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Session 2005 - 06 Publications on the internet Standing Committee Debates Charities Bill [Lords] |
Charities Bill [Lords] |
The Committee consisted of the following Members:Mrs E. Commander, Committee
Clerk † attended the
Committee Standing Committee ATuesday 4 July 2006(Afternoon)[Mr. Roger Gale in the Chair]Charities Bill [Lords]The
Chairman: I apologise to the Committee for not observing
the normal courtesy of being with you for the first sitting, but I
notice that you appear to have made good progress, probably because of
rather than in spite of that.
Clause 3The
“public benefit”
test Amendment
proposed [this day]: 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.’. 4
pm Question
again proposed, That the amendment be
made.
The
Parliamentary Secretary, Cabinet Office (Edward Miliband):
Welcome to the Committee, Mr. Gale. It is a great pleasure to have you
with us.
We had an
interesting debate this morning on amendment No. 71 and issues relating
to public benefit. I thought that it would be helpful to the Committee
if I explained in the context of the amendment how public benefit will
work under the Bill. Then I will deal with the specific issues raised
by the
amendment. An
organisation must satisfy two tests to be a charity: it must exist for
a purpose under clause 2(2), and its purposes must be for the public
benefit. To answer the question of my right hon. Friend the Member for
Cardiff, South and Penarth (Alun Michael), who is not in his place, the
purposes listed in subsection (2) are capable of being for the public
benefit but are not necessarily so. A trust to relieve the poverty of
one family member is for the relief of poverty, but would not be deemed
for the public benefit.
The key question with which
amendment No. 71 is concerned is how public benefit will be defined. As
set out in the Charity Commission document “The Public Character
of Charity”, the public benefit requirement means that an
organisation must do two things. It must provide a recognisable
advantage for people at a level that reflects their need; that is the
benefit element. In addition, the benefits must be provided to the
public at large, or at least a sufficient section of the community;
that is the public element. Those are the general principles that apply
across the board, but they are flexible enough to be applied by the
Charity Commission and the courts in different ways, depending on the
charitable purpose that they are considering. A large mosaic of case
law underpins those
principles. That
brings me to the substance of amendment No. 71. I shall deal
first with the second part of the amendment, which would introduce a
presumption of public benefit for charities that benefit the natural
environment or species within it. The Government do not believe that
that is desirable or necessary, and not only because the hon. Member
for Cheltenham (Martin Horwood) seems to be introducing a second
Cheltenham principle, which is to support presumptions of public
benefit in one respect but not at another. The amendment is undesirable
because it singles out one charitable purpose. It is unnecessary
because a charity established to benefit the natural environment or a
living species can be deemed to provide public benefit on a number of
grounds, not simply the prevention of extinction, which I think was the
hon. Gentleman’s concern. For example, animal welfare charities
are recognised as charitable not because the animals are necessarily
threatened with extinction but because of a broader acceptance of the
public benefit of avoiding cruelty and animal suffering. I understand
that the Wildlife Hospital Trust to which the hon. Gentleman referred
qualifies on that
basis. Environmental
protection is acknowledged to provide public benefit because it
improves the living conditions of humankind. The Government think that
that part of the amendment is
unnecessary. Alun
Michael (Cardiff, South and Penarth) (Lab/Co-op): My hon.
Friend is making an important point on the issues that I raised this
morning. Would it not be correct to say that just as animal welfare
produces a public good because it is recognised to be of public benefit
without necessarily benefiting individual human beings, environmental
protection need not directly benefit individuals to satisfy the public
benefit
criteria?
Edward
Miliband: That is correct to an extent. I do not think
that my right hon. Friend was in his place when I said it, but is
important to restate the point that purposes under clause 2(2) can be
for the public benefit but are not necessarily so. The public benefit
test is applied by specifically examining the individual charity and
seeing whether it benefits a sufficient section of the
public. To illustrate
that important point, I shall quote from the case of IRC v.
Baddeley. Lord Somervell of Harrow, talking about a charitable trust,
said: “There
might well be a valid trust for the promotion of religion benefiting a
very small class. It would not follow at all that a recreation ground
for the exclusive use of the same class would be a valid
charity”.
The point I am making is that there is a
general public benefit test: a sufficient section of the community must
be benefited. That test is then specifically applied, and has been
applied by the courts—there is a bedrock of common law on the
matter—in different cases in different ways. My right hon.
Friend looks quizzical, so I shall give way to
him.
Alun
Michael: The difficulty is applying the same principles to
a variety of the 13 categories that we have in the Bill. Let us stick
with the animal welfare point for a moment. Does my hon. Friend accept
that, in the terms that he used earlier, one does not have to show that
members of the public benefit from the pursuit of animal welfare in
order to show that it is charitable and in the wider sense of the term
produces that “public benefit”? I think that I virtually
paraphrased his words. If we were to paraphrase that in relation to
others of the objects, surely it would explain the situation
clearly.
Edward
Miliband: I always hesitate to disagree with my right hon.
Friend, but ultimately there must be some benefit to the public in
order to show “public benefit”. It is pretty clear from
established case law that animal welfare charities are deemed to
provide public benefit, because there is public benefit in avoiding
cruelty and suffering to animals and that redounds to the benefit of
humankind. That is my understanding of the basis on which the courts
have made their decisions. In a way, the meaning of public benefit is
that it must provide benefit to the public.
Alun
Michael: I am sorry to intervene on my hon. Friend again,
but surely the same must apply in relation to the environment. If it is
accepted that the protection of the environment more widely produces a
general public benefit, one would not have to show that a particular
group, or number or proportion of the public benefit from that any more
that one would in relation to animals. Surely the same test must
apply.
Edward
Miliband: There has to be a wider public benefit. It can
be a collective benefit, for example, one that comes from preserving
the environment or avoiding cruelty or suffering to animals. The point
that I am making to my right hon. Friend is that ultimately we must
come back to a benefit to the public in some form or another. That can
be collective; it does not need necessarily to be about direct benefit
to individuals. That is the point about animal welfare
charities.
This is
important to get clear, because in a way public benefit is the basis on
which the Bill turns. We are rightly relying on the common law
definitions of public benefit, which have built up over 400 years. The
matter therefore takes some explaining and understanding, because the
criteria have been built up over a number of years and apply in
different cases in different areas.
I move on to
the substance of the amendment proposed by the hon. Member for
Cheltenham. It might not be specifically targeted at private
schools—it might be more generally targeted—but one of
the things he clearly has in mind is schools. I shall say something
about the position relating to schools because I do not accept his
characterisation, as I said on Second Reading.
The Bill is based on four
principles. The first is that charities must show public benefit, and
there is no free pass for any charity—that is the reason to get
rid of the presumption in favour of education, religion and the relief
of poverty. The second is that the Charity Commision will have the
final say, depending on the circumstances of the individual charity, as
has always been the case and has been demanded by the National Council
for Voluntary Organisations and others. The third is that indirect
benefit that is simply relief of the public purse should not be
regarded as satisfactory. The fourth is that, as it stands, the Bill
can raise the bar of what is required, while also raising the overall
standard of education in this country.
The hon. Gentleman referred
briefly to re Resch. As I said on Second Reading, I am not sure that I
accept his characterisation. He seeks to introduce a clarification
derived from recent Scottish law. On Second Reading, my right hon.
Friend the Chancellor of the Duchy of Lancaster said, regarding the
advisability of a clarification of the
Bill: “By
trying to be more specific, we do not want to exclude organisations
that should not be excluded. I hope that hon. Members, especially my
hon. Friends, understand that we are determined that there will be a
test of public benefit, which we expect to be meaningful, but that
trying to identify matters too clearly frequently brings disbenefits
that nobody anticipated.”—[Official Report, 26
June 2006; Vol. 448, c.
26.] That is one danger in what
the hon. Gentleman proposes. I shall explain
why. Scottish charity
law is now based on a different legal framework than the law of England
and Wales. Under the Bill, the public benefit test is based on
“charitable purposes” as established in common law. Under
the new Scottish law, the public benefit test is based on the
activities of the bodies that seek to become charities, and the
regulator has been given a large amount of power to make executive
decisions about which charities meet the public benefit test. In a
sense, the intervention of the hon. Member for Isle of Wight
(Mr. Turner) on the hon. Member for Cheltenham illustrated that point.
The hon. Member for Cheltenham is right to say that what “unduly
restrictive” would mean is not a decision for him, but it will
be a decision for the Office of the Scottish Charity Regulator.
Clearly, that important decision has been taken. That is an overall
perspective of some of the differences between English and Scottish
law, and the direction of travel of the Scottish
situation. The
amendment is basically in two parts, the first of which deals with the
public benefit test and provides that the benefits must outweigh the
disbenefits. That is already established in law and does not add
anything. As I understand it, a 1947 case concerning the National
Anti-Vivisection Society, with which I have a passing familiarity,
established that the benefits must outweigh the disbenefits as part of
the public benefit test. Therefore, that part of the amendment is
unnecessary. The
second part of the amendment contains the wording “unduly
restrictive”. That wording is not clear enough for us to be
confident that it would improve the public benefit test in the Bill and
would not have unintended consequences. Could we be sure, in the
context of the law in England and Wales, that existing charities, such
as museums that charge fees, would not be caught? I am sure that that
is not the intention of
the framers of the amendment, including the hon. Member for Cheltenham,
but we are not confident that it is the best way forward. At best it
would mean no change to the public benefit test that is carried out by
the commission; at worst, it could have harmful effects. Perhaps that
is why Lord Phillips of Sudbury said, in a letter to me, that the
Scottish provision is not well drafted. That is consistent with what he
said in another place a year ago—the Liberal Democrat Front
Benchers should hear this. He
said: “It was
pressed upon me that it might assist our deliberations to introduce
some of the Scottish wording around this very issue. However, I
rejected that out of hand because in this instance I believe that the
Scots have got it plumb wrong”.—[Official Report,
House of Lords, 28 June 2005; Vol. 673, c.
168.] Liberal Democrat
Front-Benchers might need to consult with Lord Phillips on that, but on
this occasion at least, we agree with him that the amendment would not
be helpful. We have not closed our minds to the possibility of
improving the Bill, but any change must meet the true criteria set out
by my right hon. Friend the Chancellor of the Duchy of Lancaster: that
it provides a sound legal basis for the public benefit test and avoids
any unintended or harmful consequences. On the basis of those
explanations, I hope that the hon. Gentleman will withdraw his
amendment.
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