Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No.2) Regulations 2020

Lord Stevenson of Balmacara Excerpts

Friday 9th October 2020 Lords Chamber

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I declare my interests in charitable organisations as set out in the register. Like the noble Baroness, Lady Bowles of Berkhamsted, I am also a veteran of the Corporate Insolvency and Governance Act, as it now is, having spent many happy hours on it. Although I can confirm that we did not consult on or talk about this matter beforehand, I find myself in agreement with much of what she said in her presentation.

Before I get to that, I want to mention that, although I admire the effort of the noble Lord, Lord Kirkhope of Harrogate, to read through the entire saga of that Act, he missed the fact that both the noble Baroness, Lady Anelay of St Johns, and I raised the issue of CIOs and charitable bodies more generally in the then Bill, and their particular issues in relation to the legislation going forward. We asked that the interests they represent be taken care of as the Bill went forward both in Committee and on Report in your Lordships’ House, so I am a bit surprised that the noble Lord did not bring that up. However, I can understand that his eyes might have glazed over when we reached that point in the proceedings.

I agree with the noble Baroness, Lady Bowles, that the Explanatory Memorandum for this statutory instrument is not up to the standard that the House expects. There may be many reasons for that and, when the noble Baroness introduced the SI, she hinted at the problems it has been going through—but I found it very difficult to read. I am therefore very grateful that the Library decided to publish a little aide memoire on this debate, which I found much more helpful.

The problem is not so much that this is the second or third attempt to try to get right something that was going off track earlier; it is that some quite substantial issues do not seem to have been addressed. I ask the Minister whether she would consider having a meeting with noble Lords who are interested enough to want one—perhaps just those who are involved in this debate—to see whether we can find out what is happening on the ground. I am confused about it: not just on the pension issue but on what legislation might be coming down the track later in this area. We do not get much opportunity to talk about charities and, as my noble friend Lord Foulkes said, there are real issues affecting them at the moment. It would be useful to get a sense of where the department is going with this, so we can be sure, in our own minds, where we can be most helpful in trying to protect the interests of charities, as a way forward.

When the Minister introduced this SI, she said it was a necessary part of the process and was mainly about disapplying provisions that might otherwise cause complications or not be relevant to the charities involved. But I felt very uncomfortable with that approach. That might be resolved by a meeting but, at the moment, all we have to go on is the SI. I have five very quick points to make.

First, I did not agree with her analysis that the voluntary solvent dissolution procedures should be disallowed, because they go with the grain of what was intended by the Corporate Insolvency and Governance Act. If a charity is thinking about winding up and is solvent, it will probably have other charities to which it could transfer its activities and processes. I do not understand why it would be necessary to disapply the provision for dissolution, if that were the case. Surely it would be in the best interests of all concerned to quickly transfer the assets, as a going concern, to the new charity, and any hold-up in that would be a bad thing. I put that to the Minister and look forward to her response.

Secondly, the noble Baroness, Lady Bowles of Berkhamsted, is a much more expert observer of the pension schemes issue than I am, but I thought the point was that pensions issues should be within the scope of the moratorium. In other words, the creditor interest represented by the pensions due to those people who are employed by the charity needs to be protected, and that trumps the worry about this being overcomplicated. I understand that the issue has arisen because of a lack of communication with the Department for Work and Pensions, but it is still not clear—nor is it in the Explanatory Memorandum—exactly why the Government have chosen to act as they have, particularly as they now think they have got it wrong and want to bring further legislation later. That seems a very complicated way forward.

Thirdly, the Minister paid tribute to the work of charities during the Covid-19 pandemic, as did other noble Lords who spoke during this debate. But the issue is that the voluntary and community sector is facing a huge deficit in its processes, as my noble friend Lord Foulkes mentioned. While the Government have brought forward a tiny proportion, the gap between where the charities would expect to operate and where they are at the moment is enormous. Is there any hope for more funding here? Could the Minister respond?

Fourthly, I will address a question that was touched on earlier in the debate and that I want to make sure was registered by the Minister. The charitable sector is very pleased that the Government took steps to make sure that the quite difficult end-of-year processes and governance arrangements in relation to lockdown and restrictions were being dealt with, and they welcome the Government’s idea that trustees could have more time on these. However, I still think that there are concerns there. Could she put pressure on the Charity Commission to put out more practical guidance on this? From my own discussions, I understand that there are still concerns here.

Finally, a minor point was raised during the process of the Corporate Insolvency and Governance Act in relation to some charities who have collections within the ownership of the charitable bodies, which might be vulnerable if there were to be an insolvency. Clearly, the collections should be retained in the public interest, but there did not seem to be any mechanism when we raised this in the Bill for proceeding with that. Could the Minister respond to that?