Charities Bill [HL]

Lord Ponsonby of Shulbrede Excerpts

Report stage
Tuesday 14th December 2021 Lords Chamber

[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.

Amendment 1 agreed.

--- Later in debate ---

[Lord Thomas of Gresford (LD)]

My Lords, we on the Liberal Democrat Benches fully support this amendment in the name of the noble Lord, Lord Hodgson. When I heard the story of the Albert Hall that he outlined, there was only one thing I could say: “Land of Hope and Glory”. It seems to me that there is no justification for the way in which the Attorney-General acted in this case, without giving any proper reason. I did a bit of research to see what the published response of the Government was to the report of the Law Commission. No satisfactory reason for the need for the consent of the Attorney-General was given.

Because of the time, I will not delay your Lordships any longer, but it seems that the noble Lord, Lord Hodgson, should be congratulated, not only on this amendment but on all the work that he has done in this field and the report that he brought forward.

[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.