CONTROLS ON FUND-RAISING FOR CHARITABLE INSTITUTIONS: EXCLUSION OF CONNECTED COMPANIES (Hansard, 10 May 1994)

§ Madam Speaker
With this it will be convenient to take Government amendments Nos. 91 and 92.

§ The Minister for Industry (Mr. Tim Sainsbury)
I beg to move, That the clause be read a Second Time.
The new clause is a response to points raised by the eighth deregulation task force, chaired by Tessa Baring, which has been examining charities and voluntary organisations. The new clause is also in line with the outcome of a consultation exercise that the Home Office carried out last year.
As right hon. and hon. Members may be aware, the eighth task force was appointed later than the seven business task forces. Mrs. Baring and her colleagues have examined a great amount of regulation conscientiously and enthusiastically and we are most grateful for their efforts. Their report has been prepared in draft form and is being considered by the relevant Government Departments with a view to publication soon—including a Government response to their recommendations.
As with the other task forces, a copy of the report will be placed in the Library of the House. Part II of the Charities Act 1992 introduces controls on professional and commercial involvement in fund raising for a charitable institution—for a charity or any other charitable, benevolent or philanthropic organisation.
Part II applies where there is a solicitation on behalf of a charitable institution, or representation during a promotional venture, that contributions are to be given or applied for the benefit of a charitable institution. In such cases, part II requires two things: that a written agreement 162 with the organisation is already in existence, in accordance with prescribed requirements; and that a statement is made about the arrangements and accompanies each relevant solicitation or representation.
Part II is not yet in force. Draft regulations were issued for consultation last July and it had been intended that the provisions would be brought into force by now. It was decided, however, that commencement should wait until the views of the eighth deregulation task force were clearer. In fact, the task force is not—as I understand it —likely to recommend any fundamental changes to part II. Indeed, there is widespread support for its provisions and a wish to see them in force. The task force is likely, however, to endorse two key views that emerged from consultation on the draft regulations: the need to clarify the position over connected companies; and the need to allow longer time between the making of final regulations and their coming into force.
During the passage of the Charities Act 1992, the Government clearly stated that part II was not intended to regulate charities or companies connected to them—in other words, companies that are wholly owned or controlled by charities. Those who advise charities have had doubts, however, and think that the wording of part II does not achieve that intention to their satisfaction. The amendments effected by the new clause are designed to put that right.
I am sure that the House will agree that there should be no question of significant differences of interpretation, even before the law comes into operation. With that in mind I must make it clear—as does the legislation—that a company connected to a charitable institution may nevertheless be subject to part II if it is acting in concert with an institution to which it is not connected.
The two amendments grouped with the new clause are consequential on it and amend clauses 30 and 72, to provide that the new clause will come into force on Royal Assent and that it will extend only to England and Wales. The amendments are the only changes that the Government are proposing to the Charities Act at this stage of the Bill's passage, since the deregulation task force is still completing its report. We are examining carefully the case for further urgent amendments which it may be appropriate to table in another place. We have in mind the introduction of a new light-touch reporting regime for the smallest charities and hope to reach a conclusion on that issue shortly. Meanwhile, I urge the House, in the interests of charities, to accept this useful deregulatory measure.

§ Mr. Derek Fatchett (Leeds, Central)
I am grateful to the Minister for the introduction to new clause 12 and its purposes, and his reference to the consequential amendments. We shall certainly support new clause 12. What the Minister had to say makes a great deal of sense. They are technical issues, but they tidy up the Bill. We go along with the Government on that basis.
We also welcome the future reference to light touch reporting for smaller charities, which makes a great deal of sense. There may be an argument about the definition of a smaller charity, but the lighter touch would save money and time in terms of red tape.
The fact that the Opposition accept new clause 12 is typical of our approach throughout the proceedings on the Bill—if there is a sensible approach to removing regulation, of course we will support it. We shall not, 163 however, support those attempts to deregulate which put at risk the rights of employees and consumers. As new clause 12 does none of those things, we shall support it.

§ Mr. Sainsbury
I am grateful to the hon. Member for Leeds, Central (Mr. Fatchett) for what he said and I am sure the charity world is, too, as it will help deregulation. I am also grateful for what he said about supporting useful deregulation that does not reduce necessary protection but erases burdens. We are both of one mind as that is clearly set out as being the intention of the entire Bill. Perhaps it is a good omen for speedy progress.