Martin
Horwood: The hon. Gentleman slightly misses the key point,
which is that there are different definitions of “charitable
purpose” and “charity” in different pieces of
legislation that apply to the same territory. It is that inconsistency
to which I am trying to draw the Minister’s attention, and I
hope that he will address it in due course, even if not through the
Bill.
Mr.
Bone: I was not going to intervene on the hon. Gentleman,
but the Minister has taken me by surprise with his statement that, for
the purposes of Her Majesty’s Revenue and Customs,
“charitable purpose” will have a common definition. I am
sure that there will be a different interpretation for tax law; I
should be very surprised if there were
not.
Martin
Horwood: I suspect that the hon. Gentleman is correct and
that the Minister may not be quite right. There is room to iron out
some of the remaining inconsistencies, particularly those on the
application of tax
relief. I turn to the
amendments tabled by the hon. Member for Isle of Wight. He is on safer
ground when talking about sport and policing than about theology. The
general principle that he has advanced for some categories but not
others is that the Charity Commission, the charity tribunal and the
courts should be left to give the detailed definitions of some of the
ideas and concepts. We should do that for religion as for sport, so I
oppose the hon. Gentleman’s amendment No. 2, which seeks to
insert what I think is a flawed definition of religion. On the same
principle, I support his amendment No. 53, which would remove an
equally flawed definition of sport. Under that principle, I hope that
we would leave a bit more latitude to the court, the Charity Commission
and the tribunal to deal with the detail.
At the risk of incurring the
rapier-like wit of the hon. Member for High Peak, I should say that
there is some value in taking a clause that might be contested in the
courts in future—the hon. Member for Isle of Wight suggested
that that was possible in the case of the charity for the police and
their dependants—and putting it beyond doubt in the Bill. That
seems reasonable. It would be no great sacrifice for us to add a 14th
type of charity to the 13 already mentioned, especially as there will
not be a great opportunity to add dozens more and we shall not open a
can of worms in that respect. I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
1 ordered to stand part of the
Bill. Clause 2
ordered to stand part of the
Bill.
Clause
3The
“public benefit”
test
Martin
Horwood: I beg to move amendment No. 71, in
clause 3, page 3, line 21, leave
out from ‘whether’ to end of line 23 and
insert—
“a body provides or intends to
provide public benefit, regard must be had
to— (a) how
any— (i)
benefit gained, or likely to be gained, by members of the body or any
other persons (other than as members of the public),
and (ii) disbenefit
incurred, or likely to be incurred, by the public in consequence of the
body exercising its
functions, compares
with the benefit gained or likely to be gained by the public in that
consequence, and (b)
where benefit is, or is likely to be, provided to a section of the
public only, whether any condition on obtaining that benefit (including
any charge or fee) is unduly
restrictive. (2A) It
is presumed that a charity established to benefit the natural
environment, or the living species within it, exists for the public
benefit.’. I
should like to raise what is almost a point of order. We submitted two
different amendments that have emerged as one. The first part of the
amendment, which clearly relates to public benefit and the insertion of
the Scottish guidance on its implementation, was separate from the last
subsection (2A). I shall deal with that second provision
first. Our new
subsection (2A) is intended to close what I think is a loophole in the
Bill, so that the preservation of, or concern for the welfare of,
species or elements of the natural environment, which cannot
automatically be assumed to be for the public benefit, would
nevertheless be considered charitable. Charities that are for the
protection of the environment clearly qualify under clause 2, under the
heads of charity. However, under the Bill, by contrast to previous
charity legislation, they must also now pass the public benefit test.
It is not clear to me how the preservation of an area of wilderness,
such as the Antarctic or the Arctic, would be easily defined as for the
public benefit. Likewise, we can imagine that the work of a charity
such as St. Tiggywinkles, which looks after the welfare of hedgehogs,
has no great implications for biodiversity or pet care that might
indirectly benefit the public. What I wanted to achieve by the
provision was to put the issue beyond
doubt.
Helen
Goodman: I am most sympathetic to the hon.
Gentleman’s arguments. In a sense, to go back to the discussion
that we had about religion, he is saying that we have moved on from the
idea that the world is here simply for our pleasure and that we can
exploit and use it. He is right if he is talking about whether all the
value of the natural environment is to be measured in terms of the
pleasure that we derive from it. Is that the point that he is
making?
Martin
Horwood: I am grateful to the hon. Lady, who has made the
point far more eloquently than I was doing. She is entirely right. The
amendment is also intended to reflect the simple humane instinct to be
charitable, which is relevant to the simple care of animals such as
hedgehogs, where not even environmental benefit is at
stake.
Alun
Michael: I am interested in the hon. Gentleman’s
response to my hon. Friend, because it seems to me that the list in
clause 2(2) very much reflects the developments that he was referring
to. Paragraph (i), for instance, refers to
“the advancement of environmental
protection or
improvement” and I also
particularly welcome, as I did on Second Reading, the inclusion of
animal welfare. It is clear that animal welfare cannot directly be the
welfare of people. Is not it essential, however, that there should be a
test to prevent an organisation’s simply saying, “We
exist to serve the arts”—to take the arts as an
example—“and therefore we are charitable”? There
must be a test of whether the organisations will operate for the wider
public benefit, and that is what the public benefit test is about.
However, clause 2(2) surely covers the hon. Gentleman’s
point.
Martin
Horwood: The right hon. Gentleman is right up to a point.
The point about the list in clause 2(2) is that it is necessary but not
sufficient to achieve charitable status. A charity must fall within it
and be for the public benefit. Falling within the categories listed in
subsection (2) and being for the protection of the environment is not
sufficient for the achievement of charitable status. However, I agree
that it is right that there should in addition be a public benefit
test. Indeed, the rest of the amendment clearly shows that I should
like a stronger public benefit test. I am simply trying to put beyond
doubt certain categories of charitable activity that would not
immediately show themselves to be for the public benefit, and to make
it clear in the Bill that they are to be treated as being for the
public benefit. I hope that that reassures the right hon.
Gentleman.
Alun
Michael: Yes, I think that there is not a great difference
between us, but we need to be careful about amending the Bill, because
inclusion in clause 2(2) suggests that there is a public benefit in
improving the environment and in animal welfare and so on. We regard
those as part of what my hon. Friend the Member for Bishop Auckland
called those we share the planet with. That brings those activities
specifically within the ambit of charitable activity. We must not go
the further stage of saying that because environmental benefit or any
other aspect of the amendment is presumed, someone would be treated as
a charity and no more questions would need to be
asked.
12.15
pm
The
Chairman: Order. May I take this opportunity to remind all
Members that interventions should be
brief?
Martin
Horwood: I take the right hon. Gentleman’s point,
but the point is worthy of an amendment to clarify it and to put it
beyond doubt. I shall leave it at
that. The larger part
of what has ended up as the amendment would insert into the Bill word
for word the definition that has been adopted by the Scottish
Parliament in the Charities and Trustee Investment (Scotland) Act 2005.
That has a number of things to recommend it, as I said in my speech on
Second Reading. First, there is the obvious benefit of consistency. The
point was made in that debate that, with the devolution of powers, we
do not have to have consistency—it is not necessary or
compulsory in any sense—and I quite agree with that. I am a
great supporter of the decentralisation of power and would
not seek to impose either the English definition of public benefit on
Scotland or vice versa. Nevertheless, there is an advantage to
consistency where it can be adopted. Since Scotland has gone through
that process and adopted what seems to me to be a good set of guidance
on how public benefit is to be implemented by the Office of the
Scottish Charity Regulator, it would be an advantage to charities that
operate both north and south of the border to have the same definition
and guidance reflected in our Bill. There is also an argument in
principle in favour of the Scottish test. I shall not repeat everything
that I said on Second Reading, but I would like to make it clear that
some of the attacks made on the clause at the time were not
justified. The
measure certainly does not seek to attack private schools or other
institutions that might be seen to be subject to it more than charities
in general. It is about encouraging the best possible practice. That
became clear in the Scots debate, when Donald Gorrie MSP set out the
desired outcome, which I would recommend as well. He
said: “The
position that I take, and which Liberal Democrats and, I hope, other
people take, is that it should not be a blanket yes-or-no question as
to whether fee-paying schools can be or must be charities. Each
fee-paying school should have to demonstrate...that, in all the
various ways in which it works, it provides a genuine public
benefit—through its scholarships, through use of its facilities,
through the training that it gives trainee teachers and through the
work that it does in the community as a
whole.”—[Scottish Parliament Official
Report, 9 March 2005; c.
15113.] Those sentiments were
echoed by Labour Members and Ministers in the Scottish Parliament and
were clearly not intended as an attack on the sector as a
whole. Now that the
Scottish Act is law, OSCR has issued guidance on the public benefit
test and its interpretation of it. That guidance makes it quite clear
that the amendment is a moderate and reasonable proposal. It
states: “It is
worth noting that the Act draws a distinction between disbenefit and
unduly restrictive conditions (including any charge or fee). The mere
imposition of charges or fees is therefore not to be considered a
disbenefit: rather, the level of charges or fees must be considered in
the context of the provision of benefit to a section of the public and
the relative impact such fees, charges or other restrictions
have.” It goes on to
say: “The Act,
in stating that a condition may not be unduly restrictive, accepts that
there may be a certain level of restriction. The issue is whether any
condition is unduly restrictive: in other words, whether it is
excessively restrictive or restrictive in contradiction of moral or
legal standards. The fact that a (prospective) charity provides
benefits that will be charged for and will be provided mainly to people
who can afford to pay the charges does not necessarily mean that the
organisation is not set up for and does not operate for the benefit of
the
public.”
Mr.
Turner: Can the hon. Gentleman tell me whether he thinks,
in view of the fact that there is a reducing number of applications for
higher education, that the fees charged by higher education
institutions are unduly restrictive according to the definition that he
has just read out?
Martin
Horwood: I think that I have spotted the trap that the
hon. Gentleman has laid for me. I am not in favour of top-up fees of
any description in higher education, but I did not say that they
contradicted moral or legal standards in the way that OSCR describes.
Top-up fees would certainly not exclude a British university from
charitable
status.
Edward
Miliband: The hon. Member for Isle of Wight asks an
interesting question, and the hon. Member for Cheltenham has given his
answer. Perhaps he could say why he believes that top-up fees are not
unduly
restrictive.
Martin
Horwood: That is something that I happily leave to the
court, the Charity Commission and the tribunal.
The purpose of the amendment is
clearly simply to set a higher bar for the public benefit test. In a
briefing to its members, the Independent Schools Council gives exactly
the kind of advice that I would have wanted it to give on that point.
It says that that is not actually a great risk to private schools that
are seriously attempting to promote public benefit, and
says: “The
Commission is primarily there to help charities stay within the law,
rather than to penalise charities which are having difficulty
delivering enough public benefit. If the Commission considers that a
school is not delivering enough public benefit its first course will be
to advise the trustees. The aim will be to repair the public benefit
deficit within a reasonable timescale, and the Commission will advise
the trustees in this
process.” It goes
on: “Loss of
charitable status is very much the last resort. In most cases it would
require two sets of intransigent trustees (which is hardly likely) for
the Commission to invoke this ultimate
sanction.” It is clear
that the Independent Schools Council, while lobbying against that
stricter definition or guidance on public benefit, acknowledges in its
advice to its members exactly what we are saying: that a stricter
public benefit test will result in more public benefit, and in
organisations such as public schools seeking to advance the public
benefit more obviously and
demonstrably.
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