HL Deb 10 February 2005 vol 669 cc121-80GC

(Third Day)

Thursday, 10 February 2005.

The Committee met at two of the clock.

[The Deputy Chairman of Committees (Baroness Hooper) in the Chair.]

Clause 5 [Special provisions about recreational charities, sports clubs etc.]:

Lord Hodgson of Astley Abbotts

moved Amendment No. 31: Page 4, line 12, leave out subsection (4).

The noble Lord said: We move now to Clause 5. In doing so, I welcome back the Minister to the seat of power for the afternoon. Clause 5 deals with special provisions about recreational charities and sports clubs. We seek to remove subsection (4), on a probing basis, because we would like to tease out the Government's thinking on this matter.

Subsection (4) refers to community amateur sports clubs—CASCs—which have come up already in our discussions in Committee. These were created by the Finance Act 2002. The details are in Schedule 18 to that Act. Sporting organisations that fall within the parameters set by the Finance Act can register with the Inland Revenue and, in consequence, receive certain tax concessions.

As we learnt in our earlier debate, Clause 2(2)(g) provides that the advancement of amateur sport is a charitable purpose. Under English law, an organisation is a charity if it is established for exclusively charitable purposes. In theory, an amateur sports organisation registered with the Inland Revenue as a CASC could also be a charity under the "advancement of amateur sport" heading. As a charity, such a CASC would be obliged to comply with charity law. Probably, in most cases, it would be obliged to register with and be registered by the Charity Commission.

By saying that CASCs established for charitable purposes are not to be treated as being so established, Clause 5(4) seeks to draw a clear dividing line between CASCs and charities and ensure that CASCs do not find themselves subject to charity law and regulation.

If I am right in my assumptions so far, perhaps I may ask the Minister three questions. First, is the purpose of this clause to force sports clubs down one of the two routes; that is, to become either a CASC or a charity—they cannot be both? Secondly, if a sports club had gone down one route, could it subsequently change its mind and cross over to the other route? For example, a sports club chooses to become a CASC. It finds that it is offered a big donation if it is a charity, and therefore wants to switch its status from being a CASC to being a charity. There could be a tax advantage to a donor giving to a charity, which would probably not be available if the donation was given to a CASC.

Thirdly and perhaps least importantly, but it would be very interesting to hear the Minister's comments, what are the relative tax advantages of the two routes—between becoming a charity and becoming a CASC? I know that the noble Lord, Lord Phillips, has Amendment No. 31A in this group. I do not want to steal his thunder, but I think that his drafting is a great deal clearer than that in the Bill. I look forward to hearing his comments on it. I beg to move.

Lord Phillips of Sudbury

In speaking to Amendment No. 31A, I am grateful for what the noble Lord, Lord Hodgson, said in moving Amendment No. 31. Noble Lords may not be aware that as far as the noble Lord, Lord Bassam, and I are concerned, community amateur sports clubs have a rather special part in our parliamentary hearts. I set in motion the legislation that brought into being this group of quasi-charities, as I would call them. They are not quite charities but they enjoy most of the tax benefits of being charities, and now rating benefits as well. As a matter of pure charity law, if you are a charity, you are a charity. The fact that you have failed to register as such does not stop you being a charity, and you are still subject to charity law. In a sense that answers one of the noble Lord's questions.

I seek to clear up, in a way that has no unfortunate side effects, the issue to which subsection (4) is addressed; that is, to try to prevent a CASC being simultaneously a charity under the Charities Acts and charity laws. I rather hope that the noble Lord, Lord Bassam, will say that Amendment No. 31A does the trick because it heals both ways. Amendment No. 31A would make subsection (4) read: A registered sports club established for charitable purposes is to be treated as not being so established unless it has been entered on the Register of Charities at the moment CASCs can, so to speak, transmogrify into charities— whereupon it shall cease to be a registered sports club". That seems to me to leave the position clear: you either are a CASC and registered as such or you are a charity and registered as such. You cannot be both simultaneously.

Lord Swinfen

Purely on a matter of practicality, I do not understand why the Government when drafting this Bill put this subsection into it. Obviously, sports clubs, whether charitable or not, are to be encouraged for the health of the nation. There is a great outcry at the moment about obesity, particularly in children and the fact that they are unfit. Purely on the grounds of practicality it should be possible for sports clubs to have charitable status. They should be encouraged in every respect and not just for the sake of children but also for adults. All adults should be encouraged to keep fit.

Lord Bassam of Brighton

It might help the Committee if I give a little background, although I think that there is general understanding of why we introduced the CASC provision which the noble Lord, Lord Phillips, promoted in many respects.

The CASC scheme was devised by the Inland Revenue in 2002 and was promoted to small sports clubs as an alternative to charitable status. The scheme was meant to allow a sports club to be a CASC or a charity but not both. We are trying to iron out some of the flaws that have arisen in the construction of CASCs. That is essentially why we have this provision.

In general terms a sports club that is open to the whole community and is organised on an amateur basis can register with the Inland Revenue under the CASC scheme. As I said, that scheme dates back to 2002. It gives qualifying clubs many but not all of the reliefs that charities enjoy from direct taxes and from rates on their property, as the noble Lord, Lord Phillips, and I know very well. CASCs are overseen by the Inland Revenue for compliance with the rules of the CASC scheme. The Government believe that the CASC scheme has a lot of potential to encourage the formation and growth of small sports clubs and thus to increase participation in sport at grass-roots level.

Since the introduction of the CASC scheme, a number of sports clubs have also had to be registered with and be regulated by the Charity Commission due to their charitable purposes. Our intention is that CASC status should be a true alternative to charitable status for sports clubs, making it clear that a sports club cannot be a charity and a CASC at the same time. The drafting of the Bill seeks to achieve that; I think that it does. It enables those sports clubs to choose whether to register with the Inland Revenue under the CASC scheme or, instead, to register as a charity with, and be regulated by, the Charity Commission, and it allows them to convert from one to the other in either direction. That deals with the second question; there is the possibility of switching from one to the other, but you cannot be both.

The effect of the amendment would be to maintain the currently anomalous position. We cannot accept that; it would be inappropriate and wrong, which is why we cannot accept this probing amendment.

The noble Lord also asked about the tax position of charities vis-à-vis CASCs—bodies registered as a charity or a CASC. CASCS get many—perhaps most, but not all—of the tax exemptions available to charities under Section 505 of the Income and Corporation Taxes Act 1988. As I explained, CASCs receive rate relief on their property. Overall, there is probably not a lot to choose between CASCs and going through the charities route. If there is an advantage at all, it is probably slightly to charities registering with the Charity Commission. That is where the benefit lies.

The noble Lord, Lord Phillips, thought that his amendment might do the trick. I have a speaking note that covers some of the ground already covered in this short debate. The heading on the note originally said "resist", but we thought about it a little more and would like to take away his amendment to see whether we can come back with something that does what he seeks to achieve. We have taken some further advice and want to be helpful. The amendment tries to force CASCs that are already on the register to retain charitable status and lose their status as CASCs. We agree to consider that change to the Bill to try to ensure that there is a nice and simplified process for that to happen. I hope that the noble Lord will be satisfied with that.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister. As I said, the amendment was probing. I am delighted to hear that there is a two-way valve so that bodies can go in either direction. I thank him for his explanation of the tax position.

Lord Phillips of Sudbury

I am also grateful to the Minister as his reply was very helpful. The simple point is that charities cannot transmogrify into CASCs. The traffic is all the other way, from CASCs to charities. The noble Lord, Lord Swinfen, made the general background point that it is wrong to obstruct sports clubs from finding the status that best suits their circumstances, so it is good to know that the matter is under review.

Lord Hodgson of Astley Abbotts

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 31A not moved.]

Clause 5 agreed to.

Clause 6 [The Charity Commission]:

Lord Phillips of Sudbury

moved Amendment No. 31B: Page 4, leave out lines 30 and 31 and insert— (3) The Commission shall be an independent public body free of Government direction and control".

The noble Lord said: The amendment is part of a group of amendments that strike at the same general issue. I think it fair to say that all of us with amendments in the group consider it to be one of the more important aspects of potential reform of the Bill.

The first point that I want to make is perhaps my strongest. It is that the Charity Commission wishes to have a more explicitly independent status under the Bill. The chief Charity Commissioner, Geraldine Peacock, made that abundantly clear when some days ago she addressed all Peers who had an interest in the Bill. She went on to say that, of course, the commission could live with its present status, with which it has lived for an awfully long time. But it would strongly prefer to have a more independent status, such as is provided for in Amendment No. 31 B.

2.15 p.m.

Secondly, if one was looking for what I would call really informed support for this amendment and the others in the group, one could not do much better than ask the opinion of recent past chief commissioners. Richard Fries, who was the commissioner before John Stoker, is adamantly of the view that the commission, the Government and the sector would be better off if there were a more independent status for the commission. Richard Fries assures me that to that list must be added the name of Robin Guthrie, his predecessor as chief commissioner and another extremely distinguished holder of that position.

Why are they all concerned? It is broadly to do with the extent to which, in modern circumstances, charity is embroiled with the affairs of government and the state. You only have to read what Fiona Mactaggart wrote in the Government's preface to their response to the Joint Scrutiny Committee's report to see the extent to which all governments these days, not just this Government, seek to embrace the charity sector. Putting it over-simply, if the charity sector can take over from government some of the functions that hitherto have been the functions of government, then government are happy, the taxpayer is happy, and on the world goes.

We know only too well that in modern circumstances the scope of political intervention—I nearly said interference—and certainly the scope of legislative intervention is at a height that our forefathers would not have thought possible. I remind the Committee that in 2003 we passed 13,407 pages of new legislation. On top of that is a great deal more law in the form of High Court precedents, government circulars, and the like. I simply sketch the context within which this amendment is brought forward—namely, one in which the state is ever more powerful and ever more intrusive and where the need for the voluntary sector, or the charity sector if you would prefer to call it that, to remain resolutely and absolutely independent of the state is unarguable. To be fair to the Government, they do not argue that proposition. I have heard the noble Lord, Lord Bassam, the noble Baroness, Lady Scotland, and Fiona Mactaggart several times assert their wish to see an absolutely independent charity sector.

That is not an issue between us today. What is an issue is the best way of achieving that. At the moment, the Charity Commission has what is called "non-ministerial departmental status". There is a catchy little phrase if ever there was one, and if you can work that one out, you are a better man than I am. Perceptions of independence become more important. The Charity Commission is a quasi-judicial body and, just as the judges in the courts have to be seen to be independent as well as being independent, so the greater constitutional distance one can create between the commission and the Government, the better for the commission and for the Government.

Let us consider, for example, the role of the commission in dealing with complaints from the public about the way in which charities conduct their affairs. It is no secret that one of the most lively types of complaint is that a charity has behaved in a way that is considered by the complainant to be too political. There is no more vibrant source of such complaints than MPs, who feel that in their patch, on their watch or in their sphere of interest some charity or another has said or done things that are outrageous because they are being political. Again, I think it is fair that no one that I can see in this Committee would cease to clip the wings of charities in the extent to which they can engage in proper politicking and campaigning.

The Charity Commission has done a splendid job over the past 20 years in evolving guidelines that give the charities and the public a clear set of criteria by which they can judge what are and are not proper political and campaigning activities by charities. But it is fruitless to deny that there is a grey area and a lot of scope for people to disagree about the application of the criteria.

I come back to the issue: MPs and, indeed, governments are in the business of complaining about charities. And who has to decide? The Charity Commission has to decide whether the complaint is right or wrong. The public will not believe that, if the Charity Commission has non-ministerial departmental status, it is completely free of influence from, or behind the arras of, government or, indeed, senior opposition politicians. That is another reason that I think it would be in everyone's interests if the Charity Commission were cut more loosely from the skirts of government than is currently the case.

I shall raise two more quick points before I sit down. First, the noble Lord will agree that the whole tenor of the Bill is to emphasise the important legal and quasi-judicial role of the Charity Commission. The creation of the Charity Appeal Tribunal—to which all decisions of the commission will be made subject, and, beyond it, the High Court—emphasises this special character. The Charity Commission does not do the bidding of government; it does not fulfil any function on behalf of government; and it does not carry out policy on behalf of government. On the other hand, it seeks to maintain the integrity of charities and public confidence in charity. On all those issues, one comes back again and again to the need to create more distance between the commission and the Government, perhaps along the lines of the National Audit Office under the National Audit Act 1983.

So, I put it to the Government that, although their response to the Joint Scrutiny Committee's report was a firm "no" to its request to have this greater independence, it is in their interest, no less than that of the sector and the public, that this amendment be acceded to. I beg to move.

Lord Hodgson of Astley Abbotts

I have three amendments in the group—Amendments Nos. 32, 34 and 50—which concern the issue raised by the noble Lord, Lord Phillips. I share his view that this is an important issue. I think it is probably the most important issue that we shall be debating, certainly today and probably in most of the Bill.

I wish to go further than the noble Lord, Lord Phillips. His amendment is a general statement of intent. The group of amendments that I have tabled follows up the National Audit Office example and seeks to give a better specificity to this particular concept.

Amendment No. 32, which is the principal amendment of the three, is designed to buttress the independence of the commission and—I do not have much to add to what the noble Lord, Lord Phillips, said—to ensure that the Charity Commission will be ring-fenced from political pressure, as opposed to the current position where the commission remains structured as a non-ministerial department.

The addition of new subsection (3)(a), which is our Amendment No. 34, is intended to avoid casting any doubt on the requirements in the Bill, as currently drafted, that the commission should give advice to the Government. It is also intended to ensure that the commission's general function set out in new Section 1C(2)6 is not affected.

It is clearly desirable that the Government should be able to call on the commission's expertise on charity matters, always provided that the commission's independence is safeguarded. So we do not want to interfere with that particular aspect of the Bill.

Amendment No. 50—the replacement of paragraph 5 of new Schedule 1A on page 70 of the Bill—is modelled on Section 3 of the National Audit Act 1983. It removes government control over the terms and conditions of commission staff, while retaining their eligibility for the Civil Service pension scheme. We believe that this is necessary to enable the commission to determine the staffing levels that it needs to carry out its extending functions and to decide the remuneration levels that those staff should be paid.

I now move on to the central aim of these amendments and I shall explain our thinking behind them. We have been helped, particularly in the drafting, by the Charity Law Association working party. As I have said, the present Bill has the effect of preserving unchanged the status that the Charity Commission now has as a non-ministerial government department. For the reasons already touched on by the noble Lord, Lord Phillips, that is quite wrong. The commission does not fulfil functions on behalf of this Government or indeed of any government. It does so on behalf of all those involved in the charitable sector—donors, contributors, volunteers, paid staff and recipients. Therefore, it should not be part of the Government, but independent of them, clearly, legally and visibly on the face of the Bill.

I hate to throw the words back in the face of the Minister, but the first time he talked about revised guidance being put out by the Charity Commission he said, "We should be putting out revised guidance". I am sure it was a slip of the tongue, but that is how thinking starts. It was the first day of the Grand Committee and we were into that matter straightaway.

The scrutiny committee's report dealt at some length with issues of commission independence in paragraphs 175 to 180. It recommended the removal of the expression, "on behalf of the Crown", and a clear statement of commission independence as intended and as planned in these amendments.

The Government's reply rejected the report's recommendation but, in my view at least, without any convincing reasons. The matter of independence for the commission was an issue on which there was very broad support in our debate at Second Reading. The Minister said at col. 886: The Government believe that the commission's independence in that respect is of paramount importance for the proper regulation of charities and for the public's confidence in charities. It is important for me to make that clear before we proceed any further". My noble friend Lord Sainsbury said at col. 901: I have to say that having spent my life in business rather than politics, I find it difficult to come to terms with the idea that the Charity Commission is in effect not under ministerial direction and control. It is, after all, a member of the Government who appoints the chairman and the chief executive; has the power to dismiss them; decides the level of their remuneration, the size of their budget and the pay conditions and number of staff of the commission". The noble Baroness, Lady McIntosh of Hudnall, stated at col. 914: In its response to the Joint Committee, the Government assert the necessity, 'to preserve the Charity Commission's status as a Government Department'. I was clearly not alone in feeling some alarm when I read those words. Whatever the formal issues, the terms 'independent' and "a Government Department' do not sit altogether happily together. Therefore, despite my noble friend's earlier assurances, I urge the Minister to reconsider that matter and include in the Bill, for the sake of those who come after, a clear assertion that the Commission's independence from government is paramount".—[Official Report, 20/1/05; cols. 886, 901 and 914.]

The commission is not a regulator responsible for implementing government policy, albeit on an arm's-length basis. It has responsibility for delineating the scope of charitable activity, organisations that meet the charitable purpose test and are in the public interest. The commission is rightly made accountable to the Charity Appeal Tribunal and to the courts under the Bill. The commission is to be given increased powers to maintain the integrity of charities and public confidence in them. Charities serve the public interest which is not the same as carrying out government policy. The commission will be better able to win public confidence if, as the noble Lord, Lord Phillips, said, it is manifestly independent of the Government. Is not the advancement of public confidence in the charitable sector a central aim of the Bill?

Moreover, the commission must be able to force charities to meet their obligations. In a world where government rightly, and in my view commendably, rely more and more on charities as partners in the delivery of public services, the risk to their independence is increased. The commission must be free to prevent that independence being jeopardised.

Finally, the role of charities in contributing to public debate is vital. They have first-hand experience of some of the most difficult issues of public policy; their role can spill over into lobbying and political campaigning and it is equally vital that the commission should be free without fear or favour to draw the difficult line between proper use of that right and illegitimate political activity. It is especially important that the commission should be free to defend charities that properly criticise the government of the day. 2.30 p.m.

The Scrutiny Committee calls for commission independence. In their response, the Government asserted that the present status is right, without giving any reasons. Non-ministerial department status, although giving the commission responsibility for the use it makes of its power, is not of itself sufficient guarantee of independence, nor are ministerial undertakings given during the passage of the Bill. Governments and Ministers come and go and we need an amendment such as this to provide a proper guarantee of commission independence in the future.

The question arises as to what status the commission should have. There is no exact model. The commission is both an extension of the courts and an independent regulator. A non-departmental public body status seems inadequate. That is suited to bodies implementing government policy, albeit arm's length from the Government.

The National Audit Office appears to offer the nearest parallel, serving the public interest through Parliament. Section 4 of the National Audit Office Act provides that its expenses are defrayed out of moneys provided by Parliament". This could be the best model, but of course I accept that it is not an exact parallel. The NAO serves Parliament directly, whereas the Charity Commission, it could be argued, serves the public interest at large. The approach adopted in our amendments and reflected in my remarks is therefore to create a model specifically for the commission, drawing on the NAO model where this seems helpful.

We also considered that appointment of commission members. A key issue must be whether members of the new commission should continue to be appointed by the Home Secretary as commissioners are now. On balance, we concluded that it was best to leave responsibility with the Home Secretary, provided that the statute clearly guarantees commission independence on the basis that responsibility for appointments to many independent bodies rests with the Government and the Office of the Commissioner for Public Appointments guarantees their integrity.

Equally, following on from that, it is arguable that the requirement in paragraph 10(1), that the commission should report to the Home Secretary and itself separately lay the report before Parliament, makes the commission inappropriately accountable to the Government. Independence could easily be achieved by omitting the words "to the Secretary of State" so that the commission was simply required to publish a report and lay it before Parliament. But again on balance, we concluded that it may be unnecessary to go that far on the basis that the guarantee of commission independence prevents the Government from interfering with the commission through its annual report.

So much for the strategic considerations. At an operational level, there are equally good reasons for the Charity Commission to have a greater degree of independence than the Bill envisages. I do not wish to kick the Charity Commission and I acknowledge the programme of reform and improvement which the present top management team, with its chief executive, Geraldine Peacock, is undertaking. But we cannot ignore the implications of the commission remaining tied to the Home Office in terms of pay and remuneration.

I want to quote from a letter sent to me by a senior charity lawyer. He writes: I have heard it argued that the Commission should remain part of the Civil Service because of its pension arrangements. This is of course a disgrace. The Commission exists to provide a public service to the charitable sector and not to pay pensions to its staff. In any event I question the whole financial employment structure in the Commission, which I believe is one of the causes of its problems. The last figures I had suggested that one-third of the staff change every year, and that is almost certainly due to the fact that young people coming out of University etc. are more interested in the salary than in the pension. The pension arrangements no doubt dominate the thinking of the senior members of the Commission for obvious reasons, but do not in any way consider what is business-like, nor look to the future. I have a very clear recent example from what is effectively a public service over the application of the Commission's salary level staffings: [firstly] that at a certain level there is a package in the Commission which produces a salary of £32,000, a Civil Service pension, 30 days holiday per annum and no medical health insurance. [Secondly] the equivalent salary level in the private sector would produce a salary of £39,000, a contributory pension scheme on the basis of a money purchase pension with 20 days a year holiday and full sickness insurance. The actual monetary value of the Civil Service offer is £35,500, which in no way compares with the private sector equivalent and in consequence the Commission are only engaging weak staff, and in so far as they are engaging good staff they are rapidly attracted away from the Commission into the private sector, which is the reason no doubt for the high staff turnover as well as I suspect the total lack of motivation within the Commission itself due to the whole weakness in structure which I have listed above". He concluded: This needs to be addressed. I think the only way of doing this is to float the Commission off into some sort of quango independent of the Government and independent of the Civil Service".

To conclude, under the Bill as presently drafted, the Charity Commission will be performing its functions specifically on behalf of the Crown. The functions include determining questions of charitable status, as well as recognising whether charities which apply to its registration meet the appropriate test, and doing so in a much more questioning way than hitherto. In these respects, it will be acting in an executive rather than in a truly traditional way. If its status is to remain unchanged from the Bill as presently drafted, it will be more closely aligned to the Government than has at least been the public perception until now.

As the noble Lord, Lord Phillips, said, public confidence will not be increased by the knowledge of these facts. Independence based broadly on the model of the National Audit Office structure or equivalent would greatly enhance the role, the integrity and the efficiency of the Charity Commission and place the regulation of the whole sector on firmer ground. I therefore very much hope that the Government will take these points on board.

Lord Swinfen

Amendment No. 33 in the group is in my name. I hope that it will be for the convenience of the Committee if I speak also to Amendment No. 36, which should have been in the same group.

I was going to make a long speech, but I am pleased to say that the noble Lords, Lord Phillips of Sudbury and Lord Hodgson of Astley Abbotts, have said the vast majority of what I was going to say. I can therefore discard most of my speech because I am sure that the Committee will not want to hear it all again.

My efforts at drafting are poor. They are nothing like as good as those of the noble Lords, Lord Phillips of Sudbury and Lord Hodgson of Astley Abbotts. However, I, too, am trying to ensure the complete independence of the Charity Commission. It should not be used as an agent of government. It should be totally independent.

There is a suggestion in the Bill as currently drafted that the commission will continue as a government department. That gives me considerable concern. There is a suggestion that pressure will be put on the commission to interfere with the charity in the Iran aid case. I say only that it is a suspicion, because I do not know. The Government wanted to be extremely friendly with Iran in order to obtain oil contracts. If that were the case, it was both morally and practically wrong. However, the proposal as drafted in the Bill will increase the present inadequate parliamentary accountability while minimising government interference.

When the Government answered the report of the Joint Committee on the draft Bill, they rejected its recommendations for a more independent status. But they did so without advancing any reasons for their rejection. If the Minister is going to reject these amendments out of hand today, he should come up with extremely good and cogent reasons for doing so. So far as I can see, the independence of the Charity Commission is extremely important and I strongly support the amendments much better drafted than mine which have already been moved by the noble Lord, Lord Phillips, and spoken to by my noble friend Lord Hodgson.

Lord Borrie

We have heard powerful speeches concerned with the need for substantial, if not supreme, independence on the part of those who run the Charity Commission. Until now, they have been called Charity Commissioners because there has not been a clear legal status. But the body is to be called the Charity Commission. The Bill proposes that it should be a non-ministerial government department. I am surprised that the noble Lord, Lord Phillips of Sudbury, spoke of difficulty in knowing precisely what a non-ministerial government department was when such departments have existed for many years.

Certainly, the assumption that a non-ministerial government department, cannot or is not seen to be independent of government flies in the face of the experience of many such bodies. I headed one such body—the Office of Fair Trading. Neither Secretaries of State whom I served under a Labour government nor Secretaries of State under a Conservative government suggested that I or we were not in practice—on many different matters of decision-making—independent. That is how, as I understood it, the Government wanted the body to be when they set it up. They did not want the functions of the Office of Fair Trading to be part of, for example—let us call it by its modern title—the Department of Trade and Industry.

Following that, whenever the Conservative government privatised industries they set up similar bodies. We all know of Ofgas, Ofgem, Ofwat and the rest of them. This Government since 1997 have created Ofcom. I do not think that it would be right to say that Ofcom, under the chairmanship of the noble Lord, Lord Currie, is other than independent in the way it performs its functions.

So my first point is that non-ministerial government departments can be, and—I add the point since it was emphasised—are perceived to be by the general public, independent bodies. There are several examples. I was listening carefully because I was not sure whether either the noble Lord, Lord Phillips, or the noble Lord, Lord Hodgson, intended to alter the schema in the Bill for appointments. But it is not intended to dispute that the Secretary of State should make the appointments of the commission.

Lord Hodgson of Astley Abbotts

I make clear to the noble Lord that I said that the appointment system should not be changed, provided we have a guarantee of independence of the kind suggested by the main amendments we sought to move. The appointment system should remain unchanged.

Lord Borrie

I am grateful. I felt that very powerful points were made on the importance of independence. I did not dispute that. I am just as much in favour of that as those who have spoken. One or two of the points made by noble Lords went to some extremes in suggesting that the Charity Commission was to have—I think the noble Lord, Lord Hodgson, said—a function which was an extension of the courts, or a phrase of that kind. The noble Lord, Lord Phillips, referred to quasi-judicial functions.

I would draw a distinction between the Charity Commission and the Charity Appeal Tribunal. In the Bill, it is very clear that the Charity Appeal Tribunal is a quasi-judicial body. It does not have the day-to-day work of supervising and administering the whole charity set-up of the nation. That is the job of the Charity Commission. I would emphasise that in the second of the functions of the commission set out at the bottom of page 5 of the Bill, the general function of the commission is said to be, among other things: Encouraging and facilitating the better administration of charities". That is an administrative, executive job.

I will not go into the work of the Charity Appeal Tribunal, but its name is fairly helpful in that respect. It is meant to hear appeals from those who do not like the preliminary decision-making of the Charity Commission. It is a judicial or, if you like, a quasi-judicial body. Its members are to be appointed by the Lord Chancellor, which is very appropriate in the circumstances. Members of the Committee opposite do not wish to object to the Secretary of State appointing the Charity Commission. That is, at least in part, because it is to have executive functions.

2.45 p.m.

Lord Phillips of Sudbury

It is a fact that the Charity Commission perceives itself and talks of itself as acting in a quasi-judicial way. That is a typical and traditional way of referring to those aspects of its activities that are not the administrative ones to which the noble Lord rightly referred, but decisive activities such as allowing or disallowing an application for registration.

Lord Borrie

I am glad for that piece of clarification. I add only that non-ministerial government departments, such as those of which I gave examples earlier, also make decisions relating to the applications of particular individuals and firms. However, they are not regarded as quasi-judicial bodies deserving of being appointed by, let us say, the Lord Chancellor, and with all the other paraphernalia. That is because they are supervised, if you like, on appeal by a body that is appointed by the Lord Chancellor and has the title of a tribunal, an appeal tribunal or something of that nature, so that the public can understand that it has that special role.

I fully agree with the principles that all Members of the Committee who spoke before me mentioned in relation to the need for independence. We all seem to agree that the Secretary of State is appropriate to do the appointing. I do not see why those appointed by him for a period of time—people can be dismissed on certain grounds, admittedly—should not be as independent as experienced non-ministerial government departments and their members and chairman have been in the past. I hope that the message will go out from the Government that it is intended that the Charity Commission should be fully independent and will not be interfered with, either in the sort of example of suspicion that the noble Lord, Lord Swinfen, mentioned, or in any other way.

Lord Phillips of Sudbury

I have great respect for the noble Lord's views; he speaks with a great deal of authority and experience. Why does the Charity Commission want this greater degree of independence? Why do Richard Fries, the previous commissioner, and Robin Guthrie hold the same view so strongly?

Lord Borrie

They may have certain views that they are entitled to put forward, and the noble Lord has very rightly told us of those views. They must be taken into account by the Government. I am trying to give a broader view of how it is with other bodies and other non-ministerial government departments. With respect to those people, perhaps they have not taken those bodies into account.

Lord Hunt of Wirral

I am moved to intervene wholly as a result of the speech of the noble Lord, Lord Borrie. First, I should declare my interest as senior partner of Beachcroft Wansbroughs, a firm of solicitors. I also declare my interest as having been one of the Ministers—there are many; it is a roll of honour—who participated in the reappointment of the noble Lord when he was director-general of the Office of Fair Trading. It is an interesting analogy. From when I had responsibility within government, I remember the concern of the OFT about its lack of independence. I remind the noble Lord of the pay and rations issues, which I recall troubled the OFT on many occasions. They also troubled non-governmental departmental bodies, which I think that we are now supposed to know as arm's-length bodies—ALBs. I am never quite sure of the terminology.

I should explain about pay and rations. Being part of the Civil Service and of the Government, the bodies are obliged to follow spending guidelines within the Government. They cannot spend the money in the way in which they would like. They have to follow the strictures of the Treasury and a whole range of other issues. Operating within the Civil Service, they also have to follow Civil Service guidelines and operate within what I, having been Minister for the Civil Service, readily acknowledge as the finest civil service in the world, with its independence, integrity and impartiality. However, it has certain restrictions when it comes to having to operate in the outside world.

I therefore believe that the noble Lord, Lord Borrie, perhaps does not quite remember those instances when he chafed on behalf of his colleagues on the issues that constrained him. If I may add, the last time that we exchanged words on the position of the Office of Fair Trading, it was on the occasion when the noble Lord felt that there should be a chairman and chief executive in the same post. I would just like to remind him that he might have mentioned how pleased he was that he had lost that argument on that occasion, and that now the Charity Commission intends to have a separate chairman and a separate chief executive.

One of the reasons he used when he opposed me on that issue was that this regulator, this Office of Fair Trading, was within government as a non-ministerial departmental body and that therefore it did not need a separate chairman and chief executive. I am delighted that later this year there will be a separate chairman and chief executive of the Office of Fair Trading. I think that it will happen in October. I am pleased that there is a separate chairman and chief executive of the Charity Commission. I am much impressed by the calibre and integrity of this new generation who will handle these new responsibilities. I do not want them to have to put up with those constraints that so upset the Office of Fair Trading when I had ministerial responsibility, and which the noble Lord, Lord Phillips, and my noble friend Lord Hodgson have so clearly identified. Let us set the Charity Commission free from those constraints. I hope that we will hear that from the Minister. Let us underpin its independence and give it some freedom of movement as it embarks on a new chapter in its life.

Lord Borrie

I will not take up too much time on what seems to be a private recollection of the noble Lord when he was in government and when I was doing something else. He clearly has a better memory than I do. If and in so far as I chafed at the bounds set in terms of staff salaries and so on, I cannot fully remember. Let us suppose he is right. What we are discussing here today is the independence of a non-ministerial government department to make decisions free from interference by government. I do not remember either the noble Lord, Lord Hunt, or other Ministers with whom I had to deal, interfering with the decision-making of the Office of Fair Trading.

Lord Hunt of Wirral

I think, if I can advise the noble Lord, that we really ought to resist going down that road. I could list a number of occasions when Ministers over-ruled the decisions of the Office of Fair Trading, much to its anger and regret.

Lord Borrie

I do not want to spend the time of the Committee, which is dealing with the Charity Commission, on this. He can only be thinking of those occasions when the Government were making decisions, and rightly so, on my advice; and sometimes they very properly refused to take my advice. It might have irritated me, but it was perfectly proper. Here, we are talking about decision-making of the Charity Commission; not advice given by the Charity Commission to government departments. It would not apply in this field, which I hope that we will go back to talking about when I sit down.

Lord Hunt of Wirral

The noble Lord has made my point better than I could have done.

Baroness McIntosh of Hudnall

I think that I have the Floor. The noble Lord, Lord Hodgson of Astley Abbotts, has spared me the necessity of wearying the Committee by reminding noble Lords of what I said on Second Reading, for which I am grateful. However, I wanted rather tentatively and nervously to take issue with my noble friend Lord Borrie. I cannot resile from what I said on Second Reading.

The exchange that we have just witnessed between my noble friend Lord Borrie and the noble Lord, Lord Hunt, is an example of what we need to be wary of in this area. The issue here, as the noble Lord, Lord Phillips of Sudbury, reminded us at the outset, is one of perception. There does not seem to me to be any real issue of disagreement on any side of the Committee over the necessity for the Charity Commission to be independent and to be seen to be independent. The problem is that the Bill does not say that. In fact, it says something that can be read to mean the opposite. We must be aware that people who will be worried by that will look at the way the legislation has been drafted, whatever reassurances the Government are prepared to make.

I speak as one who not only supports the Bill but who also supports the Government, so I say that with some trepidation. I believe that whatever reassurances my noble friend is able to give, if that is not reflected on the face of the Bill, there will be anxiety that, at some point in the future, possibly with people of less goodwill or when there is less consensus around the issue, that may come back to haunt us. I believe the noble Lord, Lord Hodgson, or perhaps the noble Lord, Lord Phillips, referred earlier to things going on behind the arras; I shall pick up the same play and suggest very respectfully to my noble friend that protesting too much on this issue might not be advisable.

Lord Bassam of Brighton

I do not believe that there is an issue between us on the importance of the independence of the Charity Commission. I believe that all Members of the Committee accept and acknowledge that that is of critical importance to ensuring that there is public confidence. I understand the great importance of this debate and the noble Baroness, Lady McIntosh, reminded the Committee of the importance of perceptions. In a sense, that probably goes to the heart of the issue that we are considering on this group of amendments. I have looked carefully at the groups and they come at the issue from slightly different perspectives, but they have a comity of purpose in terms of what they attempt to achieve.

I want to spend some time setting out some of the background to Clause 6 and how the Bill seeks to maintain the independence of the Charity Commission which, as we are all agreed, is of paramount importance. The Charity Commission is, as the Strategy Unit pointed out in chapter 7 of its report. a non-ministerial government department which is staffed by civil servants. I think we all accept that point. However, only the courts can overturn the commission's decisions, in relation to particular charities, in the exercise of its statutory powers. Ministers have no capacity to direct or reverse any of the commission's decisions.

That insulation—if I can describe it as such—from political interests, as the Strategy Unit described it, is a strength of the current system and I have no doubt that it is greatly valued by charities and by all in the charity sector. They see it as a safeguard against the use of charity, and the advantages of charitable status, as a political football.

The Strategy Unit, in its report, concluded that the commission should continue to be independent of any political control, a point on which we are all agreed. It made no recommendation that the commission should cease to be a non-ministerial department. and indeed as I shall seek to explain it is hard to see what alternative arrangement would give the commission greater freedom from political interference. Certainly no alternative model was put forward to the Strategy Unit and, although the noble Lord, Lord Hodgson, has advanced the National Audit Office, that really is the only other model that has been mentioned in the context of this debate.

It is true that at Second Reading some very forceful views were expressed and some doubt was cast on the commission's independence and how it might operate in practice. Perhaps I should go through the detail. The powers of my right honourable friend the Home Secretary in relation to the commission are limited to the appointment of the commissioners themselves. These senior appointments are rightly made following fair and open competition, at present through the Civil Service Commissioners and when the commission becomes a body corporate under the Bill, under the separate but comparable arrangements for public appointments. That is a process which I think we all would accept has a great deal of probity to it.

3 p.m.

The commission reports to my right honourable friend only in the sense that it sends him an annual report which the commission lays before Parliament. The commission is not in any sense accountable to my right honourable friend, who has no powers whatever over the commission in the discharge of its statutory functions in relation to charities. The commission is thus entirely free from political control or direction and would remain so under the Bill.

It is true that the commission's budget and staffing levels are perhaps an issue for some. But, we should remember that they are not set by the Home Secretary. I would like here to correct a point made recently in correspondence to the Guardian by a former chief charity commissioner, Mr Robin Guthrie, who has already been referred to in this debate. He said that the Charity Commissioners were accountable to my right honourable friend the Home Secretary for the administration and costs of the commission.

The position has changed since Mr Guthrie left the commission in 1992—some time ago. Funding is provided directly to the commission and it is accountable directly to Parliament for its use of funding, through the recently appointed chief executive and accounting officer, Mr Andrew Hind. So Charity Commission funding is provided directly to the commission by the Treasury. There is a direct relationship between the commission and the Treasury. It does not have to report through and account to the Home Secretary for administration and costs.

My right honourable friend has no role whatever—

Lord Phillips of Sudbury

I am sorry to interrupt. It would be very helpful to the Committee if the Minister could say by what means that change was effected and when, because he is making a very important point. As I understand it, he is saying that the whole financial regime is different in terms of control today than it was in Mr Guthrie's time. We will not be impressed if control has moved from the Home Office to the Treasury. The Minister is implying that there is a lesser control over finance now than formerly.

Lord Bassam of Brighton

I am grateful to the noble Lord for his point. The position has changed. As I explained, when Mr Guthrie was chief Charity Commissioner in the early 1990s, control was routed through the Home Secretary. That is no longer the case. My understanding is that that change was made five or six years ago, or perhaps a little longer. As I explained, the route is through the chief executive and accounting officer, currently Mr Andrew Hind, to the Treasury.

Lord Phillips of Sudbury

The other part of my question is rather more important. Does the Treasury exert less control over the financial regime of the Charity Commission than the Home Office? Frankly, it is indifferent to us which department exerts the control; it is the level of control and constraint that matters.

Lord Bassam of Brighton

That is a question which, I guess, you could judge only when comparing past performances. It is somewhat difficult for me to do that today. The impression I get is that that direct relationship has a benefit to the Charity Commission. From my limited knowledge of that funding relationship, there seems to have been a growth in the Charity Commission's budget. I could not predict whether that growth will continue in the future. One would have to question closely the basis on which that growth has been there in the last spending round.

Lord Hodgson of Astley Abbotts

While we are talking about independence, perhaps I may draw the Minister's attention to the schedule about staffing. Paragraph 5(3) on page 70 of the Bill states: The appointment of other staff requires the approval of that Minister"— that is; the Minister for the Civil Service— as to their numbers and terms and conditions of service". That is an independent body having to go to the Minister for the Civil Service and say, "We want so many people and we want to pay them so much. Can I have your permission?" Is that independence? This is independence in a body in respect of which there are severe worries about its ability to perform its present functions, let alone its future ones. That is the independent body, and it is still written into the Bill.

Lord Bassam of Brighton

I shall try to complete my response to the noble Lord, Lord Phillips. In the context of the relationship between the commission and the Treasury, it should be understood that, in essence, the Treasury sets the budget and the targets, which is the limit of what it does in that relationship. I shall try to come back to the point made by the noble Lord, Lord Hodgson, in a moment.

It has also been suggested by some Members of the Committee that the commission should be made accountable to Parliament for the whole of its business, in the sense that the National Audit Office is accountable to Parliament. As I have said, the commission is accountable to Parliament for its administration and costs and, as the Strategy Unit pointed out, subject to examination by the Public Accounts Committee in another place.

The Joint Committee on the draft Bill made a recommendation that the Home Affairs Committee of another place should have an annual session with the Charity Commission, and that there should be a debate on the commission's annual report. I would argue that both those recommendations would significantly enhance the commission's accountability to Parliament. To go further than that and remove the commission from the Civil Service by making it report to Parliament would clearly be a rather larger management task of some magnitude.

However, the difference between the Charity Commission and the National Audit Office is that the latter exists to support Parliament in its responsibility of holding the executive to account. The Charity Commission on the other hand does not exercise parliamentary functions. It would be no more appropriate for the commission to fall within the parliamentary sphere than within the ministerial sphere.

The Joint Committee's recommendation, to which the amendment would give effect, was that the phrase, on behalf of the Crown", should be removed and replaced by a clear statement that the commission shall be a body independent of Government.

As we explained in our reply to the Joint Committee, the reference to the functions of the commission being performed, on behalf of the Crown", are necessary for technical reasons to ensure the commission's continued status as a non-ministerial department. They do not imply and would not create any change in the relationship between Ministers and the commission that I have described.

As to a clear statement of the commission's independence, I hope that my preceding remarks have made the position as clear as it could be to Members of the Committee. In conclusion, I am happy to confirm that the commission was, is and will remain wholly free from ministerial direction. It is subject to ministerial control only in the very particular respects that I have described.

The Government are wholly committed to the Charity Commission's independence and that is reflected in the Bill. The words to which the noble Lord has drawn our attention do not in any way detract from the commission's independence and are needed purely for technical reasons to ensure the Charity Commission's continued status as a non-ministerial department. Our belief is that non-ministerial department status best suits the Charity Commission's needs and that the case for any alternative model has not been made.

Speaking with great experience as a former director-general of the OFT, my noble friend Lord Borrie, touched on that issue. I have a long list of non-ministerial departments, which underlines the independence of that sector. The regulatory bodies—such as Ofsted, Ofcom, the Office of Fair Trading, Ofgem, the Office of the Rail Regulator, Ofwat and the Postal Services Commission—all work very effectively in that way. They are independent of government. They are free to criticise when it is right and appropriate. They obviously, as my noble friend Lord Borrie suggested, from time to time provide an advisory role. But they have that cherished independence, which works well for them. I think that it works well for the Charity Commission. The Charity Commission has been fully consulted while working out those proposals. Although the commission has indicated a willingness to consider other models, my understanding is that it is content with the arrangements set out in the Bill.

The noble Lord, Lord Hodgson, made a point about the annual report going through the Home Secretary. I am not drawn normally to invite amendment.

If the committee advances a consideration which suggests that the report should go directly to Parliament rather than to the Home Secretary and to Parliament, we would give fair consideration to that amendment. It would help underline the value that we, as government, place on the independent role of the Charity Commissioners as regulators.

We have had a long discussion on this important issue. I remain of the view that the provisions we have in place work well and will work better under the new legislation because I think that it underpins the independence we all value so much in the way the Charity Commission works. It is contingent on us to ensure that in moving forward we are agreed on that point.

Lord Hunt of Wirral

Before the Minister sits down, it might be helpful for the Committee to have a note dealing with the point he raised earlier; namely, the transfer of functions from the Home Secretary to the Treasury. If I recall correctly, the Treasury, instead of the Home Office—the Home Office being the sort of messenger to deliver the bad news from the Treasury— decided to communicate that bad news itself. I am not too sure that that is a loosening of the bonds. I think it is rather the opposite. I may be wrong and my recollection may be faulty. Therefore, it would be helpful to have a note of what happened, as the Minister described it.

Perhaps we may have a note on which government departments exercise control over the Charity Commission—the Minister for Civil Service on pay and conditions and numbers of staff—what controls the Treasury have over how much money can be spent on each portion of the budget and whether money can be moved; and what decisions the Charity Commission can make on pay resources. That kind of a note would be very helpful to the committee because there is some misunderstanding about the present position.

Lord Swinfen

Can the note include the authority under which the change was made? Was it made under the Charities Act 1993 or some regulations? I do not expect him to answer that now, but perhaps he can when circulating his note to all Members of the Committee.

Lord Bassam of Brighton

I am grateful to the noble Lord, Lord Hunt, for enabling me to provide some further elucidation to the committee. I am quite happy to pick up the additional points requested by the noble Lord, Lord Swinfen. We think that current arrangements work well and that the independence, which we all value, will be underpinned. I agree that we need to deal with perceptions. I think that we can do that. The commission, in grasping the nettle, the need and the urgency for reform, has begun clearly to demonstrate that in improving its operation and aspiring to carry on with that further improvement.

I have to resist the amendments. This is a very important debate. I recognise its centrality to what we are trying to achieve. I am very grateful to all noble Lords who have played a very constructive part in this very constructive debate.

Lord Phillips of Sudbury

I am sure that I express everybody's thanks to the noble Lord, Lord Bassam, for summing-up the debate. I am sure that we shall return to the matter because a number of noble Lords have made it clear how important they think this aspect of the Bill is. It is one of the benefits of this Chamber that when one gets into reminiscences of political times past there are proponents and others with a different recollection. I am extremely grateful to the noble Lords, Lord Borrie and Lord Hunt, for the considerable piece of clarification in which they engaged. It leaves those of us who are proposing amendments towards the independence of the commission even more convinced that that is needed.

3.15 p.m.

Vis-à-vis the point made by the noble Lord. Lord Borrie, about the multiplicity of other bodies that have the present status of the Charity Commission, I believe that the Charity Commission is qualitatively different from Ofcom, the OFT and so on. By and large, those bodies have a principal nexus with the business world. They have connections with the public at large, but their principal nexus, through legislation, is with the business world. The Charity Commission is a creature of common law, although it was created by statute in the Victorian era, and is the only lynchpin between the public at large and Government vis-à-vis charity. It is truly of the people by the people and for the people. The political point made by some of us in the course of this debate about the commission being subject to a great deal of political pressure in the cockpit of politics was not answered by any of those who oppose the amendments.

I turn to the point raised by the noble Lord, Lord Hodgson, about the remuneration of the commission. The noble Baroness, Lady McIntosh, and the noble Lord, Lord Best, will recollect that in the Joint Committee on scrutiny we really emphasised the importance of the commission being free to set its own pay scales and to deal with its own recruitment and remuneration. As was pointed out, paragraph 5(3) of the first schedule which creates the new commission structure is precisely about controlling all those points, as the noble Lord, Lord Hodgson, read out. The intervention of the noble Lord, Lord Bassam, about the Treasury now being this new benign master, rather than the overpowering Home Office, thanks very much, but no thanks. In withdrawing the amendment, I am sure that we need to return to these matters.

Amendment, by leave, withdrawn.

[Amendments Nos. 32 to 34 not moved.]

Lord Swinfen

moved Amendment No. 35: Page 5, line 8, at end insert— ( ) The Commission and the Crown shall jointly appoint an independent reviewer to report, within one year of the bringing into force of Parts 1 and 2 of this Act, and a year after Part 3 if implemented at a different time, on the Commission's ability and resources to meet its responsibilities under the Charities Acts.

The noble Lord said: This amendment has been given a great deal more importance than it originally had by the remarks of the Minister when we were debating the previous group of amendments. He has told the Committee that the Charity Commission is now directly funded by the Treasury and the Treasury is noted for trying to cut down the funding that government departments and non-governmental departments receive.

I notice that the amendment is defective for what I intended it to do. If Part 3 is implemented at the same time as Parts 1 and 2, the funding would not be reviewed. So I shall not press the amendment.

However, the Bill gives a great deal more work to the Charity Commission and there is doubt in the charity world whether it will have proper funding to carry out its task. Therefore, it is worthwhile having a joint Government and Charity Commission review, after a reasonable time, on the work that it is carrying out and on whether it is properly funded. In my amendment I have suggested a year, but a year may be too short a period. It may be wiser to make it two years, but I believe that we should have a review after a reasonable time. I beg to move.

Lord Hodgson of Astley Abbotts

I support my noble friend's amendment which seems to be entirely sensible. We spend much time passing legislation and much less time looking at its impact, benign or not. The whole debate on sunset clauses, statutory instruments and reviews of legislation would benefit from the kind of amendment proposed by my noble friend. I suspect that he is right when he says that one year is probably too short a time to be able to assess the situation properly. It would be a terrific commission indeed that managed to get its arms round the matter and to deal with and to learn useful lessons from its performance a year from its kick-off. I suspect that it will need a longer period. Nevertheless, I believe that the principle is a very good one.

Lord Phillips of Sudbury

I support the spirit of the amendment, which addresses the point that I made in summing up the debate on the last set of amendments.

Lord Bassam of Brighton

The Joint Committee made a recommendation to the effect that there should be an independent review of the Charity Commission's ability to meet its new responsibilities under the Bill. As we said in our reply to the Committee, the Commission is already carrying out a strategic review in order to position it and equip it to fulfil its future role. Although the review is managed by a steering group of commission staff, the steering group is assisted by external consultants. The strategic review is due to report this summer.

In addition, the Government have accepted the Joint Committee's recommendation that there should be a review of the impact of the legislation and a report to Parliament five years after the Bill receives Royal Assent. The noble Lord made the point, cogently, that one year is probably not sufficient. We can argue about time frames for assessing the effect of the legislation. We think that five years is probably more appropriate. One takes a view, and one has to work as best one can to ensure that reviews are effective. To enable the legislation to bed in and work probably does need a longer time frame.

The Government fully accept our obligation to give the commission the resources it needs to do the job. We have had something of a debate about the role of the Treasury. I am sure that colleagues like making fun of the Treasury, but it does an important job, and it must look at the broader impact on public expenditure. We recognise the importance of keeping within limits and working to tight budgets. Since 1997, the commission's budget has been increased by £8 million, or 35 per cent, which is a significant increase. It received a 6 per cent increase in last year's spending review, partly to reflect new responsibilities likely to arise from the Bill. Further pressures arising from the Bill will be considered in the context of the strategic review.

The Government do not believe that the commission would be helped by a further review of the kind described in the noble Lord's amendment. My right honourable friend has appointed to the Charity Commission a new non-executive chair, Geraldine Peacock, and a chief executive, Andrew Hind. Both have held leadership roles in a variety of settings, as well as having strong track records in the voluntary and community sectors, and they are respected for their work.

What the Charity Commission now needs is a period of freedom from external reviews, while the new chair and chief executive get on with the important job of modernising the Charity Commission, which they have begun with the strategic review. The Government have every confidence in their ability to lead the commission forward as it takes on the important new responsibilities given to it by the Bill, and we will of course ensure that the commission continues to have the resources it needs to do the job that Parliament entrusts to it.

In terms of the mechanics of the money and the way it flows, the commission has a parliamentary Vote like all other government departments. It achieves this by bidding to the Treasury, as I explained earlier, like all other government departments. Accounts are audited annually by the National Audit Office, which is a paragon of independence, as we heard earlier. So there is a proper process there, and the monitoring is appropriate and right. Obviously, the role of government is to ensure that the funding is fit for purpose and adequate to the job. I hope that what I have said about the review and the way in which it has been conducted thus far will satisfy noble Lords who are concerned about the issue.

Lord Swinfen

I thank those who have supported the spirit of the amendment and I thank the Minister for his reply, which I shall read with interest. Personally, I am not satisfied with having to wait five years for a review. I would be much happier if it were three years, which is quite long enough.

I would also like to see a provision in the Bill because otherwise there is grave tendency for slippage to occur. But the Charity Commission and the Government will want to review how the legislation works. Will the Minister bring forward an amendment on Report to put this provision into effect?

Lord Bassam of Brighton

I never rule anything out. I will certainly go away and give the matter some consideration and further thought. However, in saying that, I do not make a specific promise to bring it back on Report.

Lord Swinfen

I thank the noble Lord and I, too, will give the matter further thought between now and Report. I may well come forward with another amendment to achieve a proper review within a reasonable length of time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 36 not moved.]

Clause 6 agreed to.

Schedule 1 [The Charity Commission]:

Lord Hodgson of Astley Abbotts

moved Amendment No. 37: Page 69, line 9, leave out "four" and insert "five

The noble Lord said: We have had an important debate on the structuring and positioning of the commission. We now turn to its make-up. Our next group of amendments probe the way in which it is established. They are, by their nature, of less strategic significance than the debates we have had today, but nevertheless it is worthwhile having the Government's thinking on the record.

The first group of amendments comprises Amendments Nos. 37, 38 and 39, all of which relate to Schedule 1(1), which sets out in detail the Charity Commission membership. Amendment No. 37 seeks to increase the minimum of people who sit on the commission from at least four to at least five, other than the chairman. Noble Lords will notice that our later amendments cover the details of how we wish to alter the composition of the commission membership.

In general terms, we believe that a commission of four—or five if you include the chairman—is too small. We do so on two grounds. The first is to provide strategic direction for and control of the commission which is responsible for regulating a sector as diverse and dynamic as the charitable sector represents an unreasonable workload for any four people. Secondly, with only four members, the danger of the commission becoming introverted and isolated in its view and its decisions are increased.

Finally, our Amendments Nos. 38 and 39 seek to clear up the drafting of the Bill as we believe that subparagraph (2) is superfluous. Members of the Committee can see that these amendment make two subparagraphs into one and shorter Bills are better Bills. I beg to move.

Lord Phillips of Sudbury

There is force in the points made by the noble Lord, Lord Hodgson.

Lord Bassam of Brighton

Under the Charities Act 1993, the Home Secretary is required to appoint a chief charity commissioner and a minimum of two other commissioners to a maximum of five commissioners in all. The Strategy Unit proposed—and in their reply the Government accepted—that the maximum number of commissioners, members of the Charity Commission, under the Bill should be increased from five to nine, including the chair. The intention is to broaden the range of backgrounds and experience represented on the commission. That is achieved by the Bill.

The chair of the commission is a member of the commission appointed like other members by the Home Secretary under paragraph 1 of the proposed Schedule 1A to the 1993 Act—lines 9 and 10 on page 69. The effect of the noble Lord's amendment would be to increase from four to five the minimum number of members to be appointed to the commission under the Bill in addition to the chair.

There is no magic about the minimum of four members in addition to the chair proposed by the Bill and it is the Home Secretary's intention to appoint additional members to the proposed maximum of nine, including the chair, as soon as the relevant provisions can be brought into force. However, Members of the Committee may feel that it is better to express the minimum number of members, including the chair, as an odd rather than an even number to avoid the possibility of a tie should matters ever come to a vote. This means that the numbers, excluding the chair, must as it is now in the Bill be an even number.

3.30 p.m.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister for those comments. I am also grateful to the noble Lord, Lord Phillips, for his support. I take the point about having an uneven number of members on the commission overall. This was obviously a probing amendment. We shall think further on the matter and perhaps return to it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 38 and 39 not moved.]

Lord Hodgson of Astley Abbotts

moved Amendment No. 40: Page 69, line 14, leave out "two members have" and insert "one member has

The noble Lord said: I rise to speak to Amendments Nos. 40 and 43 which concern the same part of the schedule that we have been discussing.

Amendment No. 40 concerns the minimum number of members of the commission who must have legal qualifications. I fear that although I was lucky enough to obtain the support of the noble Lord, Lord Phillips, previously, I shall be less lucky now.

We believe that, as the maximum number of members stands at eight, having a requirement that one-quarter of the commission membership be made up of lawyers is inappropriate. Indeed, as regards the minimum number, half the commission would be made up of lawyers. Therefore, with Amendment No. 40 we seek to reduce the minimum number of lawyers from two to one.

Amendment No. 43 would then fill the space left by one less lawyer with the inclusion of an accountant. The wording of Amendment No. 43 is designed to produce someone who is a practising accountant, a company auditor, and as such will provide that expertise. We do this for two reasons. First, in its new role and with its extended powers and duties the financial complexity of the operations of the commission has increased considerably. For example, according to the regulatory impact assessment which accompanied the Bill, new costs to the Charity Commission would include between an extra half a million pounds and a million pounds to cover proposals for exempt charities, between £350,000 and £650,000 for excepted charities, £430,000 for changes to the commission and between £400,000 and £600,000 for processing appeals. Therefore, the financial complexity of the commission's operations will inexorably increase.

Secondly, and equally importantly, a major aspect—some might argue that it is the major aspect—of the commission's duties relates to the maintenance of public confidence in the operation of charities. In no aspect of the operations of the charitable sector is public confidence in the sector more likely to be dented than by cases, or a case, of financial misappropriation and malfeasance. A member of the commission with detailed accounting and/or auditing knowledge is essential to provide both expert analysis of cases brought to the commission and experienced judgment of how best to address and remedy any weaknesses.

Amendment No. 43 would ensure that one member of the commission must be an accountant. This would ensure that financial expertise, as well as the legal expertise that is already required by the provisions of the Bill, would have to be included in making up the membership of the commission. I beg to move.

Lord Shutt of Greetland

I address both Amendments Nos. 40 and 43. I have reservations about this trading description, as it were, of those who are fit and proper people to be members of the Charity Commission. I see the point of having lawyers about the place, but on the other hand you can buy 'em in. I am in favour of accountants. I have been an accountant all my working life. But should we not also have someone who is involved in real estate and an investment broker? Frankly, we need people of good judgment; that is what it is important to have on the Charity Commission. If we can get people of good judgment who also have other trading attributes, that will be fine. However, in my view it is not helpful to clog up the system by describing members in a certain way.

Lord Phillips of Sudbury

Just to show that the "Liberal" in Liberal Democrats still means something, I disagree with my noble friend. I am grateful for the noble Lord, Lord Hodgson, not calling me Mandy Rice-Davies because I would, wouldn't I, support the idea of two lawyers rather than one. However, although on the whole I think that too many lawyers is a great curse of our society, on this occasion I believe that it makes a lot of sense to have two legal commissioners. We have learnt from these debates just how particular charity law is and how difficult it is in many respects. It requires a high level of legal judgment. You cannot simply deal with it technically. Many value judgments are involved in applying charity-law tests and criteria.

Since the heart of what the Charity Commission has to do is legal, it seems to me eminently sound that there should be two lawyers among its number to ensure that that central role is adequately resourced. If I may say so, it is not enough to buy 'em in, as my noble friend Lord Shutt said; you need them there all the time to know when to buy 'em in. Therefore, I oppose Amendment No. 40.

Lord Bassam of Brighton

When I saw this group of amendments, I thought that it comprised "be beastly to lawyers and nice to accountants" amendments. My view was rather underlined by the contributions made to the debate.

Paragraph 1 of the new Schedule 1A preserves the position under existing law which requires two of the Charity Commissioners to have a seven-year legal qualification. The Strategy Unit proposed, and the Government accepted, that the number of commissioners should be increased to ensure broader representation —the point that was made by the noble Lord, Lord Shutt—particularly from the voluntary and community sector. However, as the noble Lord, Lord Phillips, said, legal issues will remain at the heart of the commission's work. It is essential to ensure that an appropriate number of the commission's members continue to be legally qualified.

The Bill sets the minimum number at two. When the number of members is increased from five to nine, the proportion who are lawyers will automatically decrease. Therefore, one could argue that their influence—I am sure that it is not a malign influence—would diminish. Because of that we believe it is more desirable that the members, as a board, should continue to have more than a single legal voice to listen to. Lawyers among the Committee might attest to the benefits of lay persons having a variety of legal views at their disposal rather than just a view from one source. That is an important point. Lawyers are good at niggling away at issues between themselves and I am sure that that can be a very creative process.

The Bill would not prevent the Home Secretary appointing more than two legal commissioners if he so wished, but I can tell the Committee that he has no present plans to do so. I hope therefore that the Committee will accept the status quo. The noble Lord, Lord Hodgson of Astley Abbotts, wanted to ensure that there was at least one accountant on the board. We are certainly not against the suggestion of particular members having skills and knowledge, but it would be wrong to try to limit that in the way the amendment suggests. It is too restrictive and might act against appointments being made in a more flexible way in the future. That is one of the reasons why we wish to expand the number of commission members. We want to see a broad range and ensure that there is scope for that to occur.

As regards advice, the commission has 25 accountants and 23 lawyers on its staff, so accountants are well represented—slightly better so than lawyers. Having heard that explanation, I hope that the noble Lord will feel happy to withdraw the amendment.

Lord Phillips of Sudbury

Did the Minister's last remark carry the implication, which I would support, that the Charity Commission needs more lawyers?

Lord Bassam of Brighton

I think that the noble Lord would be unwise to draw too much from my observation.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister and to the noble Lords, Lord Shutt and Lord Phillips. I believe that the Minister is trying to have his cake and eat it. On the one hand he says, "We must have flexibility. We must get the best people", which follows the point made by the noble Lord, Lord Shutt. On the other hand, he says, "We're going to have two of them and they have to be lawyers". Indeed, it could be half the commission, as I have said.

I have no particular problem. The reason for reducing the number of lawyers from two to one was not because I necessarily believe there should not be two lawyers on the commission, but because I did not want to be accused of unduly enlarging the commission and restricting or removing the flexibility when I sought the appointment of an accountant.

I believe that the Minister underestimates the amount which accountants on the commission could provide to it in the performance of its duties. The Minister can either take his hands away from the issue and say, "Let's have appointments in the way that makes the most sense", or he can say, "We want two lawyers for the reasons I have explained". In that case, he is starting to set the structure, not the people, and one carries an accountant in the train of those two legal appointments.

I will read what the Minister said and think about it. However, I am not convinced by the arguments he has put forward.

Lord Phillips of Sudbury

Will the noble Lord, Lord Hodgson, reflect on his maths? He said several times that there could be a situation in which half the commission were lawyers. As I understand it, the minimum number of commissioners is five.

Lord Hodgson of Astley Abbotts

The noble Lord is absolutely right, but I am talking about the four members of the commission. There are four members of the commission plus a chairman. Two of the members can be lawyers. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

moved Amendment No. 41: Page 69, line 17, leave out from "Wales" to end of line 19.

The noble Lord said: In moving Amendment No. 41, I shall speak also to Amendments Nos. 42, 44 and 47. They too are concerned with the narrow point of the make-up of the commission, and are on the Welsh aspect. Amendment No. 41 removes the necessity of consultation with the National Assembly for Wales before the Welsh member is appointed. Amendment No. 47 removes the necessity for consultation with the National Assembly for Wales before the Welsh member is removed.

The amendments are intended to give the Government the opportunity to explain why such consultation is necessary; why, if it is necessary, similar consultation is not required for the other appointments; and, finally, how it is proposed to be carried out. Is the Minister seriously proposing that the Welsh Assembly as a body be consulted before an appointment or removal? Surely not. This is a fig leaf and the Minister must know it.

For instance, it appears from the Bill that no consultation is required for the appointment of a legal member and, perhaps more importantly, no one has to be consulted before the appointment of either the chairman or the chief executive of the commission. All that the chief executive appointment requires is the prior approval of the Minister for the Civil Service under paragraph 5(2) of new Schedule 1A on page 70.

Amendment No. 44 is also concerned with the issue of the Welsh member and seeks clarification on the meaning of paragraph 1(4) of new Schedule 1A. That paragraph explains that the Welsh member of the commission as defined in new sub-paragraph (3)(b) does not include the chairman of the commission. What does that mean? Does it mean that the chairman cannot have the dual responsibility of being the member who is knowledgeable about the condition in Wales as well as being the chairman of the commission? Or does it mean that someone with knowledge of charitable conditions in Wales has to be excluded from being chairman? If the former explanation is correct, I ask the Minister why he believes that it is necessary. Surely one can envisage a situation where the Welsh member would be a suitable chairman. I beg to move.

3.45 p.m.

Lord Swinfen

I have a query. Why do the Government not have to seek advice from Parliament? They will have to seek advice from the National Assembly for Wales about someone to represent Wales. Why is advice not sought from Parliament as a whole about the other members of the commission? It does not strike me as very logical.

Lord Borrie

Hearing the noble Lords, Lord Swinfen and Lord Hodgson, I suspect a party-political motive, which is unworthy of these discussions.

Lord Swinfen

If the noble Lord will forgive me, I had not given this amendment any consideration until I heard my noble friend move it. It was examining the Bill as he was doing so that brought this to my mind. We have not discussed this.

Lord Borrie

I did not suggest that the noble Lords had discussed it. I suggested that they had a common recollection of their party's objection to devolution in Wales. This is a very straightforward provision. As a matter of courtesy, and for practicality, the National Assembly should be consulted about the Welsh member. Conservative Members may not like devolution—or the element of devolution, which is fairly modest in Wales compared with Scotland—but it is there and this is a courteous application of common sense.

Lord Bassam of Brighton

Paragraph 1 of new Schedule 1A to the 1993 Act requires at least one of the members of the Charity Commission to be someone who knows about conditions in Wales and who has been appointed following consultation with the National Assembly for Wales. The Strategy Unit's recommendation is that one member of the commission should be appointed by my right honourable friend the Secretary of State for Wales. However, the National Assembly for Wales has devolved responsibility for the voluntary and community sector in Wales. Charity law and regulation is, in practice, the only significant area of community policy in Wales for which the Home Office retains responsibility.

In the light of this, the Government believe that it would be more appropriate for all members of the Charity Commission to be appointed by the Home Secretary, following consultation with the National Assembly in the case of the member who knows about conditions in Wales. As the noble Lord, Lord Borrie, said, this is a common courtesy to do with the way in which the devolution settlement has worked out.

Details of how this arrangement will work in practice are yet to be finalised, but we would expect the National Assembly for Wales to be represented on the selection panel and for the Minister for Social Justice and Regeneration in the Welsh Assembly Government to be consulted before the appointment is made. The final decision will remain with my right honourable friend.

Nothing in the Bill would prevent the Home Secretary appointing to the chair of the commission a person who knows about conditions in Wales. However, the Government do not believe that the appointment of the chair of the commission, as opposed to its members, should necessarily require consultation with the National Assembly. Even if the chair is a person who knows about conditions in Wales, the commission should include at least one other member who has been appointed following consultation with the National Assembly.

Lord Hodgson of Astley Abbotts

I thank the Minister. I assure the noble Lord, Lord Borrie, that I had no wish to be discourteous to the National Assembly for Wales. But I think that sometimes we put fig leaves that do not mean anything into Bills. It is important that, if one is to offer courtesy, it is in a form and manner that can be followed through and made effective. I am partially reassured by what the Minister said, but only partially.

I could not quite understand the shuffle between paragraph 1(4) of new Schedule 1A, consultation, the chairman and the member from Wales. I shall read carefully what the Minister has said, rather than take up the time of Committee by asking him to clarify further now. I read the Bill to mean that the chairman of the commission could not be the member for Wales. I shall read the Bill again more carefully in the light of what I think the Minister said in his response. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

moved Amendment No. 42: Page 69, line 19, at end insert ", and ( ) one member is a trustee of a registered charity that is not subject to audit under section 27 or 30

The noble Lord said: This is the final amendment in the group dealing with the make-up of the commission. We are still with Schedule 1. The amendment adds a further defined member to the make-up of the commission. I pray the restraint of the noble Lord, Lord Shutt, while I explain why I make such a proposal.

It is a trustee of a charity which is not subject to audit under Clause 27 or 30. Those clauses refer to charities, either companies or trusts, which have an annual gross income which exceeds £500,000. The effect of the amendment is to include on the commission a representative from the smaller end of the charity scale; that is, a charity with a gross annual income of less than £500,000. I accept that that is not very small, but I felt that it was the easiest way in which we could get at least a first canter over the ground to explore the Government's thinking about the need for a representative of a smaller charity.

We laboured the point at Second Reading and during the earlier meetings of the Grand Committee that the Bill should avoid a one-size-fits-all policy on regulation and that charity regulation should be proportionate in its application to larger and smaller charities. The noble Baroness, Lady Scotland, was clearly in agreement with that view at Second Reading when she explained how the Bill will make improvements in several areas of the law and in the regulation of charities. The fourth reason she gave was the, changes to ensure that effective and proportionate regulation applies right across the charity sector, including those charities that are not required to register with the Charity Commission".— [Official Report, 20/01/05; col. 883.] "Effective and proportionate regulation" are the key words, and I know that we shall return to them at the next meeting of the Committee in various amendments.

In my experience of the City, too often regulatory bodies can be over-influenced by the big business. They are the bodies which provide representatives for panels, which suggest policy amendments and which respond to consultation papers. The little guys can get overlooked. With charity law and regulation being altered, and the commission's powers being enhanced, it seems only sensible that a representative of the smaller end of the charity sector should constitute one small part—less than the lawyers—of the commission's membership. The amendment would achieve that important effect, and I beg to move.

Lord Shutt of Greetland

I support the amendment. There is a big difference between the professional and trading qualities of a person compared with the knowledge which someone may have of charitable activity. It is important that the commission has as a member someone who understands the small charities. We should not forget that, by and large, they are the majority of the charities. The commission will from time to time send out letters, documents, newsletters and so forth, and I imagine that the commissioners will have the opportunity to look at them. To have as a member someone who can say, "Look, I or my friend could be the recipients of this as clerks. Does it make sense? Does it contain anything which relates to our little charity?", is most important.

It all fits in with the whole business of independence. I am having difficulty with independence, quasi-independence, the Minister's position and so forth. In one sense, I understand and accept the arguments put forward today about independence. However, it is important that the commission, if independent, does not run off and do its own thing. There should be someone there who knows something about the smaller charities.

I therefore believe that this is a good amendment, and it could mean that there is a balance within the commission which gives an understanding of the smaller charities.

Baroness Howe of Idlicote

I support the amendment. I am not yet certain whether it should be written onto the face of the Bill, but a very good case has been ably made for why this large sector could learn from this kind of interaction—and, indeed, contribute to it—if such charities are represented on the commission. If the Minister can convince us that this will almost certainly happen as part of the overall ethos, then it may not be necessary for it to be on the face of the Bill. Although for practical reasons that may be necessary for the more technical members, the lawyers and the accountants, I hope very much the Minister will accept the intention behind the amendment.

Lord Swinfen

I also support the amendment. I run a very small charity. I am not a trustee—deliberately—so that other people can advise me and keep me in order, which trustees do very effectively. The very small charities have a great deal of difficulty in doing their work without necessarily being able to afford the right advice—indeed, sometimes without being able to afford any advice at all. I am sure that it would be very useful for the Charity Commission as a whole to have the assistance of someone who has worked with a very small charity—possibly someone who has helped to set one up and get it going, or who has assisted in overseeing its day-to-day running.

Many charities nowadays are multi-million pound businesses. They are charitable; but they are multi-million pound businesses. We must not forget that, as in the industrial world we have to cater for the man starting up in a garage on his own as well as for the ICIs of this world.

The Lord Bishop of Peterborough

I, too, support the amendment. I am a trustee of a number of charities of all sizes, some ex officio and others in my personal capacity. I entirely agree with the points that have been made that the smaller charities have particular needs and are sometimes overlooked in the evident desire to regulate the larger charities. I therefore wholeheartedly support the amendment.

Lord Phillips of Sudbury

I, too, support the amendment. When I first read it I did not take full account of its potential. I repeat what I said at Second Reading. I have a recurring nightmare about the Bill that, clause by clause, one can justify what is on the page but in aggregate, collectively, it will be yet another rod for the backs of the small charities that make up this wonderful charity sector.

I shall be interested to hear what the Minister says in response, because there may be aspects of the debate that have not yet crossed my mind. However, I commend to the noble Lord, Lord Hodgson, that, rather than draft the amendment as he has—that "one member is a trustee of" and so on—he should state that one member has particular experience of small charities, or words to that effect.

The danger is that every member of the Charity Commission is a member of a small charity—we all of us are—and so that would not be an effective test. A generalised test would be much more effective. I have suggested those words, but the noble Lord may perhaps be able to think of better ones.

Lord Bassam of Brighton

It is certainly an interesting amendment. It has attracted broad support from within the Committee—one would not need to have too acute political antennae to detect that—but the problem with it as it stands is that it is too prescriptive—a point made by the noble Lord, Lord Phillips—in prescribing that it has to be a trustee of a registered charity who occupies a particular place within the commission.

My problem overall is that the amendment would impact on the flexibility that we want in terms of the appointments of commissioners. The likelihood is that the sort of person to whom we will look to become a commissioner in future will be someone who has broad experience of the charitable sector. I am a patron of a number of charities, which vary from one that has a very small annual turnover to an institution that has a rather large annual turnover. The breadth of experience in the individual who might become a commissioner is important so that they appreciate the problems of large and small organisations.

4 p.m.

I do not want to be entirely negative about the amount; I can certainly see that it is inspired by a good spirit and I have heard what has been said on the issue. I am rather reluctant to have prescriptive provisions entered into the Bill; I share with the noble Baroness, Lady Howe, some discomfort with that. However, I hope that the Committee will be satisfied that I agree to consider how the concerns raised on the issue can be best accommodated by the Bill. I say that without making specific promise to bring back an amendment. but the issue is something that I am certainly happy to take away to see what we can do with it.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister for that two-thirds of a positive response. I am also grateful to all those who spoke in support of the amendment—the noble Lords, Lord Shutt and Lord Phillips, the noble Baroness, Lady Howe, my noble friend Lord Swinfen, and the right reverend Prelate the Bishop of Peterborough. Let me say at once that I have no pride of ownership on the drafting. The idea was to have a debate on its principle, and I am sure that there are better ways in which things could be done. I simply wanted to ventilate the issue before the Committee.

I entirely agree with the point made by the noble Lord, Lord Phillips, about rods for the back of the charity sector. Actually, we are talking about straws on the camel's back. Each provision seems very reasonable, but the cumulative burden will be very great indeed. Therefore, we need someone to speak for the smaller end of the sector. I am grateful to the Minister for having agreed to take the issue away to think about how he can address it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 43 and 44 not moved.]

Lord Hodgson of Astley Abbotts

moved Amendment No. 45: Page 69, line 27, leave out "five" and insert "three

The noble Lord said: I am glad to say that we have now left paragraph 1 of the new schedule and are on to terms of appointment and remuneration. Amendments Nos. 45, 46 and 48 cover the details of the length of appointment. Amendment No. 45 ensures that membership shall be for a term not exceeding three years, as opposed to the five proposed in the Bill. Amendment No. 48 replaces the open end in new sub-paragraph (4), which apparently permits members to be reappointed without limit after their term of office has expired. Our amendment inserts a new provision that a member may be reappointed for only a further two terms.

Both those amendments are clearly intended to regulate more carefully the terms of appointment within the commission. To give a member a three-year appointment slot with a rolling review that can extend up to nine years—three times three—seems more structured and better regulated than in the Bill as drafted. As I read it, the Bill suggests a member can hold office for five years and then be reappointed for an infinite number of five-year slots.

We have been round this piece of the course before. The Minister will say that all three of our amendments are unnecessary because the appointments will follow the guidelines for appointments. I do not agree with that approach. The length and number of appointments of a body that is supposed to be independent of government, for the reasons that we hacked through earlier, should appear in the Bill. If the Government really believe in the guideline approach of the office of the Commissioner for Public Appointments, why mention any term at all, such as the five years in the Bill? I beg to move.

Lord Borrie

I do not agree with this amendment. I am sure that we are all very familiar with the terms of appointment in these Bills and the question always arises about how to achieve a balance between continuity on the one hand and change on the other. Therefore, I ask whether the term should be three or five years, as this amendment proposes. What I tend to feel about three years is that, by the time you have got to know what the job is all about, got your feet under the desk, got to know everybody and all the issues, you are practically halfway through the term and then on the way out again. Three years can go by incredibly quickly whereas five years allows a little more time.

I am bound to mention that the noble Lords, Lord Hodgson and Lord Phillips, who may speak on this amendment, made powerful speeches earlier in the afternoon in favour of the independence of the Charity Commission. That independence is enhanced by a somewhat longer term than whatever you first think of and five years is somewhat longer than three.

The noble Lord, Lord Hodgson, made a strong point about reappointment. Perhaps it is not sensible to have this open-ended provision in paragraph 3(4) where someone can be appointed for a succession of five years—which could amount to 20 or 30 years in theory. I doubt whether that would happen, so I doubt whether there is a practical problem unless the noble Lord knows examples of where it has been. Therefore, it is best to leave the provision in Schedule 1 as it is.

Lord Phillips of Sudbury

I have two amendments in this group, which is rather an odd group. I am grateful for what the noble Lord, Lord Borrie, said because I agree with him entirely, both on Amendment No. 45 because three years is too short and on Amendment No. 48 because two further terms is reasonable. I will say no more than that because the noble Lord said it all.

I now turn to two amendments in my name. The first, Amendment No. 46 deals with the rights of the Secretary of State to remove any commissioner. At the moment, the Secretary of State may remove a commissioner on the grounds of incapacity or misbehaviour, which is a common formulation in statutes of this kind. My amendment would add what seems to be a minimal protection—namely, that the Secretary of State can do that only, having first (other than in an emergency) consulted with the Commission (… except the person to be removed)". That seems to be, if not common sense, then common manners. After all, the commission will have a great deal to say, I hope and suspect, about removal on the grounds of incapacity or misbehaviour.

Amendment No. 49 is nothing whatever to do with the other three amendments, but I suppose that I had better deal with it because the groupers have put it in this group. Paragraph 4(3) of the schedule states: If the Secretary of State determines that there are special circumstances which make it right for a person ceasing to hold office as a member of the Commission to receive compensation", then he can go on and pay compensation.

This is a probing amendment. The phrase, special circumstances which make it right for a person … to receive compensation", could not be more vague. I want to be quite certain. If the Minister can assure me that that could not subvert the rights of a commissioner who had been removed vis-à-vis his or her contractual rights and remedies, I shall be content. I do not think that it does, but let us have it plainly stated.

Lord Bassam of Brighton

It is a slightly disparate group, but I shall try to deal with the amendments in turn. Paragraph 3(1) of the new Schedule 1A places a limit of five years on the period for which a person may hold office as a member of the Charity Commission. In recent years commissioners have generally been appointed for an initial period of three years and offered an extension at the end of that period. My right honourable friend the Home Secretary would propose to follow that practice under the Bill.

It is difficult to form a judgment about the optimum length of an appointment, and what is appropriate for one kind of appointment may be less appropriate for another. But in general terms the Government believe that a five-year maximum would be long enough for a member to have a real impact on the commission's work while ensuring that there is an infusion of new blood from time to time. Therefore, we believe that three years is too short, while five years probably enables us to get the maximum. It is right that consideration is given to ensuring that people move on. We might like to consider again the notion of placing a limit on the Home Secretary's power to reappoint members of the commission. We might want to come back with an amendment on that issue, which might satisfy some of the concerns that have been raised.

On Amendment No. 46, paragraph 3(2)(b) of the new Schedule 1A to the 1993 Act allows the Home Secretary to remove a member of the Charity Commission from office on grounds of incapacity or misbehaviour. We hope that that situation would not arise very often; it is not one that has arisen often in the past, so one hopes that it will be an infrequent occurrence. If it were to arise, the Home Secretary would, in practice, expect to consult not perhaps the whole commission but at least the chair; or, if it were the incapacity or misbehaviour of the chair that was itself at stake, one or more other members of the commission, or perhaps the chief executive. We are dealing with circumstances which we hope and expect will rarely if ever arise.

It is difficult to deal comprehensively with those sorts of issues in a Bill, covering every eventuality, and for that reason we think that it is best not to spell out in the Bill exactly what consultations the Home Secretary might expect to have before removing a member of the commission in these highly unusual and sensitive circumstances. I hope that the noble Lord will not feel obliged to press the amendment at a later stage. But I am happy to confirm that the Home Secretary would expect to consult the commission very carefully, as I have set out.

On Amendment No. 48, paragraph 3 of the new Schedule 1A places a five-year limit on the period of any appointment to the Charity Commission under the Bill. The effect of sub-paragraph (4) of paragraph 3 is to ensure that a person may be appointed to the commission for a second or subsequent term even if he or she has previously been so appointed. As I explained earlier, the Home Secretary's practice has in the past been to appoint for three years, and then usually to renew the appointment for a further two years. Sub-paragraph (4) of paragraph 3 is needed to ensure the continuing validity of that practice. It would not be the Home Secretary's intention to appoint for the full term of five years and then to reappoint once or indeed twice to a maximum of 15 years, as I suspect is the intention of the amendment. I hope that that deals with that particular issue.

Amendment No. 49 proposed by the noble Lord, Lord Phillips, raises the issue of compensation. Paragraph 4(3) of the new Schedule 1A is technically necessary to ensure that the Home Secretary is able to pay compensation to a person who ceases to be a member of the Charity Commission if there are special circumstances which make it right for him to do so. Those circumstances are deliberately not defined in the Bill, precisely because they have to be in some sense special. It is not, for example, the intention to limit the application of the power to circumstances in which a member of the commission is removed on grounds of incapacity or misbehaviour, as we touched on in connection with the earlier amendment.

We cannot envisage any circumstances in which a payment of compensation to a former member of the commission might conflict with the former member's legal entitlements, but I am happy to confirm that the provision would not override those entitlements if such a conflict were to arise. I hope therefore that the noble Lord is satisfied with that explanation of our attitude to the amendments.

4.15 p.m.

Lord Hodgson of Astley Abbotts

I am grateful to all noble Lords who have contributed to the discussion on this point. Amendments Nos. 45 and 48 should be read together; that is, if the term of five years is not replaced with three years, one would not want to have a maximum of two. That would result in three times five, which is 15 years and thus, as the Minister said, very long. So the purpose here was to ensure a maximum of nine years through three appointments of three years.

It is now general practice in the private sector for non-executive appointments to be structured on a three-year rolling basis rather than on five years. A term of five years might have been the norm years ago, but it was felt right to shorten it. The reason that the companies I am associated with have shortened it is, if I may say, a very unheroic one. It is extremely difficult to get rid of a non-executive director unless they have done something seriously wrong. However, their performance may be simply sub par. If it continues like that for the three years of their term, they are not reappointed. My concern about a five-year appointment is that if someone is all right but is not making a major contribution, there is no moment at which you have to reappoint, thereby forcing a discussion, because the appointment just rolls on. Shortening the term from five years to three therefore is an attempt to make sure that the commission members are regularly reviewed both on their performance and on what they contribute to the way the commission operates. That is very important, given the strategic nature of their role.

Given that, the provisions in the Bill in which we have provided for five years but only three years will be used do not go to the heart of what I seek here. I am very concerned that the Minister did not refer to the code of practice from the Commissioner for Public Appointments, but if he looks at it he will see that the commissioner now says that an appointment as chairman means that you start again at the beginning; that is, you can be appointed as a non-executive director for a time, and when you are appointed as a chairman, you start again. On that basis you could have two five-year terms as a member and two five-year terms as a chairman, making 20 years in total, which is clearly far too long.

I do not think that we have got to the root of this issue. There is a need for freshness by bringing in people who can take a new approach. People can become part of the furniture too quickly in this rapidly changing world. They become exhausted with the fast rate of change. A period of three years to get stuck in, followed by another appointment of three years if you are doing well, and a third appointment of three years if you are doing really well is quite sufficient. If you do not do well, the knife can fall after each three-year period.

I shall read what the Minister has said, but I may want to discuss this further at a later stage.

Lord Bassam of Brighton

Before the noble Lord, Lord Phillips, rises to respond to his amendments, I want to reiterate that I am happy to consider a limit on the Secretary of State's power to reappoint. In part I take to heart what the noble Lord says, although I cannot believe that there would be many circumstances in which someone would end up remaining in post for as long as he has suggested. However, I am prepared to consider at least part of his point, which I thought I had made clear earlier on.

Lord Phillips of Sudbury: As the noble Lord, Lord Hodgson, set out his powerful argument for rapid turnover so as to avoid people becoming part of the furniture, I could not help thinking about our own tenure in this place. Turning to the two amendments tabled in my name, I am as unhappy with the Minister's response to Amendment No. 46 as I am happy with his assurance on Amendment No. 49. Earlier we spoke at length about the importance of the independence of the commission. I do not see how it could conceivably be justified for a Secretary of State to swoop in and sack someone without even telling the commission, let alone consulting it.

It is all very well for the Minister to argue with the words, "In practice we would expect to consult, and if it was not the chairman in question, we might consult the secretary", but that is not good enough.

Lord Bassam of Brighton

It is.

Lord Phillips of Sudbury

Oh, it may be!

Lord Bassam of Brighton

All that I would say to the noble Lord is: read what I said. I thought that I made it plain that there would be that consultation and that we considered that very important. I do not see the Secretary of State's role as, as the noble Lord rather graphically put it, swooping in to sack people without talking to people about what is going on. That is not how his role is set out.

Lord Phillips of Sudbury

With great respect, the Minister said that the Secretary of State would consult but he will not accept the amendment. If the Secretary of State would consult, why on earth can the Minister not accept the amendment? The truth is that the Minister is saying that in the normal course of events, the Secretary of State will consult. I repeat that we are here dealing with an essential issue of independence over the Commission. I will certainly return to this on Report.

Baroness Howe of Idlicote

I want to clarify my mind on one point. Speaking of three years, because I support the amendment, if there are to be three plus three plus three years is at least the third appointment to be an open competition? That is quite an issue.

Lord Bassam of Brighton

Each appointment is in open competition.

Baroness Howe of Idlicote

As I understood it, reappointment often does not go out.

Lord Bassam of Brighton

The important point is that the initial appointment is subject to open competition.

Lord Hodgson of Astley Abbotts

I thought that I had already sought leave to withdraw the amendment.

The Deputy Chairman of Committees

The noble Lord made an attempt that failed.

Amendment, by leave, withdrawn.

[Amendments Nos. 46 to 50 not moved.]

Lord Hodgson of Astley Abbotts

moved Amendment No. 51: Page 71, leave out lines 13 to 22.

The noble Lord said: We now come to paragraph 9 of Schedule 1 on page 71. This is a probing amendment that would remove the paragraph entitled "evidence". The paragraph explains when the Documentary Evidence Act 1868 shall have effect. As part of my research in preparation for the Bill, I asked three or four charity lawyers what on earth that meant. Not one of them could tell me off the top of his head. Therefore, for those of us laymen who are unfamiliar with the provisions and impact of the Documentary Evidence Act 1868, the import of the paragraph is difficult to comprehend and put into the context of the Bill. For the greater good of the public, could the Minister explain the effect of the paragraph and the difference that it will make to charity law as it currently stands? I beg to move.

The Deputy Chairman of Committees (Lord Elton)

If this amendment is agreed to, I shall be unable to call Amendment No. 52.

Lord Bassam of Brighton

I suspect that the answer is: not much difference at all. The provision is designed to ensure that where evidence is needed in the courts or any legal proceedings that the Charity Commission has issued an order, regulation or other document, the evidence may be given by producing a copy certified by a member of the commission or the commission's staff. The provision modifying the 1868 Act apparently reflects a comparable provision in the 1993 Act and, as far as I am aware, reflects no change in policy. It is a carrying over, a continuance of existing practices.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister for that reply. I am sure that charity lawyers around the country will be grateful for that short explanation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton

moved Amendment No. 52: Page 71, line 14, after "first" insert "column of the

The noble Lord said: The amendment corrects an error in the drafting of the Bill. The Documentary Evidence Act 1868 has only one schedule, so to refer to it, as the Bill currently does, as the first schedule is inaccurate. The schedule has two columns. The first column lists departments and the second column lists people within those departments who may certify copies or extracts of certain documents as true copies or extracts. At the moment the Bill puts the commission in an unspecified place in the first schedule, whereas it should put the commission into the first column of the only schedule to the 1868 Act. The amendment achieves that objective. I beg to move.

On Question, amendment agreed to.

Lord Phillips of Sudbury

moved Amendment No. 53: Page 71, line 26, at end insert "and duties (see sections 1(C) and 1(D) of this Act)

The noble Lord said: I ask the noble Chairman whether I am allowed to speak also to Amendment No. 55, which should not, in my view, have been grouped with Amendments Nos. 54 and 56, except that it is in numerical order. Amendments Nos. 53 and 55 deal with the same point.

The Deputy Chairman of Committees

It is in order for any Member to ungroup an amendment. On reaching an amendment that has been ungrouped, it is appropriate to speak to it. If the noble Lord wishes to speak to it in advance, that is also in order.

Lord Phillips of Sudbury

I am most grateful. I believe that it will save time. These two amendments deal with the annual report of the Charity Commission as required under the schedule and the annual public meeting, which is also provided for in the schedule. That is an extremely good provision.

However, whereas under paragraph 10, which deals with the annual report, and paragraph 11, which deals with the annual public meeting, the commission has to give an account of how it has discharged its functions, there is no reference to the discharge of its duties. It seems to me that the discharge of its duties is quite as important as the discharge of its functions. Therefore, this amendment ensures that in the annual report and when responding to public inquiry at the annual public meeting the commission should be under an obligation to deal with duties as well as functions. I beg to move.

Lord Bassam of Brighton

In both amendments the noble Lord makes a good point. For that reason, we shall take the amendments away, give them fair consideration and bring something back on Report.

Lord Phillips of Sudbury

I am grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

moved Amendment No. 54: Page 71, line 42, after "meeting")" insert "by rotation in London, Cardiff, Newcastle, Manchester, Birmingham and Leeds The noble Lord said: Amendments Nos. 54 and 56 run parallel to the point just made by the noble Lord, Lord Phillips. This matter concerns the annual public meeting, which effectively is the annual general meeting for the Charity Commission held under paragraph 11 of Schedule 1. Amendment No. 54 has the simple effect of requiring the rotation of the location of the annual meeting so that it does not always take place in London.

It is a truism that charities exist all over the country and, therefore, it must surely be neither balanced nor fair always to hold the annual meeting in the same place. There are many who already believe that the country is too M25-centric. Rotating the AGMs so that they are spread around the country would, from time to time at least, give smaller local charities a better chance of attending them. Where the annual public meeting is to be held is not specified in the Bill and it would be helpful if the Minister could explain at what location or locations the Government believe such meetings should take place.

Following that line of argument, which is for a more user-friendly relationship between the commission and the regulated entities, Amendment No. 56 adjusts subsection (5) so that the commission shall give reasonable notice "to each registered charity" of the annual meeting. In the brave new world that we are creating with this Bill, there must be a strong argument that all registered charities should be informed of the details of the annual meeting. The drafting does not appear to ensure that such details must be communicated directly to each registered charity. The commission is, after all, inter alia, the sector regulator. Each regulated entity, particularly the smaller regulated entities, should be formally and directly informed of the AGM, the annual meeting, or whatever we are going to call it. Amendment No. 56 would ensure that such details, electronic or in the form of a letter, would be communicated to all registered charities. I beg to move.

4.30 p.m.

Lord Shutt of Greetland

I support these amendments. Particularly as a strong regionalist, I am rather in favour of rotating where the meetings may take place. I hope that when we consider this again the noble Lord might be more adventurous. It strikes me, "Why not Hexham, Halifax, Helston, and Hove?" for example. We should not always be in the usual suspect cities. We might go once every 100 years to Sudbury. I support this in principle, but beware of the usual suspect cities.

Lord Dearing

I support the amendment. These are great and glorious cities, but I agree that there are others. It would be unquestionably courageous of the Government to accept particular cities rather than others. I hope that they accept the principle that there are other places than London.

Lord Phillips of Sudbury

I wholly support the amendment. My only thought would be that one could put in a provision requiring rotation beyond the M25 without actually getting into precisely which cities. You never know; Milton Keynes might be a city in the future.

Lord Swinfen

I also support the tenor of the amendment, but it would not be right to name particular cities.

Lord Bassam of Brighton

I agree with the tenor as well. I am a bit disappointed that Brighton has been left off. I was beginning to feel aggrieved for the West Country as well; Truro is a nice place, and I am sure that we would all like to visit it.

The amendment is useful in the sense that it encourages the view that we should aspire to see these meetings take place on a rolling basis up and down the country. I do not see a problem with that aspiration. It would be wrong to put it in the Bill. It would be wrong to spell out the locations exactly, because you could run into the problem of rotating them in that form in perpetuity. I know that the commission is sympathetic to this, and it certainly empathises with the principle behind the amendment; I understand that three of its new open board meetings this year are to be held in regional locations: York, Liverpool, and somewhere in Wales yet to be determined. The spirit is willing, but the amendment would be overly prescriptive.

The effect of Amendment No. 56 would be to require reasonable notice "to each registered charity". There are some 190,000 registered charities—I have not done that calculation but someone else has. It is calculated that it would cost some £42,000 to notify all registered charities through the post. Many, but by no means all, registered charities have an e-mail address. The commission will aim to publicise details of the annual meeting as widely as it can using its website, the press, and the various umbrella organisations in the voluntary sector. I hope that the noble Lord will accept that it is not really a practical proposition to give effect to this amendment, but that the commission has, through me, given an undertaking that it will do whatever it can to give the broadest possible publicity to its annual meeting. Perhaps in the light of that commitment the noble Lord will feel able to withdraw that amendment as well.

Lord Shutt of Greetland

I am not certain that the Minister is correct about the amendment not being practical. The Charity Commission favours charities with regular circulars, newsletters and so forth. Therefore, the newsletters could certainly advertise an annual meeting. It is not a case of separate postage; the circulars are published on a very regular basis.

Lord Bassam of Brighton

I am sure that that is the case, and that the commission would be more than happy and willing to do exactly that. However, with a very specific obligation to each registered charity, there is a danger of missing one. When things are set out in tablets of stone and statutory concreteness, as it were, it is perhaps an unreasonable expectation. I am sure that the commission would want to get to all the charities in one way or another.

Lord Hodgson of Astley Abbotts

I entirely appreciate the points made by Members of the Committee who spoke in support of the principle of Amendment No. 54. I mentioned only those six cities to get the reaction that I duly got about why the idea was a good one, but they were not the right cities. However, I was grateful for the Minister for his reassurance.

What the noble Lord, Lord Shutt, said on the second amendment was exactly right. The Charity Commission will communicate with its regulated charities by various means, and it is perfectly possible to time the newsletter so that it could carry with it notice of the annual general meeting. For the first time this afternoon, the Minister was extraordinarily weak in his response. He said that the idea would prove very difficult. That is like saying to a company that it is awfully difficult to send a letter to every shareholder. Company law would not allow that.

The charities are regulated entities coming under the rod—to use the word of the noble Lord, Lord Phillips—of an active and proactive Charity Commission, which we all support. If it is efficient, it should be able to write to every registered charity by means of e-mail, inclusion in a quarterly newsletter or whatever else, and to time that so it is done effectively. To try and pin on it £42,000 for that alone is very weak indeed. I am not satisfied with the Minister's answer to Amendment No. 56, and I want to come back to it because it is important.

Lord Bassam of Brighton

I have just quietly conferred. I undertake to see whether we can have some discussions with the Charity Commission on how practical the idea would be. I heard what the noble Lord said, and the shareholder point is a valid one. We will give the matter some further thought.

Lord Hodgson of Astley Abbotts

I am extremely grateful for that. It is a handsome offer indeed, and I hope that we have some positive thought and attention to the issue. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 55 and 56 not moved.]

Schedule 1, as amended, agreed to.

Schedule 2 agreed to.

Clause 7 [The Commission's objectives, general functions and duties]:

Lord Hodgson of Astley Abbotts

moved Amendment No. 57: Page 5, line 19, at end insert— 6. The furtherment objective.

The noble Lord said: We wish to discuss a number of amendments in relation to the commission's objectives, general functions and duties. Amendments Nos. 57 and 63 are the first of those. They add another objective to the existing list given to the Charity Commission under new Section 1B. Amendment No. 57 adds the "furtherment objective" to the existing list of five, and Amendment No. 63 gives a definition of the furtherment objective to the five existing explanatory definitions in new subsection (3).

The objective is defined as, to promote public awareness of the charitable sector and to stimulate philanthropy". We believe that the failure to include that as an objective is a weakness of the Bill. The new objective in our amendment is—according to the Government in speeches made by the noble Baroness, Lady Scotland, and the noble Lord, Lord Bassam, today—one of the fundamental reasons why the Bill has been introduced. Yet it is not included specifically within the remit of objectives of the Charity Commission.

The noble Baroness made the policy intentions of the Government crystal clear in her introductory speech at Second Reading. She stated that the Government's three aims for the Bill were, first, to provide a legal and regulatory environment that will enable all charities, however they work, to realise their potential as a force for good in society; secondly, to encourage a vibrant and diverse sector independent of government; and thirdly, to sustain high levels of public confidence in charities through effective regulation". —[Official Report, 20/1/05; col. 883.]

If increasing public awareness of charities and the stimulation of philanthropy were included in the objectives set for the Charity Commission, we would be taking a big step towards achieving the Government's overall objectives for the Bill.

As several Members of the Committee have noted previously, the provisions of the Bill have increased the power of the Charity Commission by several notches. It is to become a proactive regulator. Its new role will include maintaining public confidence, setting the test for public benefit and maintaining it, ensuring compliance with the regulatory structure, promoting effective use of charitable resources and enhancing accountability.

Those are worthy objectives, which we support. But they are defensive; they are all restrictive. They invite the Charity Commission to draw attention to failure—never to success. Moreover, they run the danger of creating within the commission a box-ticking mentality.

The charitable sector is worth more than that. It needs a body to promote public awareness of what it stands for, what it offers society and what it achieves. It needs a body to explain how important a role the sector fulfils so that our fellow citizens of every age, background and economic circumstances are encouraged to contribute to the charity or charities of their choice, or at least to appreciate its contribution to our wellbeing.

It is true that individuals can and do play their role, but their work is inevitably and, quite properly, self-promoting. An even-handed sector overview is needed. That can best be provided by the commission. Hence, these two amendments, which I beg to move.

Lord Shutt of Greetland

I am not certain whether that clause is needed, but something like it is. "Furtherment" is a funny word. In my life, I do not think that I have used it very often, but I believe 1 know what is meant. I have with me Hansard for the Second Reading debate, because it is as well to have it here.

I was impressed with the contribution made by the noble Lord, Lord Sainsbury of Preston Candover. Being philanthropic himself, he clearly stated that he had been part of the Joint Committee which had considered the Bill, and so forth. Yet, towards the end of his contribution, he said: Last year research was published by Philanthropy UK which suggested that a fifth of wealthy people considering establishing a grant making trust decided not to do so because of the bureaucracy it involved, or because of what they had learnt from the difficulties created by the Charity Commission and by the charity SORP. A senior QC tells me he now advises his clients only to give out of income rather than endowing a grant making charity, because of what he calls unwarranted interference by the authorities".—[Official Report, 20/1/05: col. 904.]

If that attitude gets into the ether, it is bad for charities. One of the Charity Commission's objectives is to say, "Charities are good things. Wonderful things can happen because of charitable resources". That is rather important. Therefore, if that is "furtherment", I am in favour of it. It is important that we do not let it slip in this debate.

4.45 p.m.

Lord Best

I would like to support this amendment but I have some modest misgivings to add to the discussion. I declare an interest here because the Council for Charitable Support, previously chaired by the noble Lord, Lord Dahrendorf, and the Giving Campaign, a largely publicly funded campaign, have combined to become the Giving Forum, and I have agreed to chair that new joint body. The objective of that body is to promote—I suppose that is furtherment—philanthropy and charitable giving. Therefore, anything I say needs to be understood in the context of that new body and that alternative group supporting and promoting charitable giving alongside the idea that the Charity Commission should have that as a central role.

The Joint Committee on the draft Bill considered that matter in some detail. As the noble Lord, Lord Shutt, mentioned, the noble Lord, Lord Sainsbury of Preston Candover, spoke in favour of putting something in the Bill to stimulate philanthropy because of the anxiety that regulation would overwhelm people's willingness to give. At that time we heard that although incomes have been rising by far more than inflation, giving has remained only constant. Some stimulus could profitably be put behind a giving campaign.

In comparison with the United States, for example, there is a rather modest level of giving at present which is not keeping up with the rise in earnings, particularly as regards the rise in earnings of those in the top 10 per cent and top 1 per cent of earners. On the one hand, I am entirely supportive of the idea that the Charity Commission should join the fray, and that stimulating philanthropy should be part of its objectives—it should certainly not use its regulatory powers to inhibit giving by wealthy individuals and the community at large—but on the other hand it needs to be made clear that we are not giving this task solely, or even possibly most prominently, to the Charity Commission, as other agencies are keen to take on that role too. Therefore, as I say, I support the amendment but with reservations.

Lord Phillips of Sudbury

Like other noble Lords, I am inclined to be sympathetic to the amendment for the reasons advanced already. The noble Lord, Lord Hodgson, made a strong case. The joint scrutiny committee laid great emphasis on the need to encourage public giving. However, I have two reservations. The first concerns the language. There used to be a lovely old word in the English lexicon—"furtherance". However, I have never heard of "furtherment". The noble Lord would win me over considerably if he substituted "furtherance" for "furtherment".

My second reservation, which may betray my own limited understanding of meaning, is that I am not sure that philanthropy covers volunteering. The joint scrutiny committee rightly banged on and on about the importance of giving time as well as money. If the amendment is accepted, I would like to see the words "and volunteering" added after "philanthropy".

The more important point, which was touched on by the noble Lord, Lord Best, and to which I shall be very interested in the Minister's response, is whether in imposing this proactive objective one would not load the poor old Charity Commission with a duty the extent of which is completely open-ended. It might be difficult for the commission to decide how much of its resources—especially as it will be under great pressure as a result of this Bill—should be devoted to this objective. The noble Lord, Lord Best, said that we must not on any account reach a position where the Charity Commission is by law charged with promoting philanthropy and volunteering in some special way. It would be interesting to discuss this matter outside the Committee to examine its potential consequences in that regard.

Lord Bassam of Brighton

This has been a helpful and reflective short debate on the issue. I am with the noble Lords, Lord Best and Lord Phillips, on this one. It is a fine spirit that wishes to see the Charity Commission take up this role, and I can understand, certainly for the purposes of debate, why the noble Lord, Lord Hodgson, has put it down. If it is stated so explicitly, that might cause confusion in the public mind about what the Charity Commission is there for. I want to run through some points on that.

Principally, the Charity Commission is a regulator of charities, and its objectives have been drafted with the objectives of a regulator in mind. Promoting public awareness of the charitable sector does not seem to me to be a principal function of the regulator. That seems to me pretty much the job of the sector itself, or perhaps of the Government. Certainly, the Government have taken steps to promote charitable giving, charitable activity, giving up of voluntary time, and so on. That seems quite proper. It is a form of encouragement, and it is something in which we all share an interest. I can think of other organisations that already are better placed to undertake the important work of promoting the sector. The NCVO is an example that springs immediately to my mind, although it would not see itself as just having that function and role.

The proposal that the commission should have an objective to "stimulate philanthropy", which is the other part of Amendment No. 63, was itself a recommendation of the Joint Committee. The Government agreed with the Joint Committee's conclusion that the draft Bill should include provision to ensure that the regulatory burden on grant-making charities does not discourage philanthropy. Rather than giving the commission the objective to "stimulate philanthropy"—an objective similar to that of the Giving Campaign, and one that we do not think is compatible with the commission's role as regulator—we propose in the Bill to give the commission a new general statutory duty. Clause 7, new Section 1D(2)2.(a), gives the Charity Commission a duty of acting, in a way which is compatible with the encouragement of— (a) all forms of charitable giving". Perhaps the noble Lord does not like the words so much, but that goes some way in the general direction in which the noble Lord seeks to take the Charity Commission without going over that line, which might confuse, certainly in the public mind, the role of the commission principally as a regulator.

I hope that the noble Lord will feel able to withdraw his amendment. The noble Lord, Lord Phillips, made a good point that perhaps this is one of those issues where some further thought needs to be given to where the principal thrust of promoting the sector and promoting charitable giving needs to take place. I am not sure that this is the right way to do it, although I understand the motive behind the amendment.

Lord Phillips of Sudbury

Before the noble Lord responds, I wonder whether, in drawing attention to Clause 7 new Section 1D(2)2. on page 6, the Government would think it helpful to say not merely: So far as is reasonably practicable the Commission must, in performing its functions, act in a way, but also "in performing its functions and meeting its objectives". That would extend that, and it would go some way to meeting the point made by the noble Lord, Lord Hodgson.

Lord Bassam of Brighton

I am happy to think about it. I am grateful to the noble Lord for the suggestion, although he usually likes economy of purpose in the drafting of legislation, and he is not always keen on adding to it. I did notice a few additions that he proposed today.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister for the positive response to the spirit that I was striving for here. I am particularly grateful to the noble Lord, Lord Shutt, for his powerful speech quoting the speech given by my noble friend Lord Sainsbury of Preston Candover on Second Reading. That is the guts of what we are trying to get at here. Do we have a system that will encourage people? If we do not, we are arguing about the wrong things. I take the points that the noble Lord, Lord Best, made. Of course the commission must speak for the sector and not individual charities; it must be a joint effort. The charity sector itself must contribute to spreading the good word. As ever, I am grateful to the noble Lord, Lord Phillips, for suggesting drafting improvements. The amendment was a peg on which to hang this discussion.

I was disappointed at the Minister's remark that this amendment, which I saw as lifting the issue by giving the Charity Commission an objective relating to the stimulus of the sector, could be encompassed within new Section 1D(2)(2). That provision states that the commission must: in performing its functions, act in a way which is compatible with the encouragement of". That is pretty mild stuff. The Minister's response was not very persuasive.

The Minister asked why it was fair that the Charity Commission should be given an educational role. I invite his officials to look at the Financial Services Authority, which, besides being a very strong regulator, is required by the Government to educate the public about financial affairs. That is no more than we are doing here.

Lord Bassam of Brighton

Is it not slightly different? Obviously without looking at the relevant legislation, I think that its aim is to encourage compliance through the promotion of the authority's work. This is rather different; as the noble Lord says in his amendment, it aims, to promote public awareness of the charitable sector and to stimulate philanthropy". Presumably, the provision to which the noble Lord refers seeks to promote the importance of compliance and the ease with which organisations might achieve that objective.

Lord Hodgson of Astley Abbotts

It is not exactly the same but it is an educational function. It is worth looking at. I am pleased that the Minister has been able to give this a general welcome but I am slightly disappointed in other respects. We must look at the wording and try to table an amendment that gives more oomph to what the Charity Commissioner does. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

moved Amendment No. 58: Page 5, line 19, at end insert— 7. The advisory objective.

The noble Lord said: This is my second shot at the coconut. This amendment adds an advisory objective. We are still in exactly the same part of the Bill as we were with the last pair of amendments. Amendment No. 64 gives a more detailed definition of the phrase.

Under Clause 24 the commission is given the power to give advice and guidance, but, from my reading, it appears to be passive. The Bill does not specify the need for it to be an objective of the commission to provide advice and guidance to the sector as well as providing regulation for it. In Amendment No. 71 and amendments that the noble Lord, Lord Phillips, has tabled, we shall seek to ensure that these very different functions are properly separated and distinguished as the joint scrutiny committee wished.

I shall give an example of the role that I believe the commission should play. In the mid-1980s I was a founder director of the Securities and Investments Board, which was established under the Financial Services Act 1986. It provided the first detailed and comprehensive statutory regulation of the financial services industry. Previously, any regulation had been carried out on what can only be described as a pretty loose rein by the DTI.

A series of firms, particularly smaller ones, were faced with a new regulatory system—a statutory one at that—which carried not inconsiderable penalties for failure to comply. When I was on the board of the SIB those firms were inclined to approach us in good faith, explain that they were adopting a particular course of action and ask for our view. Under the powers specified then, we had no option but to reply, "The law is there for you to read. You should take whatever advice you wish and then take whatever action seems appropriate. If we then believe that you have broken the law we will come after you. By the way, do not think that the fact that you have sought our views will in any way count in your favour if we initiate proceedings against you".

5 p.m.

That always seemed to me to be a hopeless way of proceeding—one without merit in any sense. The regulator appeared standoffish and unhelpful, the regulated company was bewildered and, above all, there was no reward for having tried to work within the system.

I have some fear of a similar situation coming about here. We have a considerable increase of regulatory powers, a substantial increase in the number of charities to be regulated and I can see no requirement for the Charity Commission to provide advice and guidance.

Further, there is a greater complication in this Bill, which we did not face at the SIB. We then had a static situation: the regulatory framework was, so to speak, cast in stone. But here we have a dynamic situation, in that the Charity Commission will be developing the regulatory framework in a number of ways over such things as the public benefit test.

So, the amendment is designed to move "the provision of advice and guidance" from a passive possibility to an active objective. It is too easy looking down the road with a different commission and a different chairman to envisage a situation where the body decides that providing advice and guidance is too difficult and too risky. I could say more about the matter. I shall resist doing so. But I would draw the Minister's attention to the debate we had on the issue on community interest companies on 25 March 2004 when we were in the rather inelegantly titled Companies (Audit, Investigations and Community Enterprise) Bill. My noble friend Lord Glentoran at col. GC336 moved an amendment to that effect.

I accept that part of what I am seeking to achieve could probably equally well be achieved by a wholesale changing of "may" to "must" in Clause 24. But I think that the approach we have adopted is more open-ended and straightforward. I hope that the Government will feel able to accept it. I beg to move.

Lord Best

I think I come down, but only just, on the side against the proposed amendments. While the Charities Aid Foundation is the body that brings together the sector in relation to charitable giving, the National Council for Voluntary Organisations (NCVO) brings together people to provide the advice and guidance that the sector needs. That body has expressed some opposition to the amendment. I declare an interest as a member of the NCVO's advisory council.

Cries of "regulatory creep" come from that body. That is not a term of abuse for the chairman or chief executive of the Charity Commission; the NCVO is saying that this is the start of a takeover by central agency through its advice and guidance of the sector, and that that advice and guidance is something that comes better from within and from the federations and associations that support that sector.

The Joint Committee, when hearing evidence on whether the Charity Commission should have a powerful role heard contrary views from some of those representing the smaller charities around the country. The National Association of Councils for Voluntary Service (NACVS) put to us that most of its members found advice and guidance in its existing form from the Charity Commission more than helpful and would not be at all anxious for greater powers to be given to the Charity Commission through the strengthening of an objective of this kind.

NACVS also said that—and this was agreed across the piece by all, whether for or against advice through the Charity Commission—if there is to be a role for the Charity Commission of this kind, it needs to be very clearly differentiated from its regulatory role because confusion can easily emerge between what the Charity Commission says is a good idea for a charity to get on with and what it must do. Among the ways in which people presenting to the Joint Committee thought that that distinction could be drawn was the Charity Commission even going as far as to have two lots of letterheads, so that advice that was only advice was different from the guidance that a charity was compelled to take on board. Others told us that we could have the same headed paper, but that it should come in different colours. The point that everyone made was that there must not be confusion, as there often is, between a powerful body saying, "We advise you to do X and Y", when they really mean, "You must do this to comply with our requirements".

On balance, I think that the Bill as already set out goes far enough. However, if we are to have a greater power, we would need to be careful in distinguishing advice and guidance from what the Charity Commission requires of charities.

Baroness Howe of Idlicote

I support very much what my noble friend Lord Best said. We can see a more powerful Charity Commission emerging with considerable extra powers. To have the same body regulating with those very strong powers and advising on what must be done is dangerous.

The more I read and listened to the debate, the more I thought back to my past. I was a member of a body that was both a promoter and a regulator—the Equal Opportunities Commission when it was first set up. Both those duties were important to get the message of treating men and women the same off the ground. However, after a while, it became quite difficult. Luckily, lots of other organisations came on the scene, such as Business in the Community, which were able to give more independent advice before particular actions were taken. Cases were also taken to court that set a framework for the future.

I am nervous about the issue. There is a role to promote charitable giving, and I would rather that the commission did that and adjudicated on where legal boundaries were breached. I must declare an interest, as I am also on the NCVO advisory committee. However, I would much rather that a body like the NCVO had a rather more statutory body that was able to perform the duty of helping small and large charities, giving them advice about how they should proceed.

Lord Phillips of Sudbury

I tabled Amendment No. 67, which is, unfortunately, not in this group. It would add, as a further function: Giving advice and guidance to charity trustees". I have some query about the notion of Amendment No. 58 going in as one of the objectives. The objectives are the principal foundation of the whole of the Charity Commission's work, and I am not sure that giving advice sits entirely comfortably with the other five—potentially six—objectives in Clause 7.

I also take careful note of what the noble Lord, Lord Best, and the noble Baroness said about the danger of parts of the charity sector seeing the Charity Commission getting too big for its boots, and trying to push people around—giving unbidden advice, if you like. When the noble Lord, Lord Hodgson, and I reflect on the debate, it may be sensible for us to make sure that—in so far as one is talking about the giving of advice by the Charity Commission—advice has to be sought. At least, it must be sought in bespoke cases: the Bill should not allow the Charity Commission to give gratuitous advice to a charity or charities in a way that could become oppressive. That bears a considerable amount of careful further thought.

Lord Bassam of Brighton

I wonder whether the noble Lord, Lord Phillips, has anything to say on Amendment No. 67. I believe that that amendment sits with this group.

Lord Phillips of Sudbury

Would the Minister like me to deal with that now?

Lord Bassam of Brighton

That would be helpful.

Lord Phillips of Sudbury

My proposal was to insert as one of the functions the following: Giving advice and guidance to charity trustees and to any charity or charities whether particularly or generally". I note that we already have Clause 24, to which reference has been made, but that is the power to give advice and guidance on written application from charity trustees. I do not believe that anyone is arguing with that. It is an enlargement of what is already in Section 29 of the Charities Act 1993. Apart from some amendments to the wording, the general notion of giving advice which is sought must be a good one.

It is worth noting that subsection (4) of the new clause introduced under Clause 24 allows the commission to give general advice vis-à-vis the administration of charities under the second of its functions in Clause 7. Already within the Bill we have a power of initiative on the part of the commission in a general way to give advice unsought. As I say, I want to contemplate the issues raised by Members of the Committee and listen to what the Government may have to say. For the moment, I shall leave the matter there.

The Lord Bishop of Peterborough

Having listened to the debate, I confess that I have more sympathy with the amendment tabled by the noble Lord, Lord Phillips. I have sought the advice of the Charity Commission on a number of points and always found it helpful, but I entirely take the point made by the noble Lord, Lord Best, that to make it an objective is too strong. To create a function that the Charity Commission should perform on application I believe might be useful and would clarify the purpose of the Bill in this small detail.

Lord Bassam of Brighton

I am very grateful to those who have joined in this debate. It is quite useful and shows how useful the Committee process is. Members of the Committee have different experience which informs how we legislate and informs our consideration of these particular amendments. I believe that that has worked well. I am grateful to the noble Lord, Lord Phillips, for making his points under this general head.

As the regulator of charities, we believe that the principal task of the Charity Commission is regulation. Of course, the commission will, during the exercise of that function, also give advice to the charitable sector. It has power to give advice by virtue of Clause 24 to which the noble Lord, Lord Phillips, has referred. Our view is that the giving of advice and the providing of guidance is really ancillary to the main function, so it does not need to be a function in itself.

Therefore, we believe that it would be inappropriate for the commission to have a general advisory function which, in a sense, would be to raise its advisory powers to the same level as its regulatory functions. I believe that was a point that the noble Lord, Lord Best, made in his contribution. That is not to say that we do not see advice and guidance as being very important because the commission will issue guidance and it already gives advice.

When I was preparing for this discussion I asked whether there was any estimate of volume of advice given and someone said that at the last count, 28,000 pieces of advice and guidance were provided in a given year. Calculating that must have been an incredible exercise. So there is a volume of advice given.

My guess is that most of that advice is given to enable charitable organisations to comply with the regulatory framework. It is valuable because of that. Any intelligent regulator will not want just to use its position as a "hard" regulator and say, "You cannot do this". It will want to enable charitable organisations to function and work well by saying, "Well, this is how you can achieve that objective". We want to see that sort of clear advice and guidance. Therefore, the advice is towards compliance.

5.15 p.m.

Lord Phillips of Sudbury

I hope that that reply will help Members of the Committee; it certainly helped me. First, as regards the 28,000 pages of advice and guidance, under what part of the Bill—with particular respect to Clause 7—would that fall in future? Secondly, what distinction does the Charity Commission currently make between advice and guidance, if any? I am sorry to shoot those two questions across the Floor. I do not expect an instant response.

Lord Bassam of Brighton

The noble Lord will probably want to look at new Section 1C(2), proposed in Clause 7, which refers to, Encouraging and facilitating the better administration of charities". I think that that is the heading under which the commission would operate.

Lord Wedderburn of Charlton

Does my noble friend agree that there is a fault in not only what he has just said, but in new Section 1D(2), which says that, in exercising its functions, the Commission must … act in a way which is compatible with the encouragement of

  1. (a) all forms of charitable giving, and
  2. (b) voluntary participation in charity work".
People cannot be encouraged to give without being given advice on how to do so more than they were. A lot of that seems to be rather repetitive when the Government have included most of it already.

Lord Bassam of Brighton

I thank my noble friend Lord Wedderburn for that very positive contribution, which is right. To sum up, the advisory role is ancillary to the main function of regulation. There is adequate provision already. It is clear that a mass of advice has been given to charitable organisations—nearly all of it on request. I understand that some 3,000 pieces of advice were given at the Charity Commission's behest, but proactively supporting its role as a regulator, which is as it should be.

I have heard what has been said in this useful debate. It has probably informed us better on how a regulator can work and make good use of its advisory role.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister and all Members of the Committee who have participated. They have shown, and I accept, the argument that this should not fit as one of the commission's objectives. I accept the comments made by the noble Lord, Lord Best, and the noble Baroness, Lady Howe, about the dangers of advice and regulation becoming co-mingled, and the comments made by the right reverend Prelate along the same lines.

The amendment put forward by the noble Lord, Lord Phillips, has a lot to commend it and was probably better placed than that which I had tabled. But, that having been said, he said that he felt that there was a danger of the commission becoming too big for its boots, and that it should give advice only when it was sought. I do not see how his Amendment No. 67 meets the seeking requirement. It seems that one is able to give advice irrespective of the requirement. His point was good, but I thought that that should be incorporated in his amendment to give it the narrow function that he sought. In the mean time, I beg leave to withdraw the amendment.

Lord Hodgson of Astley Abbotts

moved Amendment No. 58A: Page 5, line 21, leave out "increase" and insert "promote

The noble Lord said: I shall speak briefly. I know that my noble friend Lord Hunt has been much involved in the amendment and that he will wish to say more about it. We are still concerned with the commission's objectives. We are looking at the public confidence objective, which is defined as, to increase public trust and confidence in charities". We wish to replace "increase" with "promote".

The problem with "increase" is that it indicates a never-ending process, which could go up and up. There is a problem with "promote", as there is with "increase", because it indicates a prior absence. Any such aspersion is unjustified. As we know, public confidence in the charitable sector is already very high, as many surveys have demonstrated and as the Minister and his colleagues have said many times.

One of the purposes of the Bill is to make sure that that confidence does not fall. Perhaps "maintain public trust and confidence" would have been better and less judgmental. So why do we advocate the word "promote"? It is for the simple reason that we had heard the Government were minded to accept "promote" in connection with Clause 13. I am afraid we concluded rather unheroically that half a loaf was better than no bread. I beg to move.

Lord Hunt of Wirral

I would like to thank my noble friend for his comments. Following the recommendation of the Joint Committee, I urged this amendment on the Government during the Second Reading debate in the Chamber. I rise merely to thank Ministers for the speed and the good grace with which they responded to my call. As my noble friend pointed out, increasing compliance is almost certainly impossible to demonstrate, and impossible to achieve, especially in a statutory duty in perpetuity. Therefore, I am very grateful to the Government for having proposed not only Amendment No. 61 but also Amendment No. 118, which I warmly welcome.

Lord Phillips of Sudbury

I have tabled Amendment No. 62. I am very happy with the amendments tabled by the Government and with Amendment No. 58A.

Lord Dearing

I support the two government amendments in particular. Unfortunately, the noble Baroness, Lady Warwick, has another commitment, but if she could have been present she would also have supported them. Within the university sector there is a strong commitment to compliance with charities law. To say that they must increase compliance seems rather difficult when they are already complying. It seems to imply greater regulation when there is already recognition, even by Her Majesty's Government, that there may be over-regulation of universities. Therefore, I very much welcome these two government amendments. I also thank the noble Lord, Lord Hunt of Wirral, for his part in the matter.

Lord Bassam of Brighton

I had better move the government amendments. I am grateful for—

Lord Swinfen

The noble Lord may speak to the amendment at this stage and move it when we get there.

Lord Bassam of Brighton

That is quite right. I am very grateful. We have been going a long time and I am getting ahead of myself.

I am grateful for the comments that have been made about the government amendments, which means that I do not really have to speak to them at all. However, I wish to make a few comments on Amendment No. 58A which would effect the following change. The requirement for the Charity Commission to increase public trust and confidence in charities would become a requirement for the commission to promote public trust and confidence in charities and itself as regulator. I believe that Amendment No. 58A was tabled to take into account a future scenario where trust and confidence had reached 100 per cent and therefore it would be impossible for the commission to increase trust and confidence. Where public trust and confidence reached 100 per cent, the commission would therefore be bound to fail in that particular objective. That is a tricky one.

In recommending that the commission be given objectives, the Strategy Unit's review, Private Action, Public Benefit, also stated that it would be necessary to develop a set of indicators to measure the regulator's impact in the areas of the objectives. It took the objective we are now discussing as an example. It stated that indicators for the objective of increasing trust and confidence on the part of the public could be linked to survey and other evidence, for example on levels of confidence in charities, trends in giving, volunteering and other actions which probably have a correlation with public confidence and perceptions of the amount of fraud in charities compared with the reality.

We do not believe that there will ever be evidence to indicate that public trust and confidence has reached 100 per cent. Therefore, it would always be possible to increase rather than promote trust and confidence. I hope that that rather convoluted explanation persuades the noble Lord that his amendment in the circumstances is probably unwise.

Finally, I am very grateful to Members of the Committee who have spoken in support of government amendments.

Lord Hodgson of Astley Abbotts

I thought we set off in rather a hopeful direction. Suddenly the Minister swerved off the road at the end and I am contemplating a wreck.

I said in my remarks that I thought "promote" was not as good as "maintain", for the reasons I explained in relation to Amendment No. 58A. I am grateful to Members of the Committee who thought that we should make some changes to this part of the Bill for the reasons that are applicable and where the Government intend and agree that amendments should be made.

I fail to see the distinction that the Minister was drawing between the clauses where they are happy to make the amendments, under government Amendment Nos. 61 and 118, with the other amendments in the group. I have to withdraw the amendment now, but we shall return to it because I think that the Minister is now imposing an impossible position on the sector and the commission. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury

moved Amendment No. 59: Page 5, line 22, at end insert "and in itself as Regulator

The noble Lord said: I can move the amendment very swiftly. I believe that the public confidence objective would be incomplete if it merely increased public trust and confidence in charities, but not in the Charity Commission as regulator. I do not see why the commission should be immune from the public confidence objective.

If asked: how can the commission police its own performance vis-à-vis public trust and confidence? I would say that it does that all the time, one way or another, in terms of measuring its own effectiveness. It is important that it holds itself to account in order that others can hold themselves to account. I beg to move.

Lord Bassam of Brighton

I think that we are probably going back over some of the territory we have discussed already. I shall try to address my comments precisely to the noble Lord's amendment.

The purpose of the amendment would be to give the Charity Commission the objective of increasing public trust and confidence in itself as regulator. The Joint Committee had some reservations about the capacity of the Charity Commission. In one of its recommendations it stated: The evidence we have heard has given us reason to question whether the Charity Commission is properly organised and properly resourced to make it effective in its new tasks".

However, as the Government said in our response to the Joint Committee, the Charity Commission is an effective and properly resourced organisation. I have already referred to the strategic review that the commission is currently carrying out, which includes consideration of the commission's future engagement with the charitable sector, designing the commission's operations to match our future engagement with that sector and improving the way in which the commission influences and communicates with its stakeholders.

The final recommendations of the review will be presented to the commission's open board meeting on 22 March this year.

We do not believe that increasing public trust and confidence in the commission is an end in itself. Therefore, it should not be included in the commission's objectives. Our view is that public trust and confidence in the commission will follow from the successful attainment by the commission of the objectives in the Bill.

For those reasons, trying to oblige the commission to increase trust and confidence in the way in which the noble Lord has argued his amendment would probably be unwise. It is much more likely that that trust and confidence, which is already at a very high level, will be taken to a still higher level when the legislation works through and the commission looks openly at itself in the way that I have described. I like to think that that will greatly enhance the commission's reputation, as I am sure it will. It has a very good track record on which to build. For those reasons I hope that the noble Lord does not press his amendment at Report stage.

Lord Phillips of Sudbury

I am grateful to the noble Lord. He is a little like the Grand Old Duke of York: his arguments all lead in one direction; namely, what a good amendment this is; but then he said that public trust in the Charity Commission is not an end in itself. I do not quite understand that. It is very late, I am very tired, and I do not have the will to go on, so I shall withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 60 not moved.]

Lord Bassam of Brighton

moved Amendment No. 61: Page 5, line 26, leave out "increase" and insert "promote

On Question, amendment agreed to.

The Deputy Chairman of Committees

I cannot call Amendment No. 62.

[Amendments Nos. 63 and 64 not moved.]

Lord Bassam of Brighton

Given that the noble Lord, Lord Phillips, is tired, I would not want to weary him any more, so perhaps this is an appropriate and convenient moment for the Grand Committee to adjourn until Wednesday 23 February at 3.30 p.m.

The Deputy Chairman of Committees

The Committee stands adjourned until Wednesday 23 February next.

The Committee adjourned at twenty-nine minutes before six o'clock.