HC Deb 19 July 1967 vol 750 cc2325-30
Mr. Corfield

I beg to move Amendment No. 45, in page 20, line 19, to leave out 'exclusively' and to insert 'mainly'.

I think that it would save time, Mr. Speaker, if we considered at the same time Amendment No. 46, in page 20, line 19, after charitable ' to insert: 'or otherwise concerned with the advancement of religion, education or social welfare; the maintenance or establishment of almshouses; or the support of any organisation, not established or conducted for profit, whose purpose is the provision of facilities, without charge to spectators, for open-air games or for open-air athletic sports'.

Mr. Speaker


Mr. Corfield

The purpose of these Amendments is to simplify the effect of the definition subsection (5). They relate exclusively to the charitable side of the political or charitable subscription question, so we need not get excited about political matters.

One of the most complex branches of the law is that relating to charities. The definition of charities in. legal terms is a matter on which a great number of cases have been decided. It is not practicable to say to the ordinary lay board of directors, or to quite a number of lawyers if they do not happen to specialise in the subject, that they must be certain that what they are doing is exclusively for charitable purposes and that, if a mistake is made, they commit an offence under Clause 23. If one makes a mistake in attaching to the accounts a statement regarding charitable contributions, an offence is, technically, committed. It is unlikely that a prosecution would be instituted for such an offence, but it is wrong that the possibility should arise.

Amendment No. 46 is to add words which are taken from Section 8 of the Rating and Valuation Act, 1955. That Act was an interim Measure, and Section 8 was designed to relieve from rates such institutions as under the old system, when rating valuation was done by local authorities, were relieved on the ground that they were charitable. Before the Committee reported on the rating of charities, it was thought desirable to add these various other purposes which are closely connected with charities. They give a good example of the appalling difficulties with which one is faced when deciding what technically is a charity. Unfortunately, the Board of Trade has been quite wrong in putting in the definition 'charitable purposes' means purposes which are exclusively charitable", because that does not help anybody.

1.15 a.m.

A good ad hoc definition might well have been a body which is accepted as a charity for the purposes of taxation", which is a quite good yardstick. It is something which one can find out about if there is difficulty and it is something about which normally there is little doubt. Occasionally there is doubt because it is a new body and it may or may not have completed its negotiations with the Inland Revenue. There are, however, a large number of organisations, many of which would fall within the extended definition of "allied associations", which are not at law charities but which, nevertheless, would be accepted as charities by the Inland Revenue, for obvious reasons.

I strongly plead with the Government to realise that this rigid definition of charities is nonsense, particularly in the context of Government Amendment 179, in Clause 23, page 21, line 27, leave out "(except section 18)". I know why that is being taken out: because it refers to Clause 18 in the old Bill. It would, however, be appropriate to leave it, because it seems wholly inappropriate that the penalties provided for and the offence which is created by Clause 23 should apply to a firm, a company director or the secretary of a company which makes a mistake in regard to the disclosure of its charitable contribution.

That is a good example of what my hon. Friend the Member for Ormskirk (Sir D. Glover) spoke about earlier concerning the attempt to be logical, blocking all the holes and producing the most ghastly nonsense on the Statute Book. I know that the Minister of State will say that charities were included because the Opposition suggested it and because it was a logical extension of the political contribution. That is true. But if we start carrying things to their logical conclusion we get in a mess, as we have done, and we would be better to withdraw the whole thing.

Mr. Darling

I always enjoy the arguments of the hon. Member for Gloucestershire, South (Mr. Corfield). When he gets into a state of banging the table, it is usually because he has a bad case. When he has a very good case, he is always extremely persuasive. He was not persuasive on this occasion.

The hon. Member knows very well that, under the Bill, directors of companies—at the request of the Opposition; I was not intending to mention this, but the hon. Member has done so and I will repeat it—will have to state in the directors' report their charitable contributions above a certain limit. They do not need to use the definition of charities as laid down in the Amendment and ask whether a particular contribution, which they know very well is charitable, is within or outside the definition.

All that directors are being asked to do is to state in the directors' report the sum of money which, they think, they are paying for charitable purposes. We had better leave it like that. Obviously, nobody would be prosecuted merely by reason of including something which was not exclusively charitable or leaving out something which was not exclusively charitable.

The intention is to give a rough indication to the shareholders of the amount of money that the directors think that they are paying out for charitable purposes. I think that we had better leave it like that.

Mr. Graham Page

This is not good enough. We cannot legislate for a rough indication. It is said in the Clause that the figure contributed to charities must be stated. We are left in complete doubt as to what is meant by charity. It is not difficult to define what charity is. In fact, in this Clause it has been defined for Scotland: as respects Scotland, 'charitable' shall be construed in the same way as if it were contained in the Income Tax Acts. My hon. Friend suggested that it ought to have been applied in the same way—it was the solution, he said, to define what charity is—in England and Wales. Certainly, it could have been defined in exactly the same way. Probably it is far better to define it in the way contained in Amendment No. 46, because that covers what the ordinary person thinks of as charity.

Mr. Darling


Mr. Page

Oh, I think it does. Those are the sorts of things which are charitable in the minds of those who give gifts —athletic sports, educational and social welfare, religion, and so on. Those are the sorts of things which a company thinks of as being charitable when it makes contributions from the company's funds. If it is in any doubt it can turn to the Act, or take the advice of its secretary, or even its solicitor if it is in great doubt. He could turn to the Statute for the definition of charity, which should there be set out.

As this stands at the moment the only guidance given in the Bill is that charity equals charity; "charitable purpose" is charitable purpose. It really is of no assistance at all. It says the purpose shall be "exclusively charitable" and that makes it more difficult. From the practical point of view what we want is a definition of charity, a definition which is normally accepted as being something having a charitable purpose. We need a definition here so that there can be no doubt in the minds of those who have to draw up this information. We really cannot leave them in the air, as the right hon. Gentleman wishes to do, with just a rough statement of what figures ought to be disclosed. If we are legislating, let us legislate definitely and firmly, and say what is intended by the legislation, and not leave it in this vague fashion.

Sir J. Foster

I think the right hon. Gentleman has missed the point a little here. What the draftsman had in mind was the contributions made by companies to objects which are in the ordinary layman's sense charitable, that those would be left out. In other words, we have first the political one—the subscription to the Communist Party. That has to be in the list. There are many subscriptions to the relief of spastics. That is charity, recognised as such by the Income Tax authorities. Those do not pay any Income Tax. But it is also intended, I think, that directors should list, for instance, the relief of Spanish refugees, or Oxfam. This will not be included because it is not exclusively charitable. Or £100 to the London Library.

Part of the object of this is to encourage other people to give if certain companies do. British Petroleum has given a large sum to the relief of Jordanian refugees. That is not "charitable" because it is outside this country. But other oil companies would, perhaps, be induced also to give these amounts. It has got another side to it. It is not that we want to pillory companies for giving to charity. On the contrary, we want their virtue to shine forth. But directors are put in the difficulty of knowing whether to include it or not. I sympathise with the right hon. Gentleman's difficulty: if there is any doubt, bung it in. But there are things which ought to be included, and that is where the Clause has missed the point.

Mr. Darling

Very briefly, I would say that my case has been made for me, because what will happen is that the companies, if they wish, will give a list of the contributions to what they think are charities—such as relief for the Jordanian refugees—which would not come within any of these definitions. It would be much better to leave this as it is, because to lay down definitions would make it far more difficult for the directors of companies.

If I might just reply on the point about Scotland, the answer is that the courts in this country have defined charities but they have not been defined in Scotland—[Interruption.]—I have to rely on my very good legal advisers, and I think that the hon. and learned Gentleman the Member for Northwich (Sir J. Foster) has let me down.

Mr. Corfield

The Minister of State says that my hon. and learned Friend the Member for Northwich (Sir J. Foster) has given him his case, but I think that he has given me mine, especially in relation to Amendment No. 45. If "exclusively" is left out it makes more sense. When we come to Amendment No. 46, we insert or otherwise concerned with the advancement of religion, education, or social welfare and there we have virtually got the lot. It is a much more sensible approach. Of course, I am not worried that anybody will really be prosecuted, but we should not pass laws which do not make common sense. Yet we have made it a crime not to disclose a subscription to anything which is defined as charitable, but not if it is "exclusively charitable" and this is a nonsensical and irresponsible way for Parliament to behave, even at half-past one in the morning.

Amendment negatived.