserts the right to appeal Charity Commission decisions under new Section 280A, where consent is withheld, into Schedule 6 to the Charities Act 2011. It does this by inserting paragraph 8(c) into Schedule 2 to the Bill.

Amendments 9, 10 and 11 shift some wording around in order to accommodate Amendment 12. Without these very minor changes, Amendment 12 would not make sense.

Finally, I speak to Amendment 8. In reviewing the Bill to draft these concessionary amendments, it was noticed that paragraph 2 of Schedule 2 refers to “Section 226” twice, unnecessarily. In the interests of avoiding using unnecessary words—which is a good lesson for this hour of night—this amendment removes those superfluous words from the Bill. This is purely a drafting change for tidying-up purposes.

I hope noble Lords will agree that this amendment and the consequential amendments which accompany it are appropriate and necessary for the reasons I have set out. I beg to move.

Amendment 8 agreed.

Moved by

[Lord Parkinson of Whitley Bay]

9: Schedule 2, page 35, line 25, leave out “omit”
Member’s explanatory statement
This amendment is consequential upon the amendment in the name of Lord Parkinson of Whitley Bay at page 35, line 29.