HC Deb 10 March 1954 vol 524 cc2362-70

Postponed Proceeding on Question, "That the Bill be now read a Second time," resumed.

Question again proposed.

9.57 p.m.

Mrs. White

As I was saying before the intervening business began, I am not objecting to the Bill which the Attorney-General is asking the House to accept, so far as it goes. My objection to the Bill is that it does not go anything like far enough. The Attorney-General knows from his study of the Nathan Report, about which he made some complimentary remarks, that although that Committee regarded the matter contained in this Bill as one of some urgency and importance, nevertheless there are other matters which it considered to be at least of equal urgency, and I should say of much greater importance.

This Bill deals with only one of the 17 chapters in this Report, namely Chapter 12; but, as the Attorney-General is aware, the Nathan Committee stated quite categorically that there was one outstanding problem calling for reform, namely the question of the cy pres doctrine. I am not a lawyer and, therefore, I would not presume to deal with the narrow legal aspects of the matter concerning charitable trusts, but, as I said, I have had some slight personal experience of dealing with charitable trusts and I do not see why on an occasion of this sort a lay person should not be entitled to draw attention to the social aspects of the matter, because the Bill with which we are concerned and which the Government have brought forward as a solution of the problem is a legalistic Measure. It is, no doubt, a necessary one, but it does not pretend to deal with any of the social aspects of the law concerning charitable trusts.

I suggest that the Government should now seriously consider bringing forward, first of all presumably, the White Paper which was mentioned by the Lord Chancellor in another place and, without too much delay, bringing forward legislation to deal with the major point in the Nathan Report, namely, the cy pres doctrine and the provision whereby trusts could be altered when it was clearly in the public interest that they should be. There is provision for educational trusts but not for other charitable trusts to be altered to meet present day circumstances.

There is one other important recommendation in the report which I believe should be most urgently considered by the Government, and that is the position of the Charity Commissioners and the need for more adequate representation in this House. With all respect to the hon. Member for Salisbury (Mr. J. Morrison) and his predecessors on either side of the House, I must say that the method of representation here does not satisfy either the legislative or the administrative needs.

The Charity Commission, as the Report makes very clear, is utterly inadequately staffed. My own brief experience of this work has taught me that a small charitable trust can continue for 25 years without ever being asked to submit its accounts, without ever being required to have them audited. The capital is in the hands of the Charity Commissioners, but the interest, by collusion amongst the trustees, could be misappropriated for 25 years without anybody being any the wiser.

In the case of one such trust, we have never been asked to submit to any sort of scrutiny or check. It was only when I read this report that I realised that we were under some obligation to submit accounts. We have had no communication from the Charity Commissioners telling us so. I propose at the next annual meeting to suggest we send the accounts to the Charity Commissioners as an act of courtesy, but even if we do nobody is likely to take the slightest notice of them, because the Commission is inadequately staffed.

This is not a small matter. The number of trusts is not accurately known, but it is certainly tens of thousands, and those trusts are administering sums running into many millions of pounds. There has been no major legislation since 1869. That in itself is reasonable ground for suggesting that there should be some Ministerial responsibility. The Attorney-General is required to take charge of the Bill today, but he has no general responsibility for the administration of charitable trusts or for any legislative reform required. While one cannot quarrel with the Bill, it is not satisfactory that neither the Attorney-General nor the Lord Chancellor has been able to give any positive assurance that the Government intend to do something about the other major matters mentioned in the report. It would not have been right to have allowed this Bill to pass without some voice having been raised in favour of more adequate Measures being brought forward.

10.3 p.m.

Mr. Michael Higgs (Bromsgrove)

I sympathise to some extent with the desire for tidiness of the hon. Lady the Member for Flint, East (Mrs. White), but we must remember that we are dealing with arrangements under which a private individual disposes of his own money or other property and appoints trustees of his own choosing to look after that disposal, providing his own money, and telling them what to do, and I do not see why we should add to the burdens of Ministers by seeking to compel them to interfere with private arrangements of that sort, any more than they are interfered with at present.

However, I want to talk about a small matter mentioned by the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) when I was, unfortunately, absent from the House on another duty. It is a question of the trustees who, after the 1949 cases, to which reference has been made, and which brought to light the difficulties that have led to the introduction of this Bill, took steps of their own accord to try to remedy their position.

First there were those who went to the courts. In some cases proceedings were instituted by the trustees for no other purpose than to make clear that their position was a sound one. I am told that a number of actions were started in that way for no other purpose than that of maintaining, not upsetting, the trust. There is some uncertainty as to what the position will be under Clause 4. That Clause, as I understand it, contemplates cases in which proceedings have been instituted to upset the trust. Possibly the revenue authorities wish to say that the trust is invalid. That is provided for in the Bill one way or the other.

The other sort of proceedings are entirely different, proceedings in which the trustees very commendably wished to help themselves—rather than wait for Parliament to help them—to put this right by initiating proceedings. This is a Committee point of detail, but I think that it is worth mentioning on the Second Reading that we ought to have regard to the effect of the Bill upon actions of that sort, whether they are actions begun and brought to a conclusion or actions started but which, when the report and the announcement of the Government's intention were made, were stayed, and the proceedings rest where they then happened to be.

The other class of case, of which several have been brought to my notice, is that in which the settlor being still alive, and the trust being of such a kind that it can be resettled, following 1949, the trustees recast the trust to make sure that it was a valid trust. The trustees in fact handed back the trust property to the settlor, and the settlor returned it to them on terms which, quite apart from this Bill, would make it quite clear that the trust was a valid one.

That happened following 1949 and before the Report came out and the Government announced that something was going to be done. These trustees, again, had themselves sought to do what had to be done to put their position right. So far as I know there is only one difficulty which arises about them. It may even be that this Bill is not the place to put that right, but I think that it ought to be put on record that if the settlor in such a case as that should die within five years of making that arrangement, since he has taken his property back and given it to the trustee again, death duties will fall to be paid, and these death duties would not fall to be paid assuming that the original trust was made more than five years ago.

This is a complicated point, but I hope that on the record I shall have made myself clear. It may be more appropriate to deal with this point in the Finance Bill rather than in this Bill, but I think that it is a point that ought not to be overlooked because I hope that the view of the House will not be that those who wish to put their position right will be in a worse position after this Bill than those who did nothing and waited for Parliament to help them.

10.9 p.m.

Mr. Eric Fletcher (Islington, East)

I hope that when the Attorney-General replies, he will clear up the confusion that obviously exists with regard to the meaning of Clause 4 of the Bill. As the hon. Member for Bromsgrove (Mr. Higgs) has just pointed out, the Clause is full of ambiguities and unless it is clarified it will lead to a great deal of confusion in the minds of those who have not only to administer any imperfect charitable trust, however valid, but also in the minds of those who have to advise them.

I ask the Attorney-General whether it is intended by Clause 4 (1) to deprive of the benefits of this Bill any imperfect charitable trust in respect of which any legal proceedings have begun since 16th December, 1952. I gather that the Attorney-General takes that view.

The Attorney-General

I dealt with that, but the hon. Gentleman was not here. I can easily deal with it again.

Mr. Fletcher

I was here during part of that time and I am very glad to have that confirmation.

If that is his view, I should have thought it very doubtful whether that is the effect of the Clause. The Clause says: This Act shall not apply for the purpose of any legal proceedings. … In the ordinary way, an Act does not apply for the purpose of legal proceedings. Either an Act of Parliament applies to given circumstances or it does not. It is possible to provide that in the course of certain legal proceedings the provisions of a certain Act of Parliament shall not be operative. But the Clause is particularly ambiguous, because it leaves quite unexplained the position of a charitable trust in respect of which legal proceedings were begun before 16th December, 1952, and were either completed before that date or suspended before or since that date and held in abeyance.

If it is the intention of the Government to provide in the Bill that any charitable trust in respect of which any proceedings were begun before 16th December, 1952, shall not operate, it seems to me that a considerable injustice will be done. As the hon. Member for Bromsgrove and my right hon. and learned Friend have pointed out, there were a number of cases in which, before 16th December, 1952, proceedings were taken, not of an adverse nature to the charitable trust, by some party or parties who would have been entitled to the property in default. Proceedings of a neutral character were taken by trustees, quite properly and very sensibly, to ascertain their position. It became unnecessary to continue with those proceedings when the Government indicated that legislation would be introduced.

Considerations of elementary justice would require that where those precautionary steps were taken before 16th December, 1952, and then suspended, those charitable trusts should not be deprived of the benefit of this legislation, which in this respect follows the recommendation of the Nathan Committee. I do not desire to press the point further, but merely to add my voice to those who have urged on the Government the injustice that will be caused unless something is done.

Having said that, I support what was said by my hon. Friend the Member for Flint, East (Mrs. White) with regard to the very limited nature of the Bill. I share her regret, and the regret which has been expressed by other hon. Members on this side of the House, at the failure of the Government to do more in carrying out the recommendations of the Nathan Committee. There is no need for me to repeat that the whole of the law on the subject of charitable trusts is in a most unsatisfactory state.

I should have hoped that the Government, having embarked upon the task of remedying some of the defects in the present law, would have gone further and carried out in the Bill some of the other recommendations. After all, the Report is a substantial volume of great learning and merit, representing the work which a very distinguished Committee devoted to an abstruse subject, and many detailed recommendations which, after great consideration, the Committee put forward.

I ask myself, as other hon. Members will ask, why the other recommendations of the Committee have not been carried out If they are not to be carried out in the Bill, can we have an assurance as to when the Government intend to deal with them? As my hon. Friend has said, it is not merely the purely legal considerations which compel some revision of the present law; it is also social considerations which merit some change being made.

In addition to dealing with the glaring cases of the cy pres doctrine, to which my hon. Friend the Member for Flint, East has referred, I hope that the Government will not take long before introducing legislation on the lines suggested in paragraph 140 of the Nathan Report, to provide a new definition of charities. The whole law of charitable trusts is still derived from the Statute of Charitable Uses of the reign of Elizabeth I and, as a recent Master of the Rolls said: It is now very difficult to find any principle which will guide one easily, and safely, through the tangle of the cases as to what is and what is not a charitable gift. Although the Bill goes part of the way to invalidate some charitable gifts which are imperfect because of the complexity of the law, it would be very much simpler to remove the possibilities of doubt and difficulty in the future by revising the definition of a charity in accordance with the concrete recommendations made in the report. There are many other most valuable recommendations, and I hope that the learned Attorney-General will give us some assurance about those matters.

10.16 p.m.

The Attorney-General

I am very anxious not to keep the House up any longer than I can help, but it is right that I should reply briefly to some of the speeches which have been made. The debate has been divided into two parts, both in time and in matter. Before 7 p.m. we seemed to be discussing what was in the Bill, and since 10 p.m. we have been discussing mainly what is not in the Bill. It may be convenient if I deal with the latter part first

I should like to bring to the attention of the hon. Member for Flint, East (Mrs. White) and the hon. Member for Islington, East (Mr. E. Fletcher) the views of Lord Nathan on this matter. They have waxed rather indignant because the Government have not gone further in dealing with this specific point, and they have attacked me for it, but I should have thought that Lord Nathan is probably the best witness on that subject, and he has been quite explicit about it. He said: I know that nothing more can be done this Session, but I am hopeful that it may be done next Session. I think we might leave it there, except that I should like to add that although the hon. Member for Flint, East took it for granted that everyone would be prepared to accept all the recommendations of the Nathan Committee, as regards what she described as interfering where necessary with the original intention of the trust, I cannot help thinking that there may be considerable differences of opinion as to how far one ought to interfere with the original intentions, however laudable may be the social intentions. It would be most injurious to introduce into this Bill hasty provisions which would prolong its passage through the House and might very well bring it into danger. We have tried to confine ourselves to the material points which the Nathan Committee regarded as urgent.

Another matter which has been referred to since 10 p.m. concerns Clause 4. I have already tried to make clear what is the intention of that Clause. The hon. Member for Islington, East asked whether it was intended to deprive of the benefit of this Bill any trust in respect of which any legal proceedings had begun. That wording is too wide, because proceedings might have arisen in connection with something which did not touch upon this Bill. That is why the words we have used are: This Act shall not apply for the purpose of any legal proceedings… Therefore, if it is to apply for the purpose of such proceedings, they must be proceedings in which the validity of the trust, from the charitable point of view, might arise. I entirely agree that there is ground for some possible argument or uncertainty about that wording, and I shall consider it carefully before we reach the Committee stage because I appreciate the kind of examples that were given by one or two hon. Members. One of my hon. Friends gave several examples and asked questions about them; they are well worth consideration and we will look at them.

I am grateful to the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) for the way in which he dealt with the general principle of the Bill, although he rather leaned over in one direction and his hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas) leaned over in another direction. The right hon. and learned Gentleman thought the Bill was too generous to the next-of-kin and his hon. and learned Friend thought it was too generous to the illegal trusts. Certainly my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) was of that view. It may be one of those cases where we are just about right if there are some critics who say we have gone too far in one direction and others who say we have gone too far in the other, if we take the middle course.

Sir L. Ungoed-Thomas

I think we all agreed with the conclusion.

The Attorney-General

Again the hon. and learned Member for Leicester, North-East gave some useful lines of consideration with regard to Clause 4. I can assure him that we shall value his assistance on that subject in Committee, but I warn him that we have already had a great deal of trouble with the wording and I cannot promise that we shall find anything much better.

My hon. Friend the Member for Bromsgrove (Mr. Higgs) was concerned also about several examples of cases where trustees might have taken action of a prudent character and might possibly have done some damage unintentionally. We certainly would not want that to be the case and I undertake to consider that carefully when the time comes.

Mrs. White

Will the Attorney-General tell us if, in quoting the words of Lord Nathan about legislation for the next Session, he was indirectly giving an assurance that the Government have such an intention?

The Attorney-General

I am afraid I cannot give any assurance beyond what the Lord Chancellor said at that time, namely, "I think there will undoubtedly be a White Paper."

Question put, and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee.