Charities (Hansard, 23 January 1986)

§ Sir Geoffrey Finsberg (Hampstead and Highgate)
The very essence of Great Britain has been its voluntary sector. Right across England there are vast numbers of charities, large and small, run by men and women of good will. They cannot be professionals in all spheres and are essentially amateurs.
I want to speak about small charities, because they need some extra protection. In many cases these small charities rely on professional advisers of various kinds. If I relate my own experience of the Hampstead, Wells and Camden Trust, it might help to illustrate some of the difficulties that trustees can encounter. The trust has 15 trustees, including a vicar, lawyers, accountants, and others. Some are appointed by the borough council, and the rest by the trustees themselves. They are a good cross-section of local people.
The work is divided into committees. I want to deal with the estate committee, which has the power to manage the trust's property holdings. I stress that neither the chairman of the committee nor the full committee has delegated authority to buy or sell property. The committee considers proposals for sales or purchases and listens to the professional advisers who are present. The committee will then recommend the proposition to the full trustees' meeting. The professional adviser will be present at the full meeting of the trustees, and they will then take their decision.
The trust has enjoyed the services of the same firms of solicitors and estate agents for well over half a century. Although the partners have changed, there was no obvious reason to alter the firms of advisers. From time to time advice was given to the estate committee on various sales, some under the Leasehold Reform Act, some to sitting tenants, and others to third parties. Bearing in mind the condition of some of the properties, the figures given to the trust by its adviser did not seem wildly out of line with current local knowledge. However, the trustees had to rely on their adviser and were secure in the thought that the Charity Commission had to approve such figures, and one assumed that it had the means of checking them.
At the time that I am referring to the then chairman, who was a former Labour councillor, persuaded my wife to take the chair of the estate committee. For two years she was the chairman of that committee and was persuaded by her fellow trustees to continue as acting chairman until a suitable replacement could be found. After about 18 months she was able to get a surveyor to succeed her as chairman.
The trustees gradually became suspicious of the new principal of the estate advisers. They communicated that view to the police and the Charity Commission. The adviser was eventually prosecuted for fraud, found guilty, sentenced to prison and made restitution of about £60,000. That figure was approved by the Charity Commission in all the circumstances explained to it. I have seen some reports suggesting that millions of pounds were lost. Nobody has substantiated a figure of that magnitude nor anything approaching it.
I believe that a way of helping and protecting trustees and their funds would be if the Charity Commission 548 insisted that all sales and purchases figures were franked by the district valuer. Nobody is more impartial or has more knowledge about local values of all kinds—local authority, private, and so on—than the district valuer. I hope that the Minister will ask the Charity Commission to accept that suggestion.
I refer to the hon. Member for Vauxhall (Mr. Holland). On 18 December he raised the issue on the Christmas recess motion, and brought into his speech in a snide and less than pleasant way my name and that of my wife. He gave me notice of his intention in a letter to mention the Wells and Campden Trust, but not that he would mention any names.
The debate should have started at 3.30 pm, and I received his letter at 5.5 pm in an envelope on the Board, not marked "Urgent". That was when I first came into the House on that day. If the debate had started on time, at 3.30 pm, it would have been half over by 5 pm. The hon. Gentleman said that his secretary telephoned mine that morning, but that is not relevant, as I shall seek to show. I had vital meetings at 6 pm and 7 pm outside the House and they could not be postponed at a few moments' notice. I gave the hon. Gentleman notice that I intended to put these facts on the record tonight—four days' notice.
If the hon. Gentleman was serious and not mischievous in wishing to prevent wrong-doing or errors in charity law, and honourable hon. Member would have come to me and said, "There seems to be a fiddle in a charity in my constituency, and I believe that you have had a similar problem or some sort of fraud in a charity in Hampstead. Is there a common feature? Can we work together? Can we co-operate?" Any normal hon. Member would give the answer that I would have given, unhesitatingly and unreservedly, "Of course." However, the hon. Gentleman did not choose to do so.
I have never relied upon newspaper gleanings or briefs from disgruntled tenants to make my case. However, we all operate differently, although I like to feel that the convention in which the House strongly believes, that we do not interfere in each other's constituencies, is right.

§ Mr. Stuart Holland (Vauxhall)
Will the hon. Gentleman give way?

§ Sir Geoffrey Finsberg
That is how most hon. Members in the House operate, and that is the way in which the House continues to operate, in my judgment.

§ Mr. Holland
Will the hon. Gentleman give way?

§ Sir Geoffrey Finsberg
By the very detailed—

§ Mr. Holland
rose—

§ Sir Geoffrey Finsberg
I shall not give way now.

§ Mr. Holland
rose—

§ Sir Geoffrey Finsberg
I shall not give way on an Adjournment debate. The hon. Gentleman should know better.
Judging by the detailed comments that the hon. Gentleman made, he must have prepared his speech, one, two or three days earlier, and he could easily have given notice of what he wanted to do and invited my full cooperation—

§ Mr. Holland
Will the hon. Gentleman give way?

§ Sir Geoffrey Finsberg
I shall give way in a second. The hon. Gentleman did not choose to do so.

§ Mr. Holland
With regard to notice of my intentions, my name was down for the Consolidated Fund debate and it became clear only the evening before that I would not be called, in which case, the following day, I said that I should like to speak in the Adjournment debate. I immediately gave notice to the hon. Gentleman through his secretary.
The hon. Gentleman made a point about not interfering with events in other people's constituencies. Will he reply to these questions? Is he, or is he not, a member of the board of ASDA Properties? Did it, or did it not, make a bid for properties to be sold by St. Olave's Charity in my constituency? Does he, or does he not, agree with the brunt of my claim in that debate that there should be a judicial inquiry into both the charity of which he is a trustee and the charity in my constituency? Is he, or is he not, prepared to co-operate with inquiries concerning that?

§ Sir Geoffrey Finsberg
A six-column detailed speech clearly had been prepared by the hon. Gentleman. If he was going to take part in the Consolidated Fund debate, he would have had time to give me notice. He has shown clearly that he had no intention of giving any notice.
Let me continue, because it is important that the facts are put on record. If the hon. Gentleman wishes his further snide comment to be answered, let me say that I am a non-executive director of ASDA Properties, and non-executive directors are not consulted about the sort of offer that was made. It was not pursued and not finalised. That is a wholly different matter, but the hon. Gentleman's experience of commerce clearly does not exist.
As I have said, the hon. Member for Vauxhall knew that he was going to speak, if not on the recess motion, in the Consolidated Fund debate. In neither case did he choose to advise me. He had prepared his speech, so he could have given me notice, and my arrangements could have been altered and I could have been present in the Chamber.
All the facts about the judicial inquiry to which the hon. Gentleman referred in connection with the trustees, as far as they knew them, were given to the Charity Commission and the fraud squad long ago. If the hon. Gentleman had been more careful in his reading of the facts, he might have gleaned that.
Any small charity could have found itself in such a position and with that sort of problem. I would have hoped that we could be on common ground on that matter on 18 December, and we might now be on common ground on that issue if the hon. Gentleman were to return to observing the normal conventions of Parliament. Small charities require help from the Charity Commission to make certain that their assets are not sold or indeed purchased at the wrong price. I would have hoped that that was a matter on which there would be no division, and that could have been established by a 30-second conversation. For reasons known only to the hon. Member for Vauxhall, that was not done.
There will, one hopes, at some stage be further consideration of charity law. I hope that it will not be necessary to wait very long. I trust that my hon. Friend the Minister will be able to say this evening that there is merit in my proposal for the district valuer to check and frank the price. That is, after all, the way in which most sales have to operate in local authority cases and in the right-to-buy legislation, for example, the district valuer comes in and gives his own independent judgment if that is required.
550 It is not easy for those who have never served on charities or performed unpaid voluntary work to understand some of the problems that may beset trustees doing these jobs at the request of others. With hindsight, of course, it is easy to say what A, B or C should have been done. Hindsight is a commodity given to very few people, but it is not given to what I would call normal human beings.
In conclusion, I believe that my fellow trustees and I or any other similar body of trustees—and I stress this in order to prevent this sort of problem from happening anywhere else — could have acted in no other way. Nobody could have acted more diligently or differently except, as I say, with hindsight. We believe in the competence—

§ Mr. Stuart Holland
Will the hon. Gentleman give way?

§ Sir Geoffrey Finsberg
I think that I had better leave time for my hon. Friend to reply.

§ Mr. Holland
rose—

§ Sir Geoffrey Finsberg
We believe in the competence and honesty of our advisers, for the simple reason that —[Interruption]—the hon. Member for Vauxhall has been in the House long enough to understand procedures, and he had four days' notice of my speech. Had he asked, I would have provided time in the debate, but he again chose not to do so.

§ Mr. Stuart Bell (Middlesbrough)
On a point of order, Mr. Deputy Speaker. It is obviously clear that the hon. Member for Hampstead and Highgate (Sir G. Finsberg) is referring in some depth to my hon. Friend the Member for Vauxhall (Mr. Holland). He is correct to do if he so wishes, but is it not an abuse of the procedures of the House, notwithstanding the fact that this debate is on a motion for the Adjournment, for the hon. Gentleman, as he is impugning the honour of another hon. Member, not to give way to my hon. Friend?

§ Mr. Deputy Speaker (Sir Paul Dean)
I must remind the House, particularly the Front Benches, that the half-hour Adjournment debate is normally Back-Bench Members' time. It is a matter for the Member who has the Adjournment whether he decides to give way, whatever the content of his speech. I have noticed that the hon. Member for Hampstead and Highgate (Sir G. Finsberg) has given way once. It is a matter for that hon. Member, and it is my job in the Chair to protect the hon. Gentleman's Adjournment and to ensure that the Minister has an opportunity to reply to the points that are made.

§ Mr. Holland
On a point of order, Mr. Deputy Speaker.

§ Mr. Deputy Speaker
I shall listen to the hon. Gentleman, but I must say to him that he is taking time out of the Adjournment debate.

§ Mr. Holland
Following your advice, Mr. Deputy Speaker, I am sure that you and the House will have observed that the hon. Member for Hampstead and Highgate (Sir G. Finsberg) has not, in fact, spent his time addressing his remarks to the subject of charities. Rather, he has addressed his remarks to the more trivial matter of the length of notice given to him in the debate. Could you not, Mr. Deputy Speaker, from the Chair, advise him that 551 if he wishes to gain the consent of the House for his refusal to take the points that I wish to make, he should address himself to the subject of charities and not to other matters?

§ Mr. Deputy Speaker
The hon. Member for Hampstead and Highgate (Sir G. Finsberg) is in order, or I should have pulled him up.

§ Sir Geoffrey Finsberg
I gave four days' notice to allow the hon. Gentleman to intervene, which he could have done if he had bothered to take advantage of the practices of the House. He chose not to do so. He cannot expect to intervene at this last moment. He had four days' notice, which I contrast with the 10 minutes or so that he gave me.
No charity trustees could have acted differently. One must believe in the competence, honesty and integrity of one's advisers, until they are proved to be false, and in the efficacy of the Charity Commission. It was a long stop. It is now clear that the longstop needs improving. I hope that my hon. Friend will endorse my proposition.

§ The Parliamentary Under-Secretary of State for the Home Department (Mr. David Mellor)
I am plainly glad that my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) has chosen to mention tonight the issue of charities and, in particular, their administration, which events in the affairs of the Hampstead, Wells and Camden Trust, of which he and his wife are trustees, have highlighted. I know that the matters that he has mentioned are of interest to many people in the charitable world and beyond.
My hon. Friend referred to a debate on 18 December 1985 and a speech by the hon. Member for Vauxhall (Mr. Holland) which related largely to the deeply troubling affairs of a charity in his constituency called St. Olave's. There is no doubt that during the course of that debate the hon. Gentleman referred to the Hampstead, Wells and Camden Trust and my hon. Friend's conduct. I am sure that the House will welcome my hon. Friend's remarks tonight and the clear account that he is given of the fact that his conduct in that matter is beyond reproach.
I wish to make it clear, as the hon. Member for Vauxhall is here, that what he said about the St. Olave's charity is an important matter of public interest. I feel confident that any hon. Member who was told of such an allegation about a charity operating in his constituency would have wanted to raise the matter in the House. I make no complaint about that. I think that my right hon. Friend the Home Secretary has assured the hon. Gentleman in a letter today that we continue to take that matter seriously.

§ Mr. Stuart Holland
The Minister is qualifying it.

§ Mr. Mellor
No, I am not qualifying it. The hon. Gentleman does not want to pick a fight with me. I am surely not saying anything beyond commending what he said about the St. Olave's charity. None of us can read the allegations made about it without feeling grave anxiety. I am constrained in taking that matter any further tonight because that matter and, in particular, the sale of some properties by the charity is now a matter for the courts. Criminal charges have been brought. Four people have been charged with offences of dishonesty, I am precluded from saying any more about the case. I wish to assure the hon. Gentleman that the points that he has mentioned 552 continue to remain under active consideration in the Home Office. In due course, we shall give him a substantive answer.

§ Mr. Holland
I am pleased that the Minister was able to say that the matters that I mentioned about St. Olave's are such that if they were put before any hon. Member that hon. Member would wish to put them before the House. In the case of the other London charity, it is of anxiety to many of us that similar notice was given several months in advance by at least one constituent of the hon. Member for Hampstead and Highgate (Sir G. Finsberg) and that no action was taken. He has wide experience as a former Under-Secretary of State for the Environment, and, while he can claim that charity trustees do not have wide experience, he can hardly claim the same lack of experience himself. I have asked for a judicial inquiry and for the co-operation of those who have experience of these two outstanding and notorious cases in giving evidence to that inquiry. If the Minister cannot tell us now whether he will agree to a judicial inquiry, will he seriously consider having the evidence of his hon. Friend at an inquiry? I should be willing to give evidence at an inquiry.

§ Mr. Mellor
The hon. Gentleman is making an intervention by default. I cannot say anything about that except that I have made it clear that there are matters of grave concern in St. Olave's charity—I hope that I have expressed my views about what the hon. Gentleman said with appropriate candour and commendation. What he said became gratuitous and perhaps open to an imputation of some political bile when he linked the matter with the quite separate issues that arose in the Hampstead case. I understand that an official of that charity has been sentenced by the court as my hon. Friend described. I hope that it might be possible to separate those two strands. the first is grave allegations against the St. Olave's charity, which I hope the Crown court will get to the bottom of, and the second is an attack on my hon. Friend, whose probity is beyond reproach, as those of us who have known him for many years are aware.
We share my hon. Friend's anxiety about the activities of certain charities. Our worry about small charities led to our support for the Charities Act 1985, which came into effect at the beginning of this year. The Act was intended to be a vehicle to help trustees modernise their outdated trust and a lever to make them more alive to their responsibilities as trustees by giving new powers to local authorities in relation to charities in their area.
It is important to remember that it is not the Charity Commission or Ministers who are responsible for the administration of charities but trustees. Whatever one might have to say about the powers and activities of the commissioners, the trustees are responsible for ensuring that the objects of their trusts are being achieved, and they, the trustees, must exercise proper control over the administration of their charities.
I should add that the Home Secretary has very limited powers in respect of the Charity Commissioners. He appoints them and lays a copy of their annual report before Parliament. He has a duty which we carry out to the best of our abilities, to answer questions concerning the general functioning of the Commissioners, but we have no express power to give general guidance to the commissioners or to intervene directly in the affairs of any charity. The Home Secretary's lack of powers in this area is no accident 553 but was intended to ensure that the commissioners and trustees can operate free from political guidance or intervention.
The commissioners have the general function of promoting the effective use of charitable resources by encouraging development of better methods of administration, by giving charity trustees information or advice on any matter affecting a charity and by investigating and checking abuses. In the case of any particular charity they must act to promote and make effective the work of the charity meeting the needs designated by its trust. The commissioners do not have power to act in the administration of the charity. There are, however, matters in which they have a more specific role, and consent to the sale of land is such an area. As the House has heard, land which forms part of a permanent endowment of a charity, unless specifically excepted, may not under section 29 of the Charities Act 1960, be sold or disposed of without an order of a court or the Charity Commission.
I believe that there may be some misconceptions about the duties of trustees when they dispose of land, particularly when, as in the case of the south London charity, the interests of tenants must be considered. The tenants are not, however, the beneficiaries of those charities, since the property represents income-producing endowment. The Charity Commissioners say in their annual report for 1984 that, when disposing of charitable property, trustees are under a legal duty to act in the best interests of their charity and to get the best price reasonably obtainable for their property. In that way they will meet the needs of their beneficiaries both present and future.
It is the invariable practice of the commissioners to ask trustees to obtain a professional valuation before considering trustees' proposals for any land transaction, and it is their usual practice to test the trustees' proposed sale by the publication of notices inviting higher offers, or objections. The commissioners may, however, take a different view if the proposed sale is to another charity with similar objects. They may also do so if the circumstances are such as to justify dispensing with further marketing, for example where demand is low, if the sale is to a protected tenant, or on the recommendation of the trustees' surveyors that it is necessary to avoid the risk of further deterioration in dilapidated property.
My hon. Friend's suggestion that the commissioners should refer the agreed sale price of a property to a franking valuation is an interesting one, and I shall ask the Charity Commissioner to consider it. If I have understood the idea correctly, it is by way of a second opinion to verify the professional opinion made before the property is put on the market. My immediate reaction is that such a procedure may well not have prevented the type of fraud carried out in the Hampstead case. One must ask what the value of the procedure would be which in a case such as this is a duplication of one already in existence, involving expense to the trustees and delay which could result in a sale being jeopardised. The matter deserves to be considered seriously, and it will be.
554 The general effect of section 29 is to restrict the powers of charity trustees in dealing with land. My hon. Friend suggests further restrictions. I should point out, however, that there have been suggestions pointing the other way, notably from the National Council for Voluntary Organisations. No doubt this will be a matter for continued debate. Whatever the merits of the case for restrictions, it is important to consider the matter in the context of some 150,000 registered charities, and of roughly 3,000 property transactions sanctioned by the commissioners each year.

§ Mr. Stuart Holland
Surely that is part of the problem. As so many properties are sold in any one year, the Charity Commissioners cannot adequately supervise what is going on. Will the Minister take account of the further point that I raised in a Christmas Adjournment debate about the powers and rights of local authorities, which have trained valuers and are familiar with local property, to assess properties sold by charities? Given that the fixed costs have been covered by the councils, the actual cost should be negligible.

§ Mr. Mellor
I certainly welcome any suggestion designed to ensure that appropriate checks and controls exist. We must acknowledge that the Charity Commission is undoubtedly hard pressed because of the large number of charities. In the three years that I have had responsibility for these matters, many areas of discussion on charities have arisen in the House. They show that some of the thinking that went into the Act may no longer hold good in today's climate. Today's chief Charity Commissioner, Mr. Peach, certainly wishes to take seriously any suggestion that will improve the ability of the authorities, and especially the commission, to oversee the way in which charities are operated. I shall ensure that the hon. Gentleman's point is considered and that he receives a proper answer.
While it is not for me to pass judgment on the St. Olave matter, we must examine such cases and draw proper conclusions from them. Obviously, we all have a duty to ensure that that sort of affair does not arise in future. I take the hon. Gentleman's suggestion in the spirit that it was intended.
We are aiming to influence the actions of trustees by education and persuasion rather than by coercion. That has been the philosophy behind the 1985 Act, and I believe that that philosophy is right for the kind of problem that we have been discussing tonight. I hope that the very public airing that the affairs of these two London charities have had over the past few weeks will have had the effect of reminding trustees of other charities of their responsibilities and duties towards their charitable funds, and of the existence of people who wish to do what should not be done and of reminding us all that charities, like other organisations, can be vulnerable to unscrupulous and dishonest dealings. If our awareness has increased, it should make it less likely that similar unfortunate events can occur in other property-owning charities.