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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 11 July 2006(Morning)[Mr. Roger Gale in the Chair]Charities Bill [Lords]Registration
of
charities 10.30
am Martin
Horwood (Cheltenham) (LD): I beg to move amendment No. 88,
page 11, line 39, leave out
‘(subject to subsection
(11))’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 89,
page 11, line 42, leave out paragraph
(11). No.
20, page 12, line 3, at end
insert— ‘(12) Regulations
made under section (11) may exempt only part of the copies from public
inspection.’.
Martin
Horwood: I shall be brief. The amendments relate to public
access, transparency and openness. The proposed section 3(10) of the
Charities Act 1993 is laudable and the principle that copies of charity
trusts should be open to inspection at all times is desirable. It is
therefore strange that proposed subsection (11) has a qualification
that is not explained or justified. I wonder whether it has
accidentally fallen into the Bill or whether there is a perfectly
rational explanation for it. I look forward to the Minister’s
comments. Mr.
Andrew Turner (Isle of Wight) (Con): How nice it is to see
you once again this morning, Mr. Gale. The hon. Member for Cheltenham
(Martin Horwood) must be optimistic because he is still wearing his
summer suit. I understand why he wishes to expunge the subsection. I
have looked on GuideStar and believe that the subsection covers
charities such as women’s aid charities that might have
registered addresses or even names of trustees who might be subject to
pressure were they to become widely known. Amendment No. 20 is designed
to allow only part of the details that are recorded by the commission
to be withheld from public inspection. It is not necessary to do either
all or nothing; the Government should have the opportunity to go
part-way on such
matters.
The
Parliamentary Secretary, Cabinet Office (Edward Miliband):
It is nice to see you back in the Chair, Mr. Gale. The
amendment is worth considering properly. I shall briefly explain the
position for the benefit of the Committee. The hon. Member for Isle of
Wight (Mr. Turner) rightly raised the issue of when disclosing the name
of a trustee may place that person at risk. The Charity Commission has
a dispensation to
remove such information from its register. A separate power is available
only to Ministers, which is to restrict access in respect of the trusts
of a charity. The power has existed for 45 years or so since the early
1960s, but has not been used by Ministers. Labour Members will know
that Aneurin Bevan said that the purpose of getting power is to be able
to give it away. In that spirit, I make a commitment to the Committee
to consider whether the power is really necessary. My immediate
presumption is that it probably is not, but I shall come back on Report
and I hope that I will have good news
then.
Martin
Horwood: I should have also said that it is good to see
you in the Chair, Mr. Gale. I am encouraged by the Parliamentary
Secretary’s comments and I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn.
‘the gross
income of which does not exceed
£100,000’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 21,
page 12, line 20, leave out
‘£5,000’ and insert
‘£10,000’. No.
161, page 13, line 11, leave out
‘different’ and insert
‘higher’. No.
162, page 13, line 22, after
‘(7)’, insert
‘(a)’. No.
90, page 13, line 22, leave out from
‘unless’ to end of line 25 and insert
‘a draft of the order has been laid before, and
approved by a resolution of, each House of
Parliament.’. No.
91, page 13, leave out lines 33 to
36. No. 163,
page 14, line 32, at end
insert— ‘(6) Subsections (1)
to (5) of this section do not apply to exempt
charities. (7) An exempt
charity which is required to be registered on the register of charities
shall supply for inclusion the name of its principal
regulator.’.
Mr.
Turner: Amendments Nos. 160 to 163 are about exempt
charities. When I acquired my responsibility, I seemed odd that,
although the Charity Commission has a list of most charities, I had to
search quite a lot in the depths of the legislation to find which
charities are exempt. I found a useful page in the Charities Act 1993
that contained a long list of exempt charities as well as a long list
of gaps. One then has to go further, because things have been removed,
to find out which things have subsequently been added to that list at
different stages. One then finds that the Minister will have the power
to create new exempt charities.
Amendment
No.160, regarding the proposed new section 3A(2)(a) to the 1993 Act,
would mean that an exempt charity would be subject to the same
requirement to register with the Charity Commission as excepted
charities. That is to say, they are not required to register if they
have an income that does not exceed £100,000. Most exempt
charities have an income that exceeds that figure, because they are
creatures of Government and are therefore well funded by them or
because they are long-established organisations, such as the Church
Commissioners. Therefore, my proposal would require
exempt charities to register except those which have an income of less
than
£100,000. Amendment
No.161 is about the power to vary the threshold of any charity that
registers. It would mean that the Secretary of State is limited to
raising the threshold and could not lower it. We have heard how onerous
registration might be for some charities.
Amendment No.163 continues the
theme of exempt charities. It sets out that they would not be required
to do anything other than register, except to provide the name of their
principal regulator. As they have a different regulator, they would not
be required to do any of the other things that charities have to do,
such as supplying documents to the Charity Commission. However, they
would be required to supply the name of the principal regulator. I hope
that—because it was too late to put that under the
responsibilities of the commission—the commission would take
that information about the name of the regulator and include it in the
register. Amendment Nos. 161 and 162 are about raising the thresholds
for registration. I
turn now to amendment No. 21. On Second Reading, we heard that there
are 190,000 charities, and 420 charities of them responded on the issue
of the thresholds to registration—the maximum response to any
part of the consultation—and that is a poor response rate and
even lower than we would find in the European elections. It suggests
that the voluntary and charitable sectors have had no detailed
engagement with the consultation. It undermines some of the conclusions
that were reached in the preparatory stages of the Bill, whether by the
Government or the Joint Committee.
The strategy
unit recommended a lower threshold of £10,000 for mandatory
registration, permitting smaller organisations to register if they
wished to do so. The Government responded to the review’s
recommendation of £10,000 by going for £5,000. I am not
entirely clear about the reasons for that except that they may have
split the difference, an understandable Government position but one
that does not seem to have any justification. The Minister in the House
of Lords agreed with that when he
said: “We can
see that there is some merit in raising the threshold to
£10,000. But it is not a step we should take without there being
full consultation because the figures in the Bill have been consulted
on”.—[Official Report, House of Lords, 28 June
2005; Vol. 673, c.
231.] It is true that
the Government consulted on the figures, but the response rate was
pretty low. One theory was that no one would be allowed to register
below £10,000, but that was removed as a result of the
consultation. I do not see any particular justification for the figure
of £5,000, and I do not see anything particularly bad about the
figure of £10,000. I commend the amendment to the
Committee.
Martin
Horwood: Amendment No. 90 is designed to address the
Secretary of State’s power to change the list of exempt
charities, to which the hon. Member for Isle of Wight has referred, and
the income threshold for the registration of charities.
The power is
critical. It will affect the status and the regulator of any number of
exempt charities or charities that might become exempt, including
significant bodies such as the ancient universities and other
charitable and
benevolent institutions. It deserves proper consideration, and
Parliament should have the opportunity to consider it in full. That is
why amendment No. 90 would require an order to be
“laid before, and approved by a
resolution of, each House of
Parliament.” Amendment
No. 91 examines proposed new section 3A(10)(b). It is not so much a
probing amendment as a cautionary one. It is clear that an alternative
is necessary to simply referring to a charity’s gross income
during its previous financial year, because that can sometimes be
misleading. The obvious example is an organisation such as Comic
Relief. In the year of a red nose day, its income is in the tens of
millions; in other years, it is much less. Charities’ incomes
rise and fall. Occasionally, they rise and fall for other reasons that
are much less predictable. The classic example for smaller charities
involves legacies. A run of good legacies during a couple of years can
double or quadruple a small charity’s income compared with that
for previous years, but that is not necessarily a guide to subsequent
years’ performance, which might be much less.
The idea that
the commission will reliably be able to estimate a charity’s
likely gross income stretches its powers of prediction. It is often
difficult enough for the charities themselves to predict their income
the following year, for reasons other than legacies. The value of
investments can rise and fall suddenly. One charity with which I was
involved relied heavily on an endowment fund. When the stock
market—I hate to say “crashed” in a
Minister’s presence—experienced a seasonal fluctuation,
the charity’s income dropped unexpectedly.
It is a difficult clause. The
Association for Charities included in its dossier an example of the
Charity Commission estimating income quite wrongly in the case of the
Cancer Care Foundation. I am not sure what the alternative is, but I am
sure that the present measures are not a good way forward. I should
like the Minister’s comments on the clause and how practical it
is. However, the alternative might have something to do with being able
to amend the provisions for income in the following
year. I turn to the
Conservative amendments. Amendment No. 21, which would raise the
threshold at which a charity must register from £5,000 to
£10,000, seems laudable. In theory, we all want to lighten the
burden of regulation on small charities, but we are talking about tens
of thousands of charities. Many examples that we have encountered of
less-than-perfect administration pertain to smaller organisations. It
has been mentioned in previous sittings that failure to produce
financial returns might be the first indicator that something more
serious is wrong and might be the precursor to somebody disappearing
with the charity’s money. Such a process leads to loss of
donors’ money and public confidence, and ultimately to the
damaging of beneficiaries’ interests. So I am not sure that it
is always right to keep raising the threshold to remove more small
charities. 10.45
am
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