Official Report of the Grand Committee on the Charities Bill [H.L.]

HL Deb 23 February 2005 vol 669 cc287-352GC

(Fourth Day)

2005-02-23">Wednesday, 23 February 2005.

The Committee met at half past three of the clock.

[The Deputy Chairman of Committees (Lord Haskel) in the Chair.]

The Deputy Chairman of Committees (Lord Haskel)

I remind noble Lords that the procedure in the Moses Room is the same as in the House with the exception that Divisions cannot take place. We are not expecting to have to adjourn as we are not expecting any Divisions in the Chamber.

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

Lord Hodgson of Astley Abbotts moved Amendment No. 65:

Page 6, line 13, at end insert—

"Facilitating development of and innovation in the charitable sector."

The noble Lord said: Amendment No. 65 keeps us with Clause 7, entitled, The Commission's objectives, general functions and duties",

on which we had several debates before we adjourned for last week's break. We discussed furtherment, the increase in public awareness, for which there was some support in the Committee, and an advisory objective for which there was rather less support. Amendment No. 65 seeks to add a further function to the commission's general functions listed under new Section 1C on page 5 of the Bill. The amendment seeks to add the function: Facilitating development of and innovation in the charitable sector".

In our view encouraging development of and innovation in the sector should be a fundamental part of the commission's role, and as such should be included on the face of the Bill. That would accurately express a serve-and-support dimension that the commission should have to balance its regulatory side. We believe that the commission should be committed to that function as it encourages both flexibility and progress in the charitable sector.

As has been repeated countless times, the charitable sector is enormously broad and there are a whole range of approaches that charities can take. Moreover, new needs and new approaches are emerging all the time. For example, charities in Dorset will differ from those in Cardiff because of population, local authority policy, levels of expendable income and a whole raft of socio-economic variables. Flexibility is the key to survival and, indeed, the success of many charities.

Moreover, what is relevant in Newcastle today will not necessarily be relevant next year. Of course, the general regulatory framework must be consistent, but for this sector to develop and thrive, flexibility and innovation must be encouraged rather than discouraged or the growth of the sector will be inhibited.

Innovation is the precursor to development. We do not want to see our charities over constrained by over-regulation and so prevented from growing and improving. The commission should actively encourage innovation among charities as a whole so long as it is within its regulatory provisions.

There will always be a tension between regulators and innovators. At best this will be a creative tension, but regulators tend to see innovators as a risk, and risk is something that regulators fear. Saying no rarely hurts a regulator—you usually never find out that it said no—but saying yes can hurt a regulator if the activity thus approved gets into difficulties. Therefore, within any regulator there is always the danger that there will be a drift to conservatism and rigidity. That is why, in Section 2(3)(d) of the Financial Services and Markets Act 2000, the Financial Services Authority is required to have regard to, the desirability of facilitating innovation in connection with regulated activities".

As the commission's six listed general functions revolve around its regulatory and intervention powers, it is important to include as a function the need to further develop and encourage innovation within the sector. The commission's functions should include the progressive as well as the regulatory. I beg to move.

Lord Borrie

I am not sure whether I agree with the amendment. In opposing it, one runs the risk of being regarded as uncharitable, at least, or certainly unwilling to support the development of charities. I am all in favour of their development and of innovation, but I am not sure that the Charity Commission should push people into promoting new charities. There is a huge number of charities, most of which, no doubt, are very worthwhile. All of us find some more worthwhile than others and wish to contribute to some and not others.

The Charity Commission should be in helpful mode at all times, wanting to assist people with questions about the risks, problems and so on, and what is involved in regulation. However, I am not sure that it should go beyond that help, if only because of the word "risk", which the noble Lord used. There are risks in setting up charities. The Charity Commission could get into an awkward position if it encouraged innovation and development and then charities were newly started and ran into difficulties. Surely its job is to help to avoid those risks by pointing them out rather than doing what the amendment proposes.

Lord Swinfen

I am not sure whether the noble Lord, Lord Borrie, has really understood the amendment. If I quote him correctly, he said that he did not think that the Charity Commission should be involved in "promoting", whereas the amendment talks about "facilitating". To my way of thinking that means, not that the Charity Commission should push innovation forward of itself, but that it should look kindly on charities that wish to move forward in an innovative manner.

Technology is developing very fast and change is happening at an exponential rate. We do not wish the Charity Commission to be stuck in the mud like a Middle Ages cart; we wish it to move forward at least at the rate of an aeroplane, as with modern transport. It should think on its feet and look kindly at new ideas and methods rather than saying, "It has not been done before therefore it should not be done now".

Lord Bassam of Brighton

I am rather in the camp of the noble Lord, Lord Borrie, in this argument but I must say that I tend also towards the point of view of the noble Lord, Lord Swinfen. Notwithstanding both those observations, I must resist the amendment. With the new framework we want to see from the Charity Commission a more open and innovative approach. Nothing in the Bill will preclude that.

We should not have this provision in the Bill. The debate, and certainly the remarks of the noble Lord, Lord Hodgson of Astley Abbotts, has been useful. We want to see the facilitation and development of the charitable sector—certainly the Government want that. However, it is not right to describe it as a function of the Charity Commission, which is at its core a regulatory body. The quality of how it addresses regulation is very important. No doubt the commission will want to facilitate the innovator in coming forward with new charitable concepts, ideas and thinking. The noble Lord, Lord Swinfen, rightly referred to the need to reflect on technological change.

But at heart the commission is there to ensure that the charitable sector is well run, well administered and conforms with the legislative framework, as well as to prevent mismanagement and provide a sensible way for charities to work. For those reasons, therefore, I have to resist the amendment. Perhaps we should remind ourselves that the commission can operate properly only within the confines of the law and that its task is to apply the existing law to new situations and perceptions. In doing so, I am sure that it will want to take account of new developments and new charitable interests and purposes.

It would not be appropriate for the commission to have as one of its functions an ability to extend the law in the way suggested in the amendment. It should develop the law only by analogy and where it considers it necessary, right and proper to do so. While I understand the spirit in which the amendment has been moved and the thinking behind it, it would be wrong to establish a new practice by providing this as a function for the commission. However, no doubt the commission will want to reflect on the need to encourage and facilitate as part of its advisory role, which we discussed during an earlier Committee sitting.

While I am grateful to the noble Lord for providing us with an opportunity to discuss this issue, ultimately I have to invite him to withdraw the amendment.

Lord Hodgson of Astley Abbotts

I thank the Minister for his response, but I have to say that I am disappointed that he could not see what I was driving at. In fact, he started by saying he did, but then he swerved off that road. I am also grateful to all noble Lords who have taken part in our brief debate.

While I accept what the noble Lord, Lord Borrie, said—the Charity Commission should, of course, not "push"—the amendment, as my noble friend Lord Swinfen pointed out, refers to "facilitating". Indeed, the noble Lord, Lord Borrie, said that the commission should be helpful. To my mind, the word "helpful" is equal to that of "facilitate"; while they are not exactly the same, they are very close. Thus the reality of what I am driving at is much closer to the views expressed by the noble Lord, Lord Borrie, than he reflected in his remarks.

I thank my noble friend Lord Swinfen for his comments. I think that the balance is wrong here. We are trying to put in place a framework to enable the charitable sector to go forward while under Clause 7 the general duties, functions and objectives of its central authority are all cast in a negative sense. No proactive role is set out for the Charity Commission, and I think that there should he such a role. Given the very much greater powers now being vested in the Charity Commission, the charity sector runs the risk of being inhibited unless it is recognised that there is a need for a proactive, facilitatory and helpful—not pushy—role, so enabling new ways of tackling the eternal problems faced by the sector.

Obviously I have to withdraw the amendment today, but I shall read carefully what the Minister has said and I may well want to return to the point at a later stage.

Amendment, by leave, withdrawn.

Lord Shutt of Greetland moved Amendment No. 66: Page 6, line 13, at end insert—

"That the Commission takes due care and attention to communications to and from charities and others."

The noble Lord said: We are still considering the commission's general functions under Clause 7. My amendment would add a new subsection to provide that, the Commission takes due care and attention to communications to and from charities and others".

Noble Lords may recall that at Second Reading I said that, there will be concern as to the right positioning of the Charity Commission".

I also quoted a standard paragraph used by the commission in its letters, which states: Please note: If we do not hear from you within three months of the date of this letter, we will assume that you do not wish to take the matter further and all correspondence held regarding this particular matter will be destroyed in accordance with Charity Commission policy".—[Official Report, 20/1/05: col. 895.]

Later in the debate, the Minister responded. He indicated that I would be receiving a response from the Charity Commission and he hoped that I would find that helpful. He said that I had made a good point about the clause. That is always good to hear. He said: Like any responsible body, the Charity Commission has to clarify its position with regard to correspondence. I am sure it will have heard his ardent plea today and I hope it will take note. I am sure it will. Perhaps I can use my position at the Dispatch Box to encourage it to write to the noble Lord, perhaps without the three-month caveat on the bottom of the letter".—[Official Report, 20/1/05: col. 960.]

Well, I received a response, as did all your Lordships who were present on that occasion. It is headed: Concern about the impact of our 3 month destruction policy".

It continues:

The Charity Commission manages its records according to our business needs and, as a Government Department, in accordance with the Public Records Act, the three month limit applies only to the type of routine correspondence that we know from experience is unlikely to require further action".

It may be routine to the Charity Commission, but it is often not routine to the charities with which they are dealing. The example that I spotted in the letter was a complex one about the sale of property. It was not in any way routine. For people who have busy lives and are giving their time and services to charities, it is important that they can do this in a proper way and not be, as it were, hounded by being told, "You've got to do this within three months or else".

3.45 p.m.

So this is the anti-destruction amendment. I received a response and I do not think much of it. But there is a fundamental principle here. I heard the Minister say a moment ago that, at its heart, the Charity Commission is a regulatory body. I understand and accept that. But there are three modes that the Charity Commission should operate in. The first and most important is to give comfort to the charitable sector; in effect, to be like a teddy bear to a small child—to give comfort. Secondly, it is to be a watchdog. Thirdly, it may occasionally have to be a bloodhound. However, it must know which mode it is in at a particular time. The percentages of time spent in each role may be 90 per cent, 9.9 percent and 0.1 percent. It is important that the Charity Commission is not seen as being on the backs of charities, but is helpful.

It is therefore important—and it may be even more important depending on other discussions we may have regarding where the Charity Commission stands on whether it is to be arm's length from government—that a principle is established to the effect that the Charity Commission should take due care and attention of correspondence and deals with it in a way that is appropriate for the charity sector, not in the hounding way that is currently proposed. I beg to move.

Lord Hodgson of Astley Abbotts

I am not sure that I will follow the noble Lord with his teddy bear analogy, but I have much sympathy with the amendment. In support of the points that he has made, I shall quote from a letter that I received from a firm of solicitors who have been much involved with the charitable sector. It states: I think it needs to be recognised that even when trustees do write to the Commission that the Commission has signed up to some sort of quality control marque which enables them to spend 20 days replying to a letter, even if after 20 days all that they write is that the person dealing with the matter has had to refer to somebody more senior since they were unable to answer the question. After another 20 days, the reply is received and it is then indicated that if there is no response within three months the correspondence will be destroyed! One of the Commission's problems is that it has failed to keep much of its essential paperwork in order to deal effectively with charities. Some years ago I was told that a member of their staff embarked on the policy of weeding out their files, as a result of which, much of the documentation upon which they ought to be relying to deal with charity enquiries, has actually been destroyed". The letter is from a firm working that is at the sharp end of charitable policy and deals with the Charity Commission. Therefore, it strongly underlines what the noble Lord has said.

Lord Bassam of Brighton

I am sorry that the noble Lord, Lord Shutt, is disappointed with the response he has had from the Charity Commission. It is clear, however, that the Charity Commission does listen and perhaps reads Hansard occasionally. The important message is that the Charity Commission wants to be more user friendly. I certainly understand the noble Lord's point that it should not seem to he on the back of charities and hounding them. I do not believe that the Charity Commission, as a regulator, wants to be seen in that spirit.

As I said earlier, the Charity Commission has an important job to do in its primary and core function of regulating, and the noble Lord is tempting us to debate the way in which it does so and the quality of its regulation. He has usefully drawn attention to the need for a softer approach.

I take the noble Lord's third point that the Charity Commission at times needs to be—in my kind of language or argot—hard-nosed and able to chase-up people to ensure they stick to the letter of the law. In doing so, the Charity Commission is clearly carrying out its responsibility to ensure that there is compliance with the law.

The amendment would not work in the way the noble Lord thinks on two grounds. First, it relates not to a function but more to a duty; and, secondly, it is not an appropriate duty. I would argue that it ought to be a part of the culture of the organisation that it responds in a responsible, sensible and sensitive way. From my experience in public life, I believe that good quality communication for an organisation is essential. Otherwise people do not know where they are and do not have a clear understanding of what their responsibilities are. Communication is the essence of getting all of those matters right.

As a by-product of this legislation there should be greater clarity of how the commission regulates. I was quite impressed by the booklet entitled The Charity Commission and Regulation. It was produced a few years ago and sets out with some clarity how the commission sees itself as a regulator. Obviously the booklet will need to be updated when the legislation takes effect, but it is a useful piece of communication. I would expect that kind of communication to be made plain and to be given to those who fall within the Charity Commission's remit for regulation.

It is not appropriate to put this as a function or a duty on the face of the Bill; it is there for guidance. The issue will need to be addressed in a helpful publication.

I agree with the noble Lord that the Charity Commission must take due care and attention in its communications. I hope that the quality of communication improves. Certainly the commission has become more sensitive to the issue. If the commission did not understand and appreciate it already—which I am sure it did—this debate and the debate at Second Reading has, if nothing more, alerted it to the importance of communication.

Lord Shutt of Greetland

I thank the Minister for his response and the noble Lord, Lord Hodgson, for his comments. Obviously I shall withdraw the amendment today but I hope it has been made clear that it is very difficult to legislate for culture.

I wonder whether there is some way in which this area can be covered so that there is no question of silly destruction because people are a few days late in responding after three months. Bearing in mind the way in which people operate within charities—they have meetings at fixed times and have to get their diaries together and so on—I believe there is something fundamentally wrong about the system and that it needs sorting out.

Obviously we have time to discuss the issue and I hope we will be able to do so. It may well be that the Minister is right and that this is not the right place and these are not the right words, but there needs to be some words somewhere, because we cannot leave this culture to luck.

Lord Phillips of Sudbury

Before my noble friend sits down, I suggest that one place where this could happily rest would be in the commission's general duties, the second of which states: So far as is reasonably practicable the Commission must, in performing its functions, act in a way", which is compatible with the encouragement of, say, efficiency and consideration for users of its services. That is an off-the-cuff suggestion, but it seems to sit very suitably there. Perhaps the Minister will contemplate that.

Lord Swinfen

Before the noble Lord answers, I refer to the question of the Charity Commission destroying files if three months have passed without communication. When the commission asks a charity to submit its annual report and accounts, it normally gives the charity 10 months in which to reply. In many cases, not only are charity trustees extremely busy but they have very little in the way of secretarial help. Therefore. it might be more practical to extend the period of dormancy from three months to 10.

Lord Bassam of Brighton

No doubt the noble Lord is right to raise that issue. I think that there is something in it.

On the point raised by the noble Lord, Lord Phillips, I am always reluctant to invite new and fresh amendments when we are trying to get through an important piece of legislation which we all support. However, I should not want to stop the noble Lord bringing forward a proposal and enabling us to consider it. He may well have a useful point to make.

Lord Shutt of Greetland

I thank the noble Lord for those further considerations. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury moved Amendment No. 67:

Page 6, line 13, at end insert—

Giving advice and guidance to charity trustees and to any charity or charities whether particularly or generally.

The noble Lord said: When we last met, we debated Amendment No. 64, which was not dissimilar from this amendment but sought to put the advisory function into the objectives of the Charity Commission. This amendment seeks to put a duty of advice into the commission's general functions, remembering that it has three tiers—objectives, functions and duties.

In the debate on Amendment No. 64, a number of noble Lords made very important and interesting points. A recurring anxiety was that in putting in what was then an objective but is here a function, one might create a rod for one's own back in the sense of the Charity Commission feeling that it had a duty to meddle. and nobody wanted that. In moving this amendment, I am alive to that consideration.

I think that this wording gives rise to the prospect that the Charity Commission would think that it had a duty to give advice "whether particularly or generally". It might say, "Yes, we have a duty and we are going to exercise it". In fact, in the course of its policing functions, the Charity Commission frequently writes to a charity and asks why it is doing something or wants confirmation of something. That is perfectly sensible.

Clause 24 allows trustees of any charity to request advice in respect of any matter from the Charity Commission. I think that this is a worthwhile and sensible amendment, albeit inadequately drafted. Clause 7 does something that has never been done before by trying to set out a comprehensive account of why the Charity Commission exists, its broad objectives, its particular functions in working towards those objectives and the general duties with which it has to comply in activating its functions, and so on.

4 p.m.

I rather take the point made by my noble friend Lord Shutt and by the noble Lord, Lord Hodgson, that this legislation is for a huge sector—a lay sector and voluntary sector. It is a sector that we want not to impede but to empower. Whereas many of the amendments to much legislation can easily be left out and abandoned. this is a particular clause. Once the Government have embarked on trying to set it out fully and comprehensively, they will see the sense of referring under the functions to the function of giving general advice to the public.

As the Committee will appreciate, the Charity Commission has a massive website. There are more than 50 advisory, guidance leaflets—one of which the noble Lord, Lord Bassam, recently flourished—to the sector as a whole. On the whole, they are jolly good leaflets. It seems odd not to include this function. We already have six functions, including that of giving advice to the Minister, but we do not include the function of giving advice to the sector generally, which in reality, after registration and policing, is probably the most active and important function that it currently undertakes.

I will leave it at that. I shall be interested to hear what others may have to say. I emphasise again that the wording, is not as it should be. However, it seems to me that, on balance, it would be helpful. It is not essential that it be included. The fourth provision in Clause 7 is headed "The Commission's incidental powers" and there is no doubt that,

The Commission has power to do anything … calculated to facilitate",

and so on. There is no doubt that it can do it. I am trying to include in the Bill a sort of description that accords with reality and something that lay trustees will see when look at the Bill. That is the spirit in which I move the amendment. I beg to move.

Lord Borrie

This is really a question rather than any criticism of what the noble Lord said. I see in Clause 7 already that the second general function, at the bottom of page 5, relates to, Encouraging and facilitating the better administration of charities". If one sees that and then combines it with the provision to which the noble Lord referred—namely, Clause 24, which is a power in the Commission to give advice and guidance, and it is quite a long clause—why are not those two provisions together sufficient for the noble Lord's purposes?

Lord Phillips of Sudbury

I am grateful for the question, which is a fair one. I will need to think about it. My initial reaction is that talking merely in terms of administration does not go nearly as widely as the scope of the current advice and guidance given by the commission generally. I think that that is the point. "Administration" is not a sufficiently generous word to encompass the range of current guidance let alone any future guidance. But, as I say, I think that we will all consider that. I thank the noble Lord.

Lord Hodgson of Astley Abbotts

I tabled Amendment No. 64, to which the noble Lord, Lord Phillips, referred. In the light of the comments made by various Members of the Committee. I accept that putting the advisory role into an objective was raising it too high up the "blackboard".

I think that the points that the noble Lord made today on Amendment No. 67 are worth following through. It is again the issue of warning the commission to have a positive role and not an entirely negative one. This is a positive function that it could provide and that would enable it to be seen as helpful. It is a shame that we cannot shift the balance a little. That would enable a move away from the perception of the commission as always on the side of control and restriction and, at best, as facilitating administration. That is not a cause for which one would die in the ditch. I think that there is a kernel of an idea here which should be followed through.

Baroness Howe of Idlicote

I am attracted to the amendment, which seeks to incorporate the general desire to ensure that in the commission's general dealings with charities, some of which are very small and do not have much in the way of official back-up, they are made to feel loved and understood. Like the noble Lord, Lord Borrie, however, I feel that the existing wording should be sufficient, in particular new Section 1C(2)2 which refers to "encouraging and facilitating". That seems to be the right approach.

The reason I am nervous about going much further is that the more I think about this whole area the more concerned I am that the regulator should not take on too much of an advisory role—which might he to the disadvantage of charities or would-be charities—and, as I reflected in an earlier debate, the more I think that there should be an alternative, well-resourced advisory body such as the National Council for Voluntary Organisations or another body along those lines. The line can then be drawn so that charities have to look to bodies other than the Charity Commission. I am nervous about exactly where the line should be drawn to delineate just how welcoming an adjudicator can be without discovering that it has gone too far, by which point it might be to the disadvantage of the charity in question.

Lord Best

I support the noble Baroness, Lady Howe, and express some reservations about us taking this line. If we envisage the Charity Commission providing advice and guidance on this scale, the point at which it does not insist that such advice and guidance is adopted would have to be made very clear. If not, one is moving to a position where the Charity Commission could overstep the mark. That is quite a fine balance to strike. A delicate line could easily be crossed.

When we were discussing earlier amendments I made the point that a suggestion was put to the Joint Committee that the commission might even use separate headed paper and that a different part of the body should present guidance and advice so that no confusion could arise over whether such guidance and advice was an instruction. Are the words "we strongly advise the following", from the regulator the cause of something to tremble about or can you take or leave them as you please? We are skating on slightly thin ice and I must express some reservations about the amendment.

Lord Bassam of Brighton

We have had an interesting debate because once again we have touched on the nature of advice. There are different forms of advice, and the noble Lord, Lord Best, has put his finger on it by saying that at times advice can be very directive in nature while at other times advice is offered simply to be helpful and to ensure easy compliance. When in earlier incarnations I worked with regulators, the advisory approach to achieving compliance was much to be preferred. In that way the objective is achieved in the least painful and most helpful way.

I sense from his earlier comments that the noble Lord, Lord Phillips, is very much in two minds about his own amendment. We have made provision for advice and guidance in Clause 24, while I take Clause 7 as being generally helpful in terms of encouraging the facilitation of better administration of charities. I am not sure how that could be better expressed by bringing the advisory role into play.

The noble Baroness, Lady Howe, was right to point out that it is good that a form of advice is available to the charitable sector that is outwith the commission itself. Probably like other Members of the Committee involved in this Bill, in previous charitable roles I have been the beneficiary of very helpful advice from outside the regulatory sphere that has enabled the charity itself to develop apace. For those reasons, I must resist the temptation to be drawn into the amendment.

The commission recognises the importance of advice on how it operates as a regulator. In its helpful booklet, the commission makes plain its approach. It states that it approaches its work in a number of ways: using information and advice to influence behaviour. It adds that it provides information and advice on what the law requires and on good practice, and that it aims to make a clear distinction between the two. The commission is right to do that. That booklet tells me that the commission is alive to the issue; it recognises the value and importance of advice in achieving compliance with the regulation, and it also recognises the importance of advice in assisting organisations to develop and flourish as charities.

From what I understand, we are probably best leaving what we have on the face of the Bill. There is certainly enough encouragement there for the commission to fulfil its advisory role sensitively as regulator, encourager and facilitator. For those reasons, I suggest that the noble Lord does not press his amendment further.

Lord Phillips of Sudbury

I am most grateful to the noble Lord for his response and to all those who have contributed to the debate.

We are trying to fashion a crucial clause in a way that will be most helpful to the sector. It seems perverse that we should have a general function of determining whether public collection certificates should be issued yet have nothing about the most active aspect of the commission's activities, short of registration and misconduct.

I thought that I had made clear in my opening remarks that I do not want or intend any encroachment on the freedom of charities to seek advice where they will. I agree with the noble Lord, Lord Best, about the need for the commission to make clear when it is advising and when it is instructing. The Joint Committee made that one of its key points and the Government accepted it. There is no difference between the position of the noble Lord, the noble Baroness, Lady Howe, and me on that.

Perhaps I shall take the amendment away to reconsider it. One approach would be to take up the point made by the noble Lord, Lord Borrie, on general function 2: Encouraging and facilitating the better administration of charities". Although I think that "administration" is too narrow a word, one might include, "administration and effectiveness of charities". I shall ponder the matter and reconsider. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury moved Amendment No. 68:

Page 6, line 31, at end insert—

"( ) which is fair, reasonable and proportionate"

The noble Lord said: Dare I suggest it, this is one of the most important amendments in the whole Bill. It is no surprise that my Amendment No. 68 forms part of a group, with other Members of the Committee coming in on the back of it. It was one of the principal recommendations of the Joint Committee—probably the most important recommendation which the Government declined to accept.

For reasons that I touched on in moving the previous amendment, I believe that we are under a duty to make this clause as comprehensive and balanced as possible. We must bear in mind again that this will be a much traversed clause by the sector; we all want to help charities avoid having to go to solicitors, accountants and other consultants and experts in order to understand what is going on. That must be a principal objective of us all—I know that it was a principal objective of the Joint Scrutiny Committee. Therefore, for the Government to say, as they did in response to the Joint Scrutiny Committee, and as the Minister did on Second Reading, that such a provision is not necessary because it is implicit in administration law is, with great respect, not good enough.

4.15 p.m.

The Government went further in responding to the Joint Scrutiny Committee's recommendation by saying that if they accepted this amendment, it might cast into doubt other pieces of legislation where this phrase was not included. That is far-fetched nonsense. Just to make doubly sure, if anyone doubts my legal view—and they are entitled to do so—the Minister can deal with this in one of his favourite ways, by making a statement, which, on the Pepper v Hart principle, will make it abundantly clear that including this phrase in this Bill in no sense impinges on any other legislation.

Relying on administrative law or the Human Rights Act is a heavy weapon to expect a charity to use. It is an unusable weapon; it is a commonplace that the charity sector does not have money to spend on lawyers' fees. It is the least desirable head of expenditure. That is why the common law definition of charity has curdled for want of oversight by the courts. There have been no cases on registration coming before the courts year in, year out. We have one every five years if we are lucky. I am certainly not happy to leave the situation on the basis that if there is a lack of fairness, proportionality or reasonableness, you can go to the High Court. The hurdles that have to be leapt in order to make use of judicial review are high.

I want to see a provision that will, when we come to later amendments, give some assistance to the hard-pressed charity that is being mucked about by the commission. It does not happen often, but it does happen, and it can happen with a degree of cavalierness.

I am long enough in the tooth to know that there are cases in which the commission deals with matters in a manner which is not fair, reasonable and proportionate—particularly proportionate. There needs to be something on the face of the Bill that any trustee reading it can say to Mrs Smith of the Charity Commission, "You are not acting fairly, reasonably and proportionately". She or the trustees may well be unaware of any administrative law implications, weak as they may well be.

When we come to later amendments, such as Amendment No. 87 in my name, on the costs of going to the tribunal, I want the tribunal to be able to say that the commission has not dealt fairly, reasonably and proportionately with the matter in issue before it. Even if the tribunal finds in favour of the commission on the particular legal issue, it should be able to have the discretion not to award costs to the commission and to award costs to the applicant if there has been a breach of the "fair, reasonable and proportionate" provision. So there are ramifications in all directions.

There are other parts of the clause which carry qualitative adjectives and requirements of the nature of those contained in the amendment. For example, the commission's third general duty states: In performing its functions the Commission must have regard to the need to use its resources in the most efficient, effective and economic way".

So there is a qualitative judgment on the face of the Bill. It is useful because it is on the face of the Bill and it has a great deal of the usefulness that attaches to the amendment. I hope very much that the Government will have thought again about this matter and will be willing to concede the amendment, or something like it. I beg to move.

Lord Hodgson of Astley Abbotts

I have tabled two amendments in this group, Amendments Nos. 69 and 75, which echo the amendment of the noble Lord, Lord Phillips, but approach the matter in a slightly different way. I have sought to add a further duty to the general duties of the commission; that is, in the wording of Amendment No. 69, To have regard to the principle that a burden of restriction … should be proportionate to the benefits", to be achieved from it.

Amendment No. 75 relates to proposed new section 1E, "The Commission's incidental powers", and covers a similar point. It seeks to ensure that the commission can give directions under proposed new sections 19A and 19B to charities, provided that such powers are used reasonably and proportionately".

At Second Reading and at various points in Grand Committee I have stressed the need for the commission to avoid enforcing a one-size-fits-all approach on charity regulation. The amendment would give higher priority to this concern as it would make it a general duty of the commission to consider the question of proportionality before committing to a decision.

If the provision was included in the Bill it would allay the many fears in the sector concerning the commission's new powers and whether they will be used "proportionately", a word that is so far conspicuously absent from the Bill. As the noble Lord, Lord Phillips, said, the degree to which proportionality is or is not taken into account by the commission is one of the central concerns to emerge during the hearings of the Joint Scrutiny Committee.

Looking at the potential effect of the new approach on a specific part of the sector, the grant-making charities, is perhaps the best way to show the importance of proportionality. The Association of Charitable Foundations, among other organisations, has expressed grave concerns over the matter of proportionality and the role of the commission. The association believes that it is vital that the commission should act in a way which takes due account of the diversity of the charitable sector, in particular the special position of grant-makers and small charities.

There is concern about the possible danger of inappropriate over-regulation of grant-making charities. These charities have the capacity and the will to address issues and situations that are largely untouched by other funders. They are able to be creative, flexible and sometimes unorthodox in the use of their funds to take risks that other funders are constrained from doing, including the funding of unfashionable projects. The benefits of this may emerge only over the long-term and may be difficult to quantify, although some flourishing projects owe their original existence to start-up funding from a grant-making charity. ACF's concern remains that elements of the Bill could have a negative effect on the grant-making sector and deter potential philanthropists from setting-up grant-making charities. My noble friend Lord Sainsbury made a powerful speech at Second Reading—it has already been quoted and I shall not quote it again—about the way in which the balance of regulation has moved against people wishing to set up grant-making charities. Noble Lords who wish to read what my noble friend said, as a very experienced head of a grant-making charity, in the Second Reading debate can find his remarks in full at col. 904 of the Official Report for 20 January.

If such grant-making charities were subject to precisely the same regulation as the larger charities, many of which are predominantly fundraising, the sector would lose the balance that has ensured the continuation of its flair and flexibility. Moreover, it would have done so for the sake of rigid and stifling regulatory parity.

There is a parallel objective. Amendment No. 69 is designed to force the Charity Commission to consider what benefits will flow to the public, to society or to the sector from imposing a new regulation, measured against the cost or burden imposed on those who are regulated.

We all want to maintain public confidence in the charitable sector and to avoid failure or malfeasance in that sector. However—and with respect to the noble Lord, Lord Borrie—risk is part of our existence. There is a danger that the commission, in its efforts to be seen as a good regulator, will overburden the sector. In my Second Reading speech I accepted that an ounce of prevention was worth a pound of cure, but I want to ensure that we shall not get a pound of prevention when an ounce of cure would suffice. Amendment No. 69 seeks to achieve that.

I am not suggesting that the wording of Amendment No. 69 meets the case. I admit that it has been lifted wholesale from the Financial Services and Markets Act, but it gives the Minister the chance to explain the Government's views. Amendment No. 75 applies a similar test to the powers given to the commission in Clause 19(a) and (b).

Lord Swinfen

Perhaps it would be for the convenience of the Committee if I were to speak now to my Amendment No. 72. It should have been included with this group of amendments as it covers the same subject.

I agree with everything that has been said by the noble Lord, Lord Phillips of Sudbury. I agree that the Bill should be amended to state that the Charity Commission must use its powers proportionately, fairly and reasonably. That must also cover accountability to donors, beneficiaries and the general public. Amendment No. 72 addresses two problems. The first is that the Charities Act 1993 is founded on the protection of charity property, with no regard for the human resources and liabilities, which has resulted in some destructive behaviour by the commission on some past occasions.

The second problem is that, while it may be that general administrative law requires all public bodies to act in a proportionate, fair and reasonable manner, the fact is that the Charity Commission has not always done so and certainly has occasionally not been perceived to do so. To have such words on the face of the Bill would be a useful reminder, not only to the Charity Commission but to those who work in charities generally.

Lord Borrie

The noble Lord, Lord Phillips, has made a strong case and has been followed and largely supported by those who have spoken. There are tremendous advantages in having something on the face of the Bill—provided that it is not too lengthy, and here quite a small number of words are being suggested—if that makes a matter clearer to those who are involved in administering the Act and those who are subject to it, which will entail a huge variety of bodies, people and organisations, rather than simply having the requirements as part of the general law, which you would know about only if you knew or were advised about the general law. The arguments put forward by the noble Lord, Lord Phillips, and others are strong. It is best to have those requirements on the face of the Bill.

I cannot anticipate what the Government reply will be, but it is likely they will say that if you have that on the face of this Bill but not on the face of other Bills where public bodies are subject to the same general laws, then that will perhaps call into question whether those rules apply in the other cases. It might be suggested that one could have had such matters on the face of the Bill but that Parliament deliberately did not do so. That may be a government response. But I question whether the noble Lord, Lord Phillips, took his argument a bit too far in raising that spectre, which is encouraging to everyone who is not a lawyer, that he could somehow avoid legal advice and the need for legal expense.

It seems to me that if you have on the face of the Bill or in the general law a requirement that the public body shall act in a manner which is fair, reasonable and proportionate, as soon any problem with the conduct of the Charity Commission arises, someone will ask, "Is this fair, reasonable and proportionate?". There will be different views and you will need legal advice to resolve the matter. So the argument that the noble Lord, Lord Phillips, was relying on, that it is better to have it on the face of the Bill so that we can avoid the need for legal advice, is going too far.

4.30 p.m.

Lord Phillips of Sudbury

That was not my argument actually; at least, it was only part of my argument. The greater importance of the measure is that it will set clear landmarks for the great wide charity world. Charities will know that it is there. When they think they are being unfairly, unreasonably or disproportionately dealt with, they will therefore be able to say to the Charity Commission, "Look, you are not acting in accordance with the Bill". I am not suggesting that they will then rush off to see their lawyers; I believe that the measure of itself will provide an effective discipline that will work on the ground in every day circumstances. I was not assuming that many legal cases would arise; I refer to the usefulness of the measure in that respect.

Lord Borrie

I fully accept what has been said. I thought I indicated that I fully accepted the general advantages of having this kind of phrase on the face of the Bill. However, I wanted to sound a warning, as it were, to the Charity Commission—if it needs any such warning—and to any charity involved with the regulatory powers of the commission that such a measure would avoid the need for legal advice regarding what was fair, reasonable or proportionate in particular circumstances.

Lord Dahrendorf

Even accepting the warning of the noble Lord, Lord Borrie, I agree with him, and above all with the noble Lord. Lord Phillips, that there is a strong case for this amendment. I support all four amendments mentioned in this brief debate, but I believe that Amendment No. 68 is the most important.

As some Members of the Committee know, I am of the view that the world of charities should not constitute a highly efficiently organised sector. In many ways it constitutes a creative chaos, and should be so. At the margin there are small charities that are quite afraid of large bureaucracies and which therefore need the protection of those of us who believe that they have an important part to play in our civil societies. It seems to me that Amendment No. 68 in particular is certainly an instruction to the Charity Commission. However, it is also a weapon in the armoury of those who are affected by what happens. That is the important point regarding why I am in favour of it. If one is representing a small or unorthodox charity vis-àvis the Charity Commission, one could refer to these seemingly weasel words, which in fact in this particular situation can be quite powerful, and notably to the word "proportionate". Therefore, I strongly support Amendment No. 68 and am happy to support also the others that were mentioned.

The Earl of Caithness

I am always interested to note how on one or two occasions opinions from those in every party seem to coalesce and an issue becomes very important. The position was no different in the Joint Committee in that the more we discussed the measure, the clearer it became that something needed to be on the face of the Bill regarding the accountability of the Charity Commission. It is a strong recommendation. As the noble Lord, Lord Phillips, said, it was probably one of the most important that we made. It is extremely disappointing that the Government are so negative about it at the moment. I hope that they will change their mind.

Paragraph 3 of new Section 1D(2) states: In performing its functions the Commission must have regard to the need to use its resources in the most efficient, effective and economic way". If it does that, there is potential to do severe damage to smaller charities as it will be required by law to act in a certain way that does not take into account the needs of the smaller charities, which constitute the vast bulk of the charity sector. The commission will argue that if it is producing a new SORP, it will have to produce one that covers all charities as that is the most efficient, effective and economic way of producing a SORP.

My noble friend Lord Hodgson of Astley Abbotts referred to the grant-making charities. It was very clear to the Joint Committee that much of what the Charity Commission is now proposing will stop the creation of grant-making charities. That to my mind is unacceptable; it is a complete put-off. I strongly urge the Government to take the amendment away and consider the words "fair, reasonable and proportionate" to see whether they can come back with a measure—with their own wording, if necessary—as the current wording of paragraph 3 of new Section 1D(2) will make life much harder for many charities.

I hope that the Minister will not use the argument that has already been rejected by the Joint Committee. The Minister told us that the Government could not implement the relevant provision for charities as it might call into question other pieces of legislation. That is not an acceptable argument. The Minister will have to come up with something a great deal better than that.

Baroness Howe of Idlicote

My intervention is probably superfluous but I shall make it anyway. I am impressed by what I have heard so far from all noble Lords in support of this amendment. It is one of the most necessary of the amendments and it appeals to me for two reasons. One reason has already been mentioned; namely, that complaints have been made about the way in which the commission has previously dealt with charities. Complaints have been made about the unfeeling and sometimes incomprehensible way the commission has gone about its business. I know that everything is changing, but the impression remains.

The amendment of the noble Lord, Lord Swinfen, takes everyone's interests into account. I am not suggesting that it contains the appropriate wording, but we need a measure which permits sympathetic and understanding treatment with regard to the lack of professionalism of a particular charity, if you like. We also need a power to deal with the very professional charities that perhaps have not filled in all the forms they should have done over a number of years. Such cases have arisen. It would be enormously helpful to have such a measure on the face of the Bill. I say that as someone who has chaired a public body and has often said, "Let us see what is in the Bill". If the relevant measure is not in the Bill, albeit there is a general duty on all bodies of this kind to act in a way that is fair, reasonable and proportionate, it tends to get overlooked, if it is remembered at all. If ever there was a case for including such a measure in the Bill, this is it. I warmly support the relevant amendments and the intention behind them.

Lord Bassam of Brighton

I have listened with considerable interest to the debate on this group of amendments. I am grateful to the noble Lord, Lord Swinfen, for marrying his amendment with the others as it helps us to focus the debate. I hope that I can be helpful in part. However, I start with a negative sentence; that is, I do not think I can accept the amendment of the noble Lord, Lord Phillips of Sudbury. I shall not repeat the argument I used at Second Reading, although the noble Lord, Lord Swinfen, reminded us that there is a general principle of administrative law that in this sphere organisations must act in a way which is fair, reasonable and proportionate. That is a very important safeguard and it is quite proper that we should remind ourselves of it. Of course, the Charity Commission is obliged to act in that way.

I fully acknowledge that the Joint Committee made an important recommendation that the Bill should have a provision obliging the commission to use its powers proportionately, fairly and reasonably. As regards the Government's view on introducing a requirement for the commission to act in that way, we have already gone over that ground in our response to the Joint Committee's recommendations. We stated that we were in no doubt that the commission, like all other public bodies, already has a duty in administrative law to use its powers reasonably. We do not think that there is any need to include a statutory provision in the Bill to give the commission that duty. We think that if Parliament felt it necessary to give this duty to the commission through the Charities Bill, the implication would be—as I have said before—that Parliament did not see the commission as being under that duty at present.

Neither do we agree that the Bill should include a requirement for the commission to act proportionately. The Charity Commission already operates on the principle of proportionality. As a regulator, the commission operates with regard to the five principles of better regulation, which are that regulation should be proportionate, accountable, consistent, transparent and targeted.

It is worth reminding ourselves that in its publication, The Charity Commission and Regulation—to which I have drawn attention previously—the commission outlines the seven principles by which it tries to work. These are: accountability, independence, proportionality, fairness, consistency, diversity, equality and transparency. The commission makes clear in the publication what it means by that. I wish to quote from the document as it expresses very reasonably the way in which the commission operates: We focus our priorities and resources where we believe our intervention as regulator can make most difference to charities and the people who benefit from them. We aim to ensure that the actions we take: are proportionate to the issue and to the risk of harm involved; and take account of the capacity of organisations to comply with requirements for change". That picks up the point made by the noble Earl, Lord Caithness. The document continues: We think of harm as: detrimental effects on the people or causes the charity serves; loss or misuse of significant assets or resources; damage to the public reputation of a charity or charities generally; and damage to public confidence in charity regulation. Where, in our view, none of these harm factors is present, we are likely to conclude that we can use Commission resources elsewhere to greater effect in the public interest, and that we should not take regulatory action. This approach means that we are usually less likely to take up issues in relation to very small charities than to larger ones. All charities, whatever their size, have access to our Contact Centre and publications, which are almost all free of charge".

There is evidence that the way the commission operates demonstrates a proportionate response. The point made about the size of the relevant charity emphasised that. The commission's guidance to its own caseworkers—much of which is published on its website—frequently covers issues of proportionality in relation to the exercise of specific powers. For example, in the guidance to caseworkers on "payment of trustees" the commission makes clear: Where, for example. the cost of making an Order (to authorise a payment already made to a trustee without previous authority) is disproportionate to the value of the transaction or activity being authorised, we are entitled to regard the matter as insignificant in terms of regulatory impact and potential risk to charitable funds".

The question is not whether the commission should have regard to issues of proportionality, but how it exercises its judgment when deliberating issues of proportionality. Those who believe that the commission has exercised its judgment incorrectly in a particular case and thus has acted disproportionately will have recourse to the commission's internal complaints and decision review procedures, to the independent complaints examiner, to the parliamentary ombudsman and the new Charity Appeal Tribunal.

If noble Lords have some specific ideas about how the commission might act differently in certain general circumstances, that might be something we could discuss further. However, I am not sure that the amendment we are discussing helps us in the way the noble Lord claims as the matter is already covered with regard to the way in which the commission operates.

4.45 p.m.

I turn to Amendment No. 69. The noble Lord, Lord Hodgson of Astley Abbotts, made a very useful contribution that helps us in relation to the amendment spoken to by the noble Lord, Lord Phillips. I was attracted to the wording of the amendment of the noble Lord. Lord Hodgson. I am extremely grateful to him for drawing attention, by way of analogy, to the Financial Services and Markets Act. I am not sure that the wording would work completely in the context of charity law, but I am happy to consider the possibility of alternative wording and, if the noble Lord is satisfied with that, to come back with an amendment at a later stage. Having invited further thought from the noble Lord, Lord Phillips, on some of the issues he has raised with his short form of words, I hope that noble Lords will find my response useful.

The amendment of the noble Lord, Lord Swinfen, brings us back to the issue raised by the noble Lord, Lord Phillips, in his amendment. I believe that I have covered the important points with regard to that amendment. I understand where the noble Lord is coming from, but what he seeks is already implicit in the way the Charity Commission works. The commission certainly regards it as implicit. It is an important general principle and one to which we expect the commission to adhere. I recognise the value and the importance of this debate because we want the Charity Commission to behave in the way suggested by the noble Lord. However, I am not sure that is best achieved through his proposed route.

Lord Phillips of Sudbury

I am extremely grateful to all Members of the Committee who have contributed so effectively to the debate. As the noble Earl, Lord Caithness, has said, it is a mark of the importance of this amendment and those grouped with it that there has been no contrary voice, but rather strong support from all speakers. I am grateful for that.

I do not think the Minister will be surprised to hear that I found his response not just unacceptable but wholly unacceptable. To say that the Charity Commission has seven principles of operation, what jolly good principles they are, and that that is enough, really is not enough for us. If you want the seven principles written on the face of the Bill, they may he enough for us. However, they are self-imposed principles, they are changeable and they do not have the profile and the authority of being principles included in the Bill itself. I hazard a guess that 95 per cent to 99 per cent of all charities have no idea of these seven principles. I believe that they are less than prominent.

For all the reasons that have been mentioned, we must return to this amendment at the next stage of the Bill and probably vote on it. It will be important to know exactly what shape the concession that has been made to the noble Lord, Lord Hodgson, will take. Obviously, he, I and others will put our heads together on that, but I fear that this issue will have to be taken further. However, at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

had given notice of his intention to move Amendment No. 69:

Page 6, line 42, at end insert— To have regard to the principle that a burden of restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction.

The noble Lord said: I thank the Minister for his very positive response. We look forward to hearing what he has to say. It was never my belief that the wording would have stood the test of the parliamentary draftsmen. I shall not move the amendment.

[Amendment No. 69 not moved.]

Lord Hodgson of Astley Abbotts moved Amendment No. 70: Page 6, line 42, at end insert—

"To publicise the outcome, both in cases where the Commission has made a decision and where it has failed to make a determination."

The noble Lord said: Amendment No. 70 is also concerned with the commission's general duties. Members of the Committee will note that this amendment seeks to insert as one of the commission's general duties the requirement that it should publish not only the outcome of all its decisions, but also where it has decided not to make a decision.

This amendment goes hand in hand with our other amendments that we have been discussing this afternoon and, indeed, at the previous sitting of the Committee, concerning the interaction of the commission with the charitable sector. They are all intended to increase the openness and transparency of the relationship between the two.

It is a commonplace that this Bill gives the Charity Commission very wide-ranging powers. With that increase in power it is only just that there should also be an increase in accountability and transparency. While the commission is a regulatory body it differs from many other types of regulatory body because, as we have already heard this afternoon, there is a culture of dialogue between the Charity Commission and the charitable sector—something that I think all Members of the Committee very much welcome. That should be continued. Setting in statute the requirement that the Charity Commission publicises all its decisions would help that process, as it would ensure that charities are kept informed of developments in the sector.

Part of the memorandum evidence provided by the Charity Commission to the Joint Committee explained that it provided information and advice and a footnote (Joint Committee on the draft Bill: Evidence Volume II-Ev 199) reads as follows: We publish information about: our decisions on questions of charitable status, our statutory and regulatory requirements, and related advice about best practice, the results of research into governance and finance issues, and the outcome of our investigations".

The commission has confirmed that it publishes information about these vital considerations but we wish to ask the Minister, will the commission be required to publish or publicise information concerning the above issues in all cases, whether a determination has been made or not? It is surely just as important for the sector to know when the commission has decided not to rule as to know when it has.

As has been previously discussed, charity law continues to evolve to reflect changing social attitudes. It is therefore necessary for it to be one of the commission's general duties to keep the sector abreast of any changes. Ensuring the commission publicises such developments would be a significant step towards achieving that. I beg to move.

Lord Bassam of Brighton

If the Government were to accept this amendment, the commission would be under a duty to publicise the outcome of all its decisions and of cases where it declined to make a decision. The commission makes thousands of decisions every year, the vast majority of them entirely non-controversial. For example, the commission, on the application of the trustees of a medium-sized service-providing charity, may make a decision to make an order allowing the trustees to purchase trustee indemnity insurance. This would be of little or no public interest and is an example of the kind of decision that the commission makes hundreds of times a year.

Presumably the noble Lord is interested in seeing the outcome of controversial or high profile cases or those that are likely to set a precedent. I expect that he is also motivated by a wish for the commission to be more transparent—which I am sure is widely shared. In fact, the commission already publishes the outcome of decisions of the commissioners that are novel, significant or otherwise of wider interest. That includes cases in which the commission decided to, or decided not to, register an organisation as a charity, such as the Church of Scientology case, which it did not register, and The Charity Bank Limited case, which it did. The commission also has a policy to report the outcome of every formal inquiry by publishing a statement of the results on its website. Occasionally, it may not be possible to publish a statement, for example, because there are ongoing criminal investigations or prosecutions pending. The commission does not routinely announce the opening of formal inquiries. However, in any case in which there is a particularly high level of public interest, or if the commission wishes to appeal to the general public for information, a press release will be issued.

The commission also publishes a great deal of its internal guidance to caseworkers in addition to its free publications aimed at trustees. The internal guidance allows trustees to see which factors will be taken into account when they approach the commission with a request for a decision. So if the trustees of two small almshouse charities wished to merge the two charities, they could see under the commission's internal guidance various issues that may be taken into consideration by the caseworker dealing with the case. That would allow the trustees, even before they contact the commission, to consider how the commission will view their application. That will inform their decision whether to proceed.

As the commission already as a matter of policy publicises the outcome of cases of interest, I think that the effect of the amendment would in any event be negligible. I am not sure, because of the straitjacket it might provide, that it would necessarily be terribly helpful.

I therefore hope that the noble Lord, having heard what I have said about current practice, will feel able to withdraw the amendment.

Lord Hodgson of Astley Abbotts

I am very grateful to the Minister for that forthright reply. He is right that we were not trying to get at the thousands of decisions but at what he described as the "high profile, precedent setting and novel decisions". He said at one point that the Charity Commission has a formal duty to publicise these matters and to do so on the website. Later, he said that it was a matter of policy to publicise. There is a slight difference in the wording there and I am not quite sure what the formal duty is.

This issue was raised with us by the Charity Law Association, which was concerned that there was not the degree of publicity of cases which it felt was appropriate. It is not for me to say whether that is right or wrong because I am not a charity lawyer, as I made clear. However, I wonder whether there is not a lacuna here. If the Charity Law Association feels that there is a problem, it does not seem to be answered as easily as the Minister has suggested. Does he have any further comment on the formal duty in the matter of policy?

Lord Phillips of Sudbury

I am most grateful to the noble Lord for giving way. I regret not supporting at least part of his amendment. He and the Charity Law Association are correct that the level of reporting of decisions has declined. It is an important issue.

Lord Hodgson of Astley Abbotts

I am grateful to the noble Lord. His comments—from an expert of 20 years' standing—underline my own as a mere Johnny-come-lately to charity law. Perhaps the Minister will have a further response.

Lord Phillips of Sudbury

It is 40 years.

Lord Hodgson of Astley Abbotts

I apologise.

Lord Bassam of Brighton

I am not sure that I agree with the comments of the noble Lord, Lord Phillips, on a reduction in the publication of the outcome of cases. I should like to see a quantification of that before I accept it. I think that he would accept that point.

The noble Lord, Lord Hodgson, said that it was policy to report. What I said was that the commission also has a policy to report the outcome of every formal inquiry by publishing a statement of the results on its website. I hope that that clarifies what I said. I think that it should. I would be very puzzled if it did not.

Lord Hodgson of Astley Abbotts

We have had a good canter round that track. I will read what the Minister said and talk to the Charity Law Association. I shall also no doubt get further advice from the noble Lord, Lord Phillips, with his 40 years of experience: I apologise to him for undercooking it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts moved Amendment No. 71: Page 6, line 42, at end insert— In managing its affairs, the Commission must differentiate clearly its regulatory from its advisory functions.

The noble Lord said: We come now to a matter which the noble Lord, Lord Best, and other noble Lords have already mentioned: the further general duty of the commission to differentiate clearly its regulatory from advisory functions. As we heard, the topic of the Charity Commission's advisory and regulatory functions was subject to rigorous investigation and discussion during and after the Joint Committee's hearing of evidence on the draft Bill. The need for that separation was the subject of recommendation 20 of the Joint Scrutiny Committee.

The concern—and I am again partly repeating what has already been said this afternoon—is that the Charity Commission will be in a position where it can enforce regulations upon a given charity as well as advise that same charity. If it is not made abundantly clear to the charity whether it is advice or regulation being given, the charity will either risk the repercussions of ignoring regulations or risk carrying out regulations which were intended only as advice.

5 p.m.

There was a clear wish from a large number of interest groups to amend the Bill to avoid that confusion. The Association of Charitable Foundations, the Charity Law Association, the National Council for Voluntary Organisations and the Association of Chief Executives of Voluntary Organisations all highlighted the need for the commission to distinguish its regulatory from its advisory functions. If such a distinction is not made, the likely effect will be that advice given by a regulator becomes de facto regulation, as my noble friend Lord Caithness said earlier, thereby gradually extending the regulation of charities.

Of the 190,000 regulated charities, 95 per cent do not employ staff. The commission clearly needs to have a strategic advisory as well as a regulatory role, but these smaller charities are particularly dependent upon the advice of the commission. But we do not want these smaller charities to interpret advice by the commission as a "must do". It is, therefore, particularly important to make the distinction between advice and regulation, as it will be far from favourable if the smaller charities were to suffer from regulatory creep. In practice, such a distinction should not be difficult to make. Indeed, noble Lords have already referred to some of the mechanisms this afternoon—different coloured paper, different sections of the commission, and so on.

The Bill is intended to encourage charitable endeavour and encourage citizenship engagement in the charitable sector. We do not wish to see a regulatory regime which prevents this happening. The point was concisely explained by Mr Stuart Etherington, the chief executive of NCVO, while giving evidence to the Joint Committee on 9 June. He said: The slight anxiety is this: that voluntary organisations and charitable organisations are part of the civil society and their sophistication with which they engage with the State apparatus is quite a complex one, and we would not want to see spontaneous, citizen-led activity stifled by a regulatory regime which actually, when it gave advice, implied that you could or could not do certain things which had the force of statute when it did not … Of course one wants to see a good and robust regulatory regime and of course that regime will give advice when it has the competency to give it and should make it clear that it is giving advice, but our anxiety comes from, if you like, the smaller end, the fact that we want to encourage more charitable activity and we want to encourage more citizen engagement through this type of activity and we do not want a regulatory regime which prohibits that from happening".

Advice being interpreted as regulation could well stifle citizen engagement, particularly considering the impact it will have upon the smaller charities. Amendment No. 71 would make it a general duty of the commission to ensure that it manages its affairs so that confusion between advice and regulation would not occur. I beg to move.

Lord Phillips of Sudbury

I certainly support the noble Lord, Lord Hodgson of Astley Abbotts, in his opening remarks that there is, quite often, in practice, a confusion between the advisory and the regulatory functions. I speak as a great supporter of the separate tasks of policing and the charity friend. I have had cases in which a client charity has been the object of a formal statutory inquiry and has not known for weeks, sometimes months, that the inquiry has started. The commission has engaged in correspondence without telling the charity that the statutory inquiry has commenced and the charity has therefore conducted its correspondence in a less guarded way than might otherwise have been the case.

I am sure I speak for charity lawyers generally in saying that some of the inexperienced case officers who deal with correspondence do not know at what point they are stating matters which have no statutory or other common law backing but are merely advisory, and when they are on firm legal ground.

So there is certainly a problem. I know that the commission has endeavoured to get to grips with it—there is no question about that—and I am not damning the commission. I am saying that there is a problem which, given the special and unusual duplicity of roles, could recur. Something needs to be done, as the cliché has it.

The Earl of Caithness

I support my noble friend's amendment. This point was raised in the Joint Committee and in their reply the Government said that they endorsed our recommendation in paragraph 207. Later it was stated that the commission accepts the recommendation.

Given everything that the Minister has said in his previous arguments, particularly on Amendment No. 68, about how the Charity Commission behaves, what it is supposed to do and how it sets out its business, why has not this already been done? The amendment should be otiose. If the Charity Commission was doing what the Minister said it should be doing, the amendment would be totally unnecessary.

Lord Bassam of Brighton

The noble Earl asks a very reasonable and fair question and I shall come to it.

Let me remind the Grand Committee where we are. It is certainly right that the Joint Committee recommended that the commission should, take steps to differentiate between its advisory and regulatory functions and make clear in all its communications the distinction between advice and instructions". As the noble Earl said and the noble Lord, Lord Phillips, made plain, that recommendation is broadly accepted. It is a recommendation, of course, which the Charity Commission should take forward.

In fairness, the commission has already in part adopted that approach. For example, in the beginning of its publications it states that the words "recommend or advise" are used where the commission is suggesting to trustees actions which we consider to be good practice but which do not represent a legal requirement; and the word "must" is used to refer to actions that trustees, or their agents or employees, are obliged to take by law.

However, this approach is not formally incorporated into all the commission's other communications and the commission accepts the Joint Committee's recommendation. Indeed, the commission has stated: The Commission will take [the recommendation] forward by reviewing its structure and communications to help trustees and their advisers recognise when the Commission's activities are directed specifically at informing charities about compliance with their legal obligations and when the activities are advisory".

I understand why noble Lords want to see this included on the face of the Bill. In seeking that objective, they wish to compel the commission to take forward the recommendation. But both the commission and the Government have accepted the recommendation and, in the sense of changing practice—which is what this is all about—the noble Lord is pushing at an open door.

It is perhaps worth adding that the commission, in recognising that it needs to change, has now commissioned work to produce a new format for publications which will make a much clearer distinction between legal requirements and advice. The formats now being applied to all publications are being reviewed—reference has been made to such publications during our debates—and the first revised publication, as I understand it, is currently being tested with a consumer group prior to being issued. So some practice is being undertaken to see whether the new format works. I also understand that the commission has separately commissioned advice on the design and layout of its publications. From 1 April this year all new and revised publications will be in that new format. It is giving effect to the recommendation. Obliging it to be written into the legislation is probably unnecessary and perhaps overhearing in this regard. It would be ill advised to write it into the Bill as the noble Lord suggests.

The commission and the Government understand the importance of the recommendation; we want to see it carried through. From my understanding, it seems that the commission is taking practical steps to do that. The point is very well made and well understood.

Lord Hodgson of Astley Abbotts

The Minister has certainly made all the right noises, and they were handsome indeed, so I am grateful to him. If the Charity Commission can follow through the sorts of lines of endeavour that the Minister described, clearly it is moving towards what supporters of the amendment wish to see. I am grateful to Members of the Committee who have spoken in support of it.

I shall withdraw the amendment, talk to people outside to see whether there really is a move in the real world as opposed to the Moses Room, and return to the matter if we feel that there has not been enough progress among those involved in the practice in the world outside. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 72 not moved.]

Lord Phillips of Sudbury moved Amendment No. 73: Page 6, line 45, after "to," insert "the achievement of its objectives or

The noble Lord said: I hope to deal with this amendment very swiftly. We are still on this crucial Clause 7, which incorporates into the Charities Act 1993 a description of the objectives, general duties and functions of the Charity Commission. The last part of the new clause, new section 1E, states that the commission shall have incidental powers. The first of those powers reads as follows: The Commission has power to do anything which is calculated to facilitate, or is conducive or incidental to, the performance of any of its functions".

It struck me as odd that that incidental power should apply only to performance of functions and have no reference to the objectives or duties. My amendment is designed to pull those in. leaving the subsection drafted as follows: "The Commission has power to do anything which is calculated to facilitate, or is conducive or incidental to, the achievement of its objectives—that is one addition—or the performance of any of its functions and duties". It seems a useful amendment; I hope that the Government will think so, too. I beg to move.

Lord Borrie

On Amendment No. 74, why cannot one say that the word "functions" implicitly includes the duties of the commission?

Lord Phillips of Sudbury

Functions are very distinct from duties in this clause. Functions are dealt with in new section 1C; duties are dealt with in section 1D; and objectives are dealt with in section 1B.

Lord Bassam of Brighton

The noble Lord, Lord Phillips, finds it odd that the Bill does not work in the way that he suggests. On reflection, we think it rather odd as well, so I am grateful to the noble Lord for tabling the amendment and making his highly relevant comments. We wish to consider the amendment further with a view to tabling an amendment on Report if we think it appropriate. No doubt we will liaise with the noble Lord to ensure that it satisfies the spirit of his suggestion.

Lord Phillips of Sudbury

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

Amendment, by leave, withdrawn.

[Amendments Nos. 74 and 75 not moved.]

Clause 7, as amended, agreed to.

5.15 p.m.

Clause 8 [The Charity Appeal Tribunal]:

Lord Swinfen moved Amendment No. 76: Page 7, line 21, at end insert— ( ) The Tribunal shall have the two general roles of considering cases of points of charity law and considering claims for compensation against the Charity Commission for disproportionate, unfair or unreasonable behaviour.

The noble Lord said: In moving this amendment I shall speak also to my Amendment No. 102. We now move on to deal with the Charity Appeal Tribunal. The amendment is designed so that the tribunal should have power to award full compensation to a charity, trustee, donor, beneficiary or other interested party who has suffered financial loss as a result of the Charity Commission acting disproportionately, unfairly, unreasonably or otherwise unlawfully.

In particular, the Charity Commission must be willing to act against its own receivers and managers where disproportionate, unfair or unreasonable behaviour amounts to a breach of trust. The Government have said that they wish to rely on the Independent Complaints Reviewer and the Parliamentary Ombudsman to make restitution for financial loss.

However, the Government have failed to understand the real situation. The Independent Complaints Reviewer's brief excludes her from recommending compensation for financial loss. She can make recommendations of up to £5,000 only for consolatory payments but nothing else. The ombudsman has repeatedly refused to take cases until they have been through the High Court, in spite of the fact that the rules of the court tilt the balance so heavily against a complainant that only a fool would take a case there.

For example, a charity must bring the commission to court to have the court force the commission to issue the certificate that enables the charity to bring the commission to court for the substantive issue. When the commission eventually comes to court, it chooses not to appear itself but to send in the Attorney-General and the Treasury Solicitor, with all the costs implications for the complainant if it loses. In the Little Gidding Trust case the court refused to consider the behaviour of the commission, despite the fact that it had already identified it as the main issue. I am told that the Court of Appeal chose not to reverse that denial of justice. I beg to move.

Lord Phillips of Sudbury

The noble Lord, Lord Swinfen, has tabled a number of amendments that touch on the same broad issue. I have considerable sympathy with their aim but will listen attentively to the Government's response.

Lord Bassam of Brighton

I thank the noble Lord, Lord Swinfen, for tabling the amendment. I wish to introduce the Bill's provisions on appeal tribunals, as it is an important innovation. I shall first speak generally and then respond in detail to the issues touched on in the amendments.

Going back in time, the Strategy Unit review recommended that an independent tribunal should be established to hear appeals against the legal decisions of the Charity Commission. It found that there was a perception that taking appeals to the High Court involved undue expense and delays, which meant that the Charity Commission was virtually unchallengeable in practice. There is very strong support for the introduction of the tribunal in the charity sector. I understand that some 92 per cent of the respondents who commented on the recommendation were very much in favour of it.

The Government believe that tribunals will provide charities and trustees with a less expensive and less formal means of challenging the legal decisions of the Charity Commission. It should be an avenue of appeal of first resort, and in the vast majority of cases appellants could represent themselves if they so chose. I emphasise that the tribunal is not for challenging the case-handling or other administrative decisions of the commission or for complaints about standards of service. Those will be in the territory of the ombudsman rather than the tribunal.

We have listened very carefully to the views of stakeholders in developing the proposals for the tribunal, particularly its remit.

I am sure that it will not have escaped noble Lords' notice that the remit of the tribunal has considerably expanded since the publication of the draft Bill, including appeals against decisions of the Charity Commission in relation to public collection certificates. The estimate is that the range of cases has probably been doubled in general terms by the expansion of the tribunals remit.

In creating the tribunal we have also sought to retain the expertise of the Attorney-General in matters related to charities. We very much welcome his continued interest and involvement. He will retain a right of appeal both to and from the tribunal as well as being able to he a party to the proceedings or to argue a case before it. Of course, much of the detail of the workings of the tribunal will be dealt with through the Lord Chancellor's rules. I assure noble Lords that work on those will begin at an early stage and that they will be subject to consultation with stakeholders. I am sure that that will include and want to draw on the experience of many Members of the Committee who have an interest and a wish to be involved in that consultation. The rules will be laid before Parliament and subject to the usual negative resolution procedure.

We believe that the tribunal will become an effective mechanism for dealing with appeals against Charity Commission decisions, and, like everyone else in this field, we want to make it work. But we will, of course, listen very carefully to comments made by noble Lords throughout the debate on the amendments before us today.

I shall now comment on the detail of Amendment No. 76. We believe that the tribunal should be able to award costs against the Charity Commission, limited to where the tribunal considered that the relevant commission decision, direction or order was unreasonable or where it considered that the commission had acted vexatiously, frivolously or unreasonably. The amendment would widen the remit of the tribunal so that it could consider claims for compensation where the Charity Commission had acted disproportionately, unfairly, unreasonably or unlawfully. However, the amendment would enable the tribunal to consider whether compensation should be payable as a result of maladministration on the part of the commission. It is not appropriate for the tribunal to consider complaints of this nature, as its remit is to consider appeals against the commission's substantive decisions.

That does not mean that appellants would be prevented from pursuing a complaint about maladministration. Those complaints already fall within the remit of the commission's own established internal complaints procedure, the Independent Complaints Reviewer and the Parliamentary Ombudsman. The Independent Complaints Reviewer has the power to recommend that the commission make what is described as a consolatory payment in recognition of anxiety and distress caused by maladministration, although I understand that she has no power to recommend payment of a specific amount in respect of financial loss. However, in appropriate circumstances, she could recommend that the commission consider this. As I understand it, the commission has never yet refused a recommendation from the Independent Complaints Reviewer to make a consolatory payment.

Complainants are not required to use the Independent Complaints Reviewer's service and could instead seek a referral to the Parliamentary Ombudsman. There are no restrictions on the Parliamentary Ombudsman in recommending compensation for actual financial loss, save that she would have to be satisfied that the loss resulted from maladministration on the commission's part.

I hope that the noble Lord will accept that it is not appropriate for the tribunal to consider complaints of maladministration. I therefore invite him to withdraw his amendment.

I should add that I have details of the commission payments, which I described, for poor service standards. As I understand it, in the past 12 months the commission has paid or offered consolatory payments of approximately £1,500 to six clients, and compensation payments totalling approximately £11,000 to a further six clients. There are cases where that has happened. They are made on the basis of internal investigation and review and the activities of the Parliamentary Ombudsman. So the commission is not closed to making compensation payments. I hope that my explanation will satisfy the noble Lord.

Lord Swinfen

I thank the Minister for his fairly lengthy and detailed reply. I am not sure, in my own mind, whether it would be appropriate for the tribunal to award compensation for maladministration. The Charity Commission should be held to account where there is maladministration. However, I would like to read very carefully what the Minister has said before coming back to this matter on Report. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts moved Amendment No. 77:

Page 7, line 26, leave out "may" and insert "shall"

The noble Lord said: In moving Amendment No. 77, I should also like to speak to Amendment No. 83. They are grouped with amendments in the name of the noble Lord, Lord Phillips, and my noble friend Lord Swinfen. We have moved a tad further down page 7 of the Bill to the practice and procedure section under Clause 8.

This section establishes that the Charity Commission is to be the respondent on appeal at the tribunal. Subsections (2) and (4) detail the matters to be covered in the Lord Chancellor's rules which would regulate the exercise of the rights of appeal to the tribunal as well as its practice and procedure.

Our two amendments would change the drafting of the Bill in a way that I suspect the Minister will argue is unnecessary. They would provide that the Lord Chancellor "shall" rather than "may" make rules and provisions regulating the rights to appeal under subsections (2) and (4). Such regulations are listed under subsection (4) and include provisions inter alia about the representation of parties to proceedings, disclosure of documents and the withdrawal of appeals and applications. Such provisions are significant considerations that I believe must be covered under regulatory rules by the Lord Chancellor and not left to choice. They are seen to be significant enough to list in the Bill and should be given a guaranteed place in regulation. Binding the Lord Chancellor to make rules regulating the rights to appeal brings more clarity to the procedures of the tribunal.

As the Minister has said. we have yet to see the guidelines on the tribunal so we are, so to speak, arguing in the dark. But ensuring that the Lord Chancellor will definitely rather than maybe make rules regulating the rights to appeal will at least go some way to providing some initial clarity on a matter that remains rather hazy.

I think that the Minister will argue that in law "may" equals "shall", but as a non-lawyer, I always like clarity. It seems to me that "shall" is a great deal clearer than "may", whatever the Minister may say. I beg to move.

Lord Phillips of Sudbury

My Amendment No. 80 is the second in this group of four. Amendment No. 81 in the name of the noble Lord, Lord Swinfen, covers, in essence, the same ground as mine. Amendment No. 83, in the name of the noble Lord, Lord Hodgson of Astley Abbotts, is similar to his Amendment No. 77.

Amendment No. 80 deals with the duty or discretion of the Lord Chancellor to make rules,

about the practice and procedure to be followed in relation to proceedings before the Tribunal". That is very sensible. My amendment adds, and in so doing shall seek to make such rules as simple, non-adversarial and user-friendly as shall be practicable".

I hope that this will appeal to the noble Lord, Lord Bassam. Not only is he not a lawyer, he is a healthy critic of the obfuscations of my profession. I am delighted, too, that the noble Lord, Lord Hodgson, is not a lawyer and can thus bring shafts of Anglo-Saxon sense to the interpretation of language.

5.30 p.m.

If this tribunal goes anywhere near the way of, for example, the employment tribunals—which we should not forget started off with the intention of being the plain man's guide to self-representation—it will be an abject failure. The employment tribunals are now lawyer infested. There are tomes and tomes of decisions and law books and textbooks and courses and consultants. It is a nightmare. It is a great growth area for lawyers. I am not sure that we did as well as we might have done with those tribunals. As far as we can, we must avoid allowing these tribunals to go that way.

Before the good noble Lord, Lord Borrie, accuses me of naivety, I shall say at once that there is a strict limit on how far you can keep complex law out of these tribunals, because they are essentially dealing with decisions that will be based on law. Charity law, as we all know, is at least as complicated as any other branch of law. But at least we can say, and put it clearly at the heart of these measures on the tribunal, that when it comes to practice and procedure, the rules shall allow the tribunal to be as simple, non-adversarial and user-friendly as practicable. I hope very much that that will appeal to the Minister and even to the Government. I beg to move.

Lord Swinfen

Before speaking to my own amendment. I should like to support the amendment of my noble friend Lord Hodgson of Astley Abbotts, in that we should leave out "may" and insert "shall".

Let me take the Minister back a small number of years to when he was a small boy and was given permission by his mother to go down to the corner shop and buy himself some sweets. That was permissive. But on another day, his mother said to him, "You shall go down to the shop and buy me some baked beans before you go out to play." That is not permissive; that is instructive. You have got to do it whether you like it or not. So there is a considerable difference between "may" and "shall". There is no way that the Minister can come back to me and tell me that the two words mean the same. They do not. I strongly support my noble friend in his amendment.

My Amendment No. 81 is an attempt to make certain that the rules made by the Lord Chancellor for the tribunal are effective. The tribunal must have power to access all charity, all commission and all receiver's and managers' records and require the attendance of any individual person. It is much quicker than the courts. It will take weeks rather than months, certainly, and possibly years. It will be much cheaper than the courts. And much to the chagrin of the noble Lord, Lord Phillips, I am sure, lawyers are not essential—although I am sure that he is overworked in any case.

Under the rules as I suggest them, the tribunal must publish all cases without the anonymising favoured by the Independent Complaints Reviewer. The tribunal must include expert charity lawyers as well as trustees experienced in small as well as big charities. It must be charged with seeking, fairness, justice and equity for all stakeholders, whether or not they are party to the case, as well as technical compliance".

Lord Borrie

I would not dream of accusing the noble Lord, Lord Phillips, of naivety—certainly not on the matters about which he has just been talking. I share his view on employment tribunals, and other tribunals, which were often set up with the intention of taking matters out of the courts so that they could be dealt with cheaply, quickly and lawyer-free.

I think that I am right in saying that, when the various welfare state tribunals under the national insurance Acts were set up by the Attlee government in the late 1940s, the great cry of the Trades Union Congress was, "No more courts, no more lawyers, let's put all these matters into the hands of tribunals". The tribunals were to have a chairman—he might be a lawyer but there would not be lawyers on both sides arguing cases—two wingmen, who would be a trade union representative and a worker representative, and an employer representative. It was intended that the tribunals would come to fair, equitable and sensible decisions and would not be concerned with the technicalities of the law. We all know that it did not work out quite as happily as that. The tribunals got "infested"—to take the word used by the noble Lord, Lord Phillips—with lawyers.

I very much share the noble Lord's general theme on what is desirable. But a week or two ago, when we debated the very early clauses of the Bill during a previous Committee sitting, we discussed definitions. Members of the Committee who were present will remember how long it took us. Did we resolve the question of what is a charity that advances religion, or what is a charity to advance all the various other causes listed? The noble Lord, Lord Phillips, in particular referred to Tudor on Charities and other authoritative works showing how complex the law had become since the famous statute of 1601—there are 400 years of law.

I like the propositions that have been put forward by the noble Lords, Lord Hodgson and Lord Phillips. But on the amendments of the noble Lord, Lord Swinfen, who has tabled more than the noble Lord, Lord Phillips, the more detail there is, the more questionable some of the propositions are. On Amendment No. 80, tabled by the noble Lord, Lord Phillips, I would like to see non-adversarial rules as far as practicable. However, if you have non-adversarial procedures in relation to a complex scheme of charities you must have, for example. a lawyer acting for the tribunal who will ensure that everybody knows what the law is, who probes the definitions and all the rest. If you do not have lawyers on both sides, you must certainly have one doing that very effectively on behalf of the tribunal. In response to the last of the propositions of the noble Lord, Lord Swinfen—tribunals shall seek fairness, justice, equity and so on—we all know that the law and justice are not necessarily the same things. The law strives for justice. The Bill contains definitions and law accumulated over the years; they are not being dismissed out of hand, as we are not starting absolutely from scratch. Although seeking fairness, justice and equity for all stakeholders is a very desirable objective, I very much doubt whether the Lord Chancellor could somehow set out the rules differently from how he would do without the inclusion of that phrase.

I shall not continue at length, because, as I am sure the noble Lord, Lord Swinfen, will agree, the more detailed an amendment is, the easier it is to criticise it. No doubt he would like simply to debate the matter and for the Minister to respond as constructively as possible to his points. I admit that I am being entirely negative, but, then, I am not the Minister.

Lord Bassam of Brighton

This has been a very entertaining diversion. I shall start as I mean to go on: by being rather negative about this group of amendments, I am afraid. I do not speak in absolute terms because the amendments have a positive focus and I certainly understand why they have been tabled.

The first amendment tabled by the noble Lord, Lord Hodgson, is a "may" and "shall" amendment. When I first joined your Lordships' House I heard that argument and thought, "It is plain commonsense: of course the appropriate word is 'shall' rather than `may'". I have since heard the argument several times and it has always been explained that "may" actually means "shall" and that that is the way it rests. The noble Lord is right to anticipate that as part of my response. We do not see the need to change the wording because effectively "may" means "shall". To give absolute certainty, of course rules will be prepared, as I explained earlier. Those rules will make it clear that appellants will be able to appear in person rather than with legal representation. The tribunal could not operate without procedural rules whether or not lawyers will play a major part in the proceedings.

The noble Lord, Lord Phillips, spoke with great enthusiasm for keeping lawyers out of the business, as lawyers often do. I share that enthusiasm. I must be careful in what I say, as I live with a lawyer and occasionally I have to be subject to her obfuscation over the breakfast table and at suppertime. I certainly understand what the noble Lord is saying.

The noble Lord, Lord Borrie, is right that at the outset it was believed that tribunals would make it much easier for lay people to present their own case or story. Sadly, study and analysis of the outcome of tribunal cases tends to show that, as tribunals have developed over the years, lawyers get a better result than a lay person making a presentation of their case. That is because lawyers are very well versed in the argument. Of course some lay people are very good at presenting cases. When I was a law centre worker I thought that as lay people we were quite good at making presentations on behalf of ordinary folk.

The spirit of the amendment is that the rules must be plain, clear, understandable and accessible. I shall give an undertaking today that I hope we can stick to. I wish to ensure that all noble Lords who expressed an interest in helping draft the rules so that they fit that rubric can be involved in the consultation process. It would be very valuable. It has been very helpful to read the stab by the noble Lord, Lord Swinfen, at writing the rules into the Bill. It will provide us with interesting thoughts and guidance on where we should go with the rules.

The noble Lord, Lord Phillips of Sudbury, seeks in his amendment to ensure that the rules are "user-friendly". I do not think that I have seen that expression written into legislation previously; it would certainly be novel and unusual. I can reassure the noble Lord that we intend that they should be user-friendly. As part of that, we are committed to issuing a plain English guide so that the rules are available and accessible to people who want to understand them better. The draft of the rules is about to be prepared, and a plain English guide will explain them, I hope, with the sort of clarity that we have come to expect from such guides.

I agree with the spirit of the amendments tabled by the noble Lord, Lord Swinfen. It must be a general principle of the tribunals system that a tribunal provides a quick and cheap mechanism of appeal without the need for legal representation, as we have all sought to establish. In establishing the tribunal so that appellants will not have to go through the slow, expensive and legalistic environment of the court, it must be a given that it will have to operate fairly and along the lines of sound natural justice.

The underlying principles to which the noble Lord's amendment refers at paragraphs (a) and (d) will be specifically dealt with in the procedural rules. The Lord Chancellor will appoint the legal and ordinary members of the tribunal from panels selected to ensure that members have the right qualifications so that there is a balance of lay people and those with professional expertise that is appropriate to how it is envisaged the tribunal will work. Further, we certainly want to see in place people with experience in dealing with charity law and those well versed in the charity world.

In preparing the draft rules, we will seek to ensure that the points raised by the noble Lord are considered. I have made it clear that the rules will be subject to consultation and I am more than happy to give a commitment to ensure that those noble Lords who have taken part in this debate are specifically included in the exercise.

I am grateful to all noble Lords who have spoken to this group of amendments. They have provided a useful focus for our debate on the way in which the tribunal is to operate, its rules and its membership. With that response, I hope that the noble Lord, Lord Hodgson, will feel able to withdraw his amendment.

5.45 p.m.

Lord Shutt of Greetland

When the Minister referred to the "plain English guide", is that to be the only guide or will it direct the reader to a more complicated one, which will be the real one for those who want to get really excited about these matters?

Lord Bassam of Brighton

My understanding is that there will be just one guide, written in plain English.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister and to my noble friend Lord Swinfen for his supportive comments on the merits of "may" and "shall".

I should like to put one question to the Minister. Under subsection (4) on page 8, listing the areas where the Lord Chancellor "may, in particular"—I would prefer "shall, in particular"—"make provision", is it a requirement that every one of those areas is covered? For example, paragraph (e) covers the, admission of members of the public to proceedings". Does that have to be covered?

Lord Bassam of Brighton

The answer is that these areas are not requirements but in practice they will be covered.

Lord Swinfen

To be quite honest, I do not think that that is good enough. The requirement to make provision should be in the Bill by using "shall" rather than "may". To respond by saying that something is not a requirement but that in practice it will be done means that any future government could ignore it. That is not what the Minister has implied in his answer and therefore he should accept my noble friend's amendment.

Lord Bassam of Brighton

As I have explained, I do not think that it is necessary to accept the amendment. However, I would like Members of the Committee to accept my undertaking that these matters will be covered because that is certainly the intention. As I read the areas listed in subsection (4), it would not make much sense if they were not. In practice that is exactly what will happen: these matters will be covered.

Lord Hodgson of Astley Abbotts

This is where the Minister's horse is shot from under him. While he asserts that "may" and "shall" are the same because "may" has the same effect, on further and closer examination the word "may" is used because some of these circumstances could be left out. It is obvious that we cannot take this much further today, but where a list of areas is set out to be included in rules and the Minister tells the Committee that they are to be covered, they should be covered. Otherwise why should they be listed? I do not say that the Minister or this Government would necessarily drop or leave out any of these areas, but a future government might seek to do so. Given that, the position needs to be made clear.

Lord Bassam of Brighton

To be helpful, the noble Lord is beginning to persuade me. I have listened to what he has said and, in order to conclude this debate because we need to move on, I shall give the point further consideration.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister for that response and to those noble Lords who have supported me in this debate. I thought that the comments of the noble Lord, Lord Phillips, about the danger of setting the precedent of employment tribunals were powerful.

The only other thing I want to say is that I thought the Minister was extraordinarily brave to suggest that conversations with his partner over breakfast or supper include obfuscation. I just hope that she does not read Hansard.

Lord Phillips of Sudbury

I can assure noble Lords that she will read Hansard.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts moved Amendment No. 78:

Page 7, line 30, at end insert ", including provisions for the expeditious treatment of cases"

The noble Lord said: In moving Amendment No. 78, I shall speak also to Amendment No. 84. These amendments concern the practice and procedures of the tribunal as set out in Clause 8. I hope that we are all agreed that it is in the interests of justice that the Charity Appeal Tribunal should resolve cases expeditiously, particularly those involving smaller charities with their inevitably more limited resources.

New Section 2B(4) lists the subjects on which the Lord Chancellor may make rules pursuant to subsection (2)(b). The list includes at subsection (4)(b) the ability to make rules,

"for the Tribunal to deal with urgent cases expeditiously".

In our view it is important that all cases should be dealt with expeditiously. Speed and efficiency should be key procedural objectives of the tribunal. Accordingly, the need for the expeditious hearing of cases should not be relegated to subsection (4), and in any case cover only urgent cases. Because of its importance and significance, this matter should be referred to directly in subsection (2)(b) rather than in the subsidiary list set out in subsection (4). As I have said, it should cover all cases, not only urgent ones.

For example, who will decide whether a case is urgent or not? No doubt for the charity or charities concerned, many cases will be seen to be urgent. These amendments would correct that weakness. I beg to move.

Lord Swinfen

I should like to support these amendments, particularly in regard to very small charities. They are often run by volunteers and have no paid staff whatsoever. If a case was outstanding with the Charity Commission and the trustees needed to be changed, that would put a small charity in a virtually impossible position because it would not be able to do so. No new trustee would take on the task while there was an outstanding case. That could be very upsetting for a small charity. If it has a problem to be resolved by these means, its members would often not be able to carry on with their work.

If the Minister will not accept the precise wording of these amendments, I hope that he will agree that something similar needs to be put in the Bill.

Lord Bassam of Brighton

I agree with the desire expressed by both noble Lords to see that cases coming before the tribunal are dealt with expeditiously. Indeed, the Bill as it is makes provision for the Lord Chancellor to make rules about that. The point made by the noble Lord, Lord Swinfen, is important in that regard because smaller charities could be profoundly affected if there was an unreasonable delay in the consideration of their cases.

The amendments seek to move the relevant provision from new Section 2B(4) to 2B(2) of the 1993 Act. However, that would not alter the Lord Chancellor's rule-making power. New Section 2B(2) sets out the general areas to be covered by the rules, while Section 2B(4) deals with some particular matters that might be covered by them. We think it is clearer to list all the specific matters on which rules may be made in one place so that they can be taken together. That is why the provision is set out as it is.

I said earlier that we are committed to consulting on the draft rules with stakeholders and that work will start at an early stage. At that point I think that the comments of the noble Lord, Lord Swinfen, and the points made by the noble Lord, Lord Hodgson of Astley Abbotts, will come into play and be taken into careful consideration. I shall certainly make sure that they are.

As drafted, the Bill enables the Lord Chancellor to make rules about the need to deal expeditiously with urgent cases. What has been said today has been most helpful in that regard, and on that basis I invite the noble Lord to withdraw his amendment. However, I am grateful to him and to the noble Lord, Lord Swinfen, for their comments.

Lord Hodgson of Astley Abbotts

I am glad that we shall have some further involvement in the procedural rules when they are drafted. However, the reason for seeking to move the expeditious treatment of cases up from subsection (4)(b) to subsection (2)(b) of new Section 2B is to highlight the importance of this provision, given the nature of our debate concerning accessibility and the user-friendly nature of the tribunal's proceedings.

I shall be happy to withdraw the amendment, but I did not hear the Minister explain why we need to have the word "urgent". I accept his argument that it should remain in the list set out in subsection (4), but why should only urgent cases be dealt with expeditiously? I return to that point because urgency is in the eye of the beholder. If the tribunal is to be effective and well regarded by the sector, we seek the expeditious treatment of all cases.

Lord Swinfen

Before my noble friend decides what to do with his amendment, can the Minister tell us in whose opinion a case would be deemed urgent?

Lord Bassam of Brighton

The answer to the question put to me by the noble Lord, Lord Swinfen, is that that would be as determined and described in the rules. A framework will be set up for determining the urgency of a case. On the definition of what is urgent more generally. an example might be where an order has been made to remove a trustee or official of a charity. Cases of that kind would merit urgent consideration. In any event, we want to see the tribunal exercise expedition on all the cases brought before it. Given the volume of cases expected to be brought forward, I suspect that that will be the case, certainly at the outset. I do not see a large volume of cases being brought forward immediately, and it has been estimated that the initial effect of the tribunal will be modest in terms of numbers.

Lord Hodgson of Astley Abbotts

I am grateful to my noble friend for asking that further probing question. I am content to leave the treatment of urgent cases as set out in subsection (4)(b), but I want to think further about the more general question of urgency, which I am not sure that the Government have yet addressed properly. In the mean time, however, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts moved Amendment No. 79: Page 7, line 30, at end insert— ( ) requiring the Tribunal to publish its decisions

The noble Lord said: We remain in exactly the same place in the Bill: that is, new Section 2B(2) which provides for the Lord Chancellor to make rules. This amendment would add to paragraphs (a) and (b) by requiring the tribunal to publish its decisions. We think that the Lord Chancellor ought to make this further rule regarding the practice and procedures of the Charity Appeal Tribunal.

In Amendment No. 70 we discussed the merits of setting out in the Bill the need to include, as one of the commission's general duties, that of publicising its decisions. If charity law is to develop consistently and transparently it is important that the commission, the charities themselves and their advisers should be aware of tribunal decisions. With such information the sector can be kept informed about and in touch with developments in charity law. It could also significantly benefit the commission by reducing the time it has to spend advising and updating charities, as greater transparency on tribunal decisions should result in fewer queries being directed to it.

We would argue that an issue of this importance regarding the new tribunal—the need to publish its decisions—should be set out in primary legislation. I beg to move.

6 p.m.

Lord Phillips of Sudbury

My Amendment No. 96 is grouped with Amendment No. 79 and really is to the same effect, but I have put it in the schedule rather than in this clause. The only difference between the two amendments perhaps is that the noble Lord, Lord Hodgson of Astley Abbotts, talks about publishing the decisions whereas I say: The Tribunal shall give reasons". I think that there is a significant difference. The decision of a jury is guilty or not guilty; reasons they do not give.

Lord Hodgson of Astley Abbotts

I have not had 40 years' experience.

Lord Phillips of Sudbury

Fair enough; and the noble Lord is probably the better for it.

Subject to that, I endorse the remarks of the noble Lord, Lord Hodgson. I think that I must also say that, having argued strongly that one wants to minimise the legalisation of all this, none the less it is going to be helpful to the sector to know what is what and how things are developing. There is no getting away from that.

Lord Bassam of Brighton

I certainly understand the importance and value of transparency. I think that the notion of publishing the outcome of appeals is a very important one. We do not resist the idea at all; we might take issue only with the way in which effect would be given to it. There is a need for flexibility. Because of the way in which the amendment is drafted, we could well end up with a situation where all the tribunal's decisions would be published. I am not sure that that would necessarily be helpful because it is possible to lose things in a fog of information.

Cases where the tribunal reaches a decision about whether a specific purpose is charitable would clearly be in the public interest, and it would be helpful if those decisions were more widely publicised. It would also be helpful if the rationale behind the decision were made public. However, other cases might involve information that was commercially sensitive and it would be potentially damaging to place it in the public domain. It might not be appropriate to publish in full such decisions.

We certainly recognise that it is important for the tribunal to publish its decisions, but we also think that there is a need for some flexibility. As the noble Lord will understand, the Bill makes provision for rules to be established on the recording and promulgation of decisions. As I have already said several times, the consultation on those rules will be important. This is one of the issues on which we will consult.

The amendments are helpful in drawing our attention to the important issues of the tribunal's operation. I hope that, having heard my comments about reflecting that in the rules, noble Lords will feel able not to press their amendments.

Lord Phillips of Sudbury

Perhaps I may ask the Minister a little more about the difficulty he faces. He said that some types of decisions might be a bureaucratic burden without much merit. I can see that there may be such cases. But surely the answer is for the Government to come back and say that they will publish the reasons in the registration cases, and in this sort of case and that sort of case, whereas in other cases it will be left to the discretion of the tribunal. This is an important part of the whole functioning of the tribunal. The words "recording and promulgation of decisions" do not go to reasons, but I come back to that. Could the Minister not look at this in a more purposeful way and say, "Yes, we can see that these reasons need to be publicised"?

The Earl of Caithness

I should like to follow up on that argument because my point is related to it. Who will decide whether the decision and the reasons are published, as the noble Lord, Lord Phillips, seeks? Rules will be made, but who will decide? Is it to be the tribunal or another body?

Lord Bassam of Brighton

In answer to the noble Lord, Lord Phillips, it certainly would he possible for the tribunal to give a direction on publication of a decision and the content in general terms of such publication, as well as on the publication of reasons. That will be covered in the rules themselves. It may well be that the tribunal then begins to exercise that more rigorously and thoroughly than perhaps we are envisaging today, but the facility will be available.

I understand the noble Lord's insistence on this point because it is very important. Not that long ago I recall being party to a debate in your Lordships' House in which we discussed the value of ensuring that planning committees produce and publish their reasons for decisions. I see no fundamental difference here, but there needs to be some qualification so that where sensitive commercial information is involved in the decision-making process, it can be protected. I am sure that the noble Lord understands that.

Lord Phillips of Sudbury

I do not want to prolong the debate, but this is an important issue. In response to the noble Lord's comments, it is not enough for the tribunal to be able to decide when it gives reasons; it should be for Parliament to decide. I would not mind particularly if new Section 2B(4)(h) referred to reasons as well as decisions because we could then see in the draft rules exactly what is required and we could argue the issue at that stage. That would ensure that Parliament is given proper oversight.

Lord Bassam of Brighton

I want to reflect further on what the noble Lord has said. While I make no commitment at this point, I want to think about it a little more. However, I ought to make it clear that the tribunal will always give reasons. It is more a question of whether it would be right for those reasons to be published. Nevertheless, the tribunal itself will always have to have reasons for its decisions.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister for his last intervention because it does address our concerns about leaving this provision too vague. We look forward to hearing about where his further deliberations take him. I hope very much that he will be able to come back with something that will increase certainty by making clearer what we can expect from the rules when they are drafted and discussed. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 80 and 81 not moved.]

Lord Phillips of Sudbury moved Amendment No. 82: Page 8, line 5, at end insert— ( ) subject to subsections (5) and (6), specifying that the Commission shall not be entitled to recover costs

The noble Lord said: In moving Amendment No. 82, I shall speak also to Amendment No. 88. They provide for further insertions in Clause 8, the object of which is to cover the issue of costs. Costs, I am afraid, are much more of an encumbrance to the satisfactory working of charity law than most people realise. They have frozen judicial evolution of the definition of charity. To some extent this Bill will make inroads on the problem in that new Section 2D(4) allows the Attorney-General to intervene in and take over proceedings, but none the less there is a real fear on the part of charities of getting embroiled in matters where costs could run out of control. I do not need to explain that the funding of charities is such that the spare cash available for overheads—non-project finance—is extremely scarce. They are always hunting around for more.

The two amendments before us are designed to improve that. Amendment No. 82 would insert a further subsection to new Section 2B to provide that, subject to subsections (5) and (6), specifying that the Commission shall not be entitled to recover costs".

The purpose of Amendment No. 88 may not be obvious to noble Lords. It would give the commission the right to decide in advance that it would not require, any charity or trustees of a charity to pay the Commission's costs incurred in connection with any appeal or application for review before the Tribunal".

That is necessary because without it I am not sure that the commission would be at liberty to give an undertaking to a charity that it would not be looking for its costs to be met in the event that it succeeded in the tribunal case rather than the charity itself.

Taken together, these two provisions would give some comfort to charities appearing before tribunal hearings. I beg to move.

Lord Hodgson of Astley Abbotts

My Amendment No. 86 runs parallel to the proposals set out in the amendments tabled by the noble Lord, Lord Phillips, but approaches the point in a slightly different way. We seek to add to the end of subsection (5), which concerns how the tribunal can order a party to proceedings before it to pay costs if it believes that that party has acted "vexatious, frivolously or unreasonably", the words: In other circumstances, subject to subsection (6) below, the party bringing proceedings will not be subject to costs". Subsection (6) empowers the tribunal to force the commission to pay the other party's costs in cases where it has acted unreasonably.

I shall briefly underline the points made by the noble Lord, Lord Phillips. Concerns have been expressed to us that charities face the possibility of having to meet the costs of the commission, and it may be that the Attorney-General will shy away from bringing a case to the tribunal, thereby defeating the aim of furnishing charities with a forum for challenging decisions reached by the commission. The amendment would make it expressly clear, rather than simply implying the case as at present, that the burden of costs will fall only on those who make vexatious, frivolous or unreasonable applications to the tribunal. The purpose behind the amendment is to ensure that the tribunal is as accessible as possible to charities both large and small, which I presume is the intention of the Government behind its establishment in the first place.

Lord Bassam of Brighton

I thank both noble Lords for tabling these amendments because they provide us with a useful opportunity to look again at the powers provided for the tribunal to award costs. As we have all agreed on a number of occasions, the tribunal will provide a quicker and cheaper means of challenging legal decisions rather than pursuing them through the High Court. We do not believe that costs should be awarded by the Charity Appeal Tribunal as a matter of course, as that might deter appellants with legitimate appeals from submitting them. However, we appreciate that there might be cases where the tribunal considers that the person bringing the proceedings, or any other party to them, had acted in such a manner that it would warrant costs to be awarded against him or her. The Government therefore want to achieve a balance between not deterring potential appellants from submitting appeals because of the threat of costs being awarded against them and discouraging appellants from lodging appeals in an unreasonable, frivolous or vexatious manner. We appreciate the range of the argument here and the difficulties that can be encountered either way.

We agree that costs should only be awarded against the party bringing the proceedings in the circumstances provided for by subsections (5) and (6) of new Section 2B of the 1993 Act, as they would be inserted by this clause. That is limited to sets of circumstances: awarded against any party where the tribunal considers that the party has acted in a vexatious, frivolous or unreasonable manner; and against the Charity Commission, where the tribunal considers that it had acted unreasonably in making the relevant decision, direction or order.

6.15 p.m.

In the light of the amendment we will consider carefully whether the Bill as drafted achieves that outcome, which is to limit the award of costs to the circumstances provided by new subsections 2B(5) and (6) of the 1993 Act.

Regarding Amendment No. 88, spoken to by the noble Lord, Lord Phillips, the Lord Chancellor will be making rules about the award of costs by the tribunal. As I said earlier, we believe there should be a limit on the circumstances in which those awards can be made. The power to award costs is important and powerful, as the noble Lord, Lord Phillips, said, and is a useful and necessary sanction to use against the vexatious or frivolous litigant who, frankly, behaves badly, abuses the public purse and wastes time.

However, the intent of Amendment No. 88 is already provided for in the Bill. The commission could, in advance of the proceedings, decide not to seek recovery of costs. Indeed, the Charity Commission has already stated that it will not routinely claim costs against a charity even if the tribunal makes the award. In the circumstances, that is a useful commitment given by the commission.

I hope that the noble Lord will accept that his amendment is not necessary, particularly given that the Charity Commission can already decide in advance of proceedings not to recover costs.

Lord Phillips of Sudbury

That response by the Minister is helpful and I am reassured by his comments. On that basis, Amendment No. 88 is redundant. I shall read carefully what he has said regarding Amendment No. 82 and Amendment No. 86, tabled by the noble Lord, Lord Hodgson, and hope that I am as satisfied as I am at the moment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 83 and 84 not moved.]

Lord Hodgson of Astley Abbotts moved Amendment No. 85: Page 8, line 18, at end insert— ( ) The High Court shall have power to cede jurisdiction to the Charity Appeal Tribunal in matters otherwise within the jurisdiction of the High Court concerning charities either (on the application of any interested party) in relation to one or more particular category or categories of cases. ( ) The High Court shall furthermore have power on the application of any person interested to give directions as to the proper hearing of matters falling within the jurisdiction of both the Charity Appeal Tribunal or the Tax Tribunals (or both) and the High Court as it shall think fit for the purposes of the proper determination of the issues in question and the proper representation of all necessary or interested parties. ( ) Rules of Court may be made for the purposes of the exercise of foregoing powers.

The noble Lord said: The amendment concerns the Charity Appeal Tribunal's jurisdiction. It seeks to insert after on page 8 a new subsection that would fit between subsections (4) and (5).

Christopher McCall QC has provided a helpful briefing on this probing, if highly technical, amendment. We seek to draw the Government's attention to some distinct problems that the legal experts believe did not receive proper attention when the draft Bill was under review. The noble Lord, Lord Phillips, has tabled a similar amendment in a different part of the Bill. He has the benefit of 40 years' experience to put it in the right place.

There will be three originating tribunals for issues of charity law: the new appeal tribunal, tax tribunals and the High Court for issues not within the jurisdiction of the other two. A tax tribunal can refer matters straight to the Court of Appeal in appropriate cases, but not to the Charity Appeal Tribunal. The High Court cannot refer matters to the Charity Appeal Tribunal, nor can the Charity Appeal Tribunal refer matters to a tax tribunal. Some issues might, in theory, come within the ambit of all three processes. A will trust for a dubious charitable purpose might give rise to, first, an inheritance question for the tax tribunal; secondly, a question of registration, which would bring it within the remit of the Charity Commission and, at one remove, the tax appeal tribunal again: and, finally, questions of construction involving next of kin which must, surely, be destined for the High Court.

If what I have been advised is right, surely the positions of the various jurisdictions need to be clearer. It is accepted that the High Court needs some jurisdiction, for example, where issues mix private and public questions—for example, will construction or the rights of members of a charity—or ones which may need some form of injective relief such as Sikh temples, or issues of administrative law such as the National Trust. The tax tribunals may have to deal with issues that affect more than mere questions of charity rights, so one cannot simply disregard the need for the tax tribunals to deal with charity law issues.

However, if there is to be a Charity Appeal Tribunal, why does the High Court have to deal with what I understand is called a Snowden question—whether a charity has the power to meet a moral obligation? As I understand it, the answer is that it does, because it is a proceeding which only the Attorney-General can initiate and because the Snowden case says that it must. But should it have to? It appears that the likely effect would be to reduce the standing of the Charity Appeal Tribunal for it to he seen as an appendix of the High Court and a reviewing body of some commission decisions, not a body which stands on its own feet to give directions to issues of charity local authorities, as tax tribunals do in the case of tax law.

Is it not possible to give the High Court a supervisory jurisdiction which enables it to direct that issues affecting charities should be referred either directly to it in place of tax tribunals, or to the Charity Appeal Tribunal, or to allocate appeals between those two other tribunals? A wider power to make rules of court and/or practice and procedure seems to be worth considering. Also, should there not be the power to jump over the High court from the Charity Appeal Tribunal and go straight to the Court of Appeal on pure questions of law?

As I have said, this is a probing and technical amendment. I look forward to hearing the Minister's explanation as to how he believes the various pieces in this complex legal jigsaw will fit together. I beg to move.

Lord Phillips of Sudbury

The noble Lord, Lord Hodgson of Astley Abbotts, read his brief to perfection. He was word perfect, and we thank the good Christopher McCall QC for taking the trouble to raise these issues and, indeed, for drafting the amendment. I do not know why mine was tabled: I should have put my name to this amendment. Although technical in nature, it achieves severely practical ends, as the noble Lord has described, and I hope that it will assist the Government in improving the Bill.

Lord Bassam of Brighton

I shall have to read my brief carefully. Under the existing law a right of appeal to the High Court exists in relation to some decisions of the commissioners. Clause 8, as currently drafted, creates the new Charity Appeal Tribunal to act as the "court of first instance" for appeals against the legal decisions of the Charity Commission. The intention is for the tribunal to deal with appeals expediently and only where necessary for cases to be referred on to the High Court on a point of law.

It goes without saying that the Government have given careful thought to the jurisdiction of the tribunal and, in response to the Joint Committee's recommendation, have ensured that the Bill reflects as many as possible of the commission's decisions to exercise, or not to exercise, its statutory powers. If noble Lords believe that there are specific decisions of the Charity Commission which would be outside the remit of the tribunal, but which they consider should be within the its remit, we would be foolish to ignore them. We would be happy to give them fair consideration.

The Charity Appeal Tribunal is being established for a specific purpose: to hear appeals against specific decisions. There is a clean line of accountability and appeal. Potential appellants will know which of the commission's decisions can be appealed against and that an appeal could be taken further to the High Court on a point of law, if necessary.

These amendments would extend the jurisdiction of the tribunal in a number of ways that the Bill does not intend. Amendment No. 91 would give the Attorney-General a role in consenting to the High Court's jurisdiction being ceded to the tribunal in relation to particular categories of case; and both amendments would allow any interested party to apply to the High Court for jurisdiction to be ceded in a specific case.

The High Court would not refer matters related to charities to the Charity Appeal Tribunal. If a matter was before the High Court, it would be within the High Court's jurisdiction and the court should decide the case. There may be a large number of matters before the High Court that related to charities, but which did not relate to Charity Commission decisions. It would not be appropriate for those matters to be considered by the tribunal. In addition, it would not be appropriate for the High Court to give directions in a case before the tribunal. The tribunal and court have separate distinctive jurisdictions and the case would not be the High Court's concern until there was an appeal to the High Court.

I should add that there is scope for the list which specifies appeal rights, eligible appellants, and remedies, to be amended by order, subject to the affirmative resolution procedure, if it becomes necessary to widen the tribunal's scope. So, if, following a process of review, it was thought that the tribunal was too narrow, its remit could be expanded to include a wider range of issues and considerations.

I hope that noble Lords will accept that the tribunal and High Court have distinctive jurisdictions and that it is the tribunal that should first deal with appropriate charity appeals against the specified decisions of the Charity Commission. I hope that that answers the noble Lord's comments.

Lord Hodgson of Astley Abbotts

It was a handsome invitation by the Minister for us to bring to him specific examples where we felt that the present drafting of the Bill would not meet the case. I do not wish to pretend that my technical knowledge takes me any further on this matter. I can feel the ice cracking beneath my feet even as I talk. Christopher McCall will need to be asked whether we can produce anything further that would be of value to the Minister in consideration of further drafting. But meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 86 not moved.]

Lord Phillips of Sudbury moved Amendment No. 87: Page 8, line 24, after "proceedings" insert "or the manner of the Commission's dealings with the same

The noble Lord said: The amendment goes back to the issue of costs. It would allow costs to be awarded by the tribunal where the commission was not merely unreasonable in the decision, direction or order that it reached, but in, the manner of the Commission's dealing with the same".

This is aimed at the prelude to the decision, rather than the mere decision itself. I do not mean "prelude" in the way that the case was conducted before the tribunal, but in terms of the dealings between the commission and the particular charity before the matter was ever referred to the tribunal.

I am considering what I agree and hope would be a rare case where, although the commission's decision, direction or order was upheld, it was of the view that the manner in which it handled the whole business prior to the reference to the tribunal was unreasonable to the point where the tribunal felt that the commission should pay the other party's costs or part of them.

If the Minister can tell me that subsection (5) deals with this matter in any event, then I shall be more than happy to withdraw the amendment. Subsection (5) is broader and states that if the tribunal, considers that a party to proceedings before it has acted vexatiously, frivolously or unreasonably",

without any restriction on how that party has acted unreasonably, the tribunal may order costs, as it thinks fit.

My question for the Minister is therefore this: does subsection (5) cover the scenario at which I am aiming? Does it mean that the tribunal could take the view that the commission's performance in relation to a matter that was ultimately brought to the tribunal was so parlous, so unreasonable, that it is entitled to award costs, whether in whole or part, to assist the charity that has been damaged, if I may use that word, by the unreasonable behaviour? I beg to move.

6.30 p.m.

Lord Bassam of Brighton

The short and correct answer to the question is "no".

I cannot be very helpful here because the effect of the noble Lord's amendment would be to widen the scope of the tribunal's jurisdiction by giving it the power to award costs where it considered, as the noble Lord argued, that the Charity Commission had acted unreasonably in its dealings in relation to the decision subject to appeal, as opposed to limiting the award of costs to where it considered that the relevant decision was unreasonable. Of course, costs could also be awarded against the Charity Commission where the Charity Appeal Tribunal considered that it had acted unreasonably in relation to proceedings before it.

We agree that it is correct for the Charity Appeal Tribunal to consider whether the decision subject to appeal was unreasonable. After all, the appeal and the resulting costs would not have been necessary had it not been for that decision. However, we do not believe it is appropriate for the tribunal to consider whether the Charity Commission had acted unreasonably in its handling of that decision as that would amount to maladministration.

As I argued on an earlier amendment, issues of maladministration are not best dealt with in the forum of the tribunal; they are best left where they should properly be, and that is with the independent complaints reviewer or the parliamentary ombudsman. That is where the expertise on maladministration, poor process and so on, and an understanding of such issues, rests.

What then happens with a ruling or a guidance given by an ombudsman, of course, is very much a matter for the commission itself to consider. As I said earlier, the commission has a very good track record in dealing with cases referred to it by the reviewer and the ombudsman.

Having heard that explanation, I am sure that the noble Lord will not be too happy because subsection (5) does not help him with his argument.

Lord Phillips of Sudbury

I am grateful to the Minister for being so briefly frank about the unavailability of subsection (5) to deal with my concern. It brings me back to the general proposition that costs are a huge deterrent to charities. Unfortunately, the experience is that even though the lawyer will say to the charity, "Look, I am confident that you will succeed in this matter", it will say, "But what if you do not?". You have only then got to say that it will cost a four-figure and sometimes a five figure sum for the most frightened trustee to rule the roost.

Before I leave the amendment, is the Minister saying with regard to subsection (5) that the ability of the tribunal to award costs to a party to proceedings is limited to vexatious, frivolous or unreasonable conduct in the course of those proceedings? It may not be fair to expect an instant answer to the question—I shall be quite content if it comes later—but it would help the Committee to know that.

Lord Bassam of Brighton

It is fair that I should make clear and put on the record that, yes, it is to deal with vexatious, frivolous and unreasonable action. The noble Lord probably sees that as being too restrictive, but it is the right approach.

Lord Phillips of Sudbury

Does the Minister mean "yes" in relation to the proceedings only?

Lord Bassam of Brighton

Yes.

Lord Phillips of Sudbury

I am grateful for that confirmation. I shall read carefully what the Minister has said. I have a feeling on behalf of all those who have brought forward amendments visàvis costs that we may need to regroup, reconsider and come back. At this juncture. I beg leave lo withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 88 not moved.]

Lord Hodgson of Astley Abbotts moved Amendment No. 88A: Page 8, line 34, at end insert— ( ) In addition to the appeals and applications which may be made to the Tribunal pursuant to the provisions of Schedule 4 to this Act, the Attorney General or the Commission may of their own volition refer to the Tribunal such issues relating to the application of the law to charities as they may consider should be reviewed and determined by the Tribunal.

The noble Lord said: The amendment seeks to insert a new subsection into the proposed new section 2B, "Practice and procedure" of the Charity Appeal Tribunal, in Clause 8.

In their response to the Joint Committee report, the Government indicated that they agreed that the Attorney-General should be able to refer matters to the Charity Appeal Tribunal, but did not comment on the Joint Committee's recommendation that the Charity Commission should also have such an ability. We argue that the role of the tribunal could be usefully expanded to give both the Attorney-General and the commission the power to decide of their own volition to have matters, whether specific or generic, referred to the tribunal for interpretation in the public interest.

A situation might arise where the commission sees a strand of cases which on their own might not individually lead to referrals to the tribunal but where collectively it would be helpful to have the general principles reviewed in order to assist in the development of charity law.

Recent examples of situations where it might have been helpful for the commission to have such a tribunal to which it could have referred such cases include the review by the commission of whether amateur sports clubs could or should qualify for charitable status. The commission had to wait to deal with that issue until a suitable test case became available.

In this way it would be possible for the commission or the Attorney-General to be proactive in using the resource of the tribunal and to give it an important role in the continuing development of charity law, rather than simply waiting for appeals to be made to it against specific decisions. Rather than have this power contained in the regulations for the tribuna1 to be made by the Lord Chancellor, we believe that it is of sufficient importance to have the general principle inserted into the Act, with any necessary procedural and other details included in the regulations. I beg to move.

Lord Phillips of Sudbury

My Amendment No. 100, which is grouped with Amendment No. 88A, covers essentially the same ground. I think the positioning of the amendment of the noble Lord, Lord Hodgson, is better than mine.

The provisions in proposed new Section 2D for insertion in the 1993 Act under Clause 8 fall under the heading of, Intervention by Attorney General". One might think that that gave him the power to refer points of charity law to the tribunal, but it does not. It gives no power of initiation to the Attorney-General; only a power to intervene in a case already commenced by someone else.

One of the recommendations of the Joint Committee was precisely that the Attorney-General—and, indeed, the Lord Chancellor—should have this power. The response was that the Government agreed that the Attorney-General should be able to refer matters to the tribunal. So presumably this will elicit a jolly response from the Minister.

Lord Borrie

Schedule 3 to the Bill creates the tribunal and describes its composition. As we know, the president, the legal members and the non-legal members are all to be appointed by the Lord Chancellor. That shows its significance in the judicial scheme of things. It has an important jurisdiction in regard to appeals of decisions of the Charity Commission and review powers. These are important functions. As a matter of principle we should be very cautious before allowing it to be used as a facility for advisory or, if I may put it this way—pejoratively perhaps—academic opinion.

I am thinking of a situation where a matter is not yet in dispute and has not yet arisen as an issue, as a problem, but someone in the Charity Commission wishes to know the answer. Instead of consulting their own legal staff or paying for legal advice elsewhere, that person might see the facility of the tribunal and say, "Let us go there for an advisory opinion".

There is a distinction between the Attorney-General and the Charity Commission. For what it is worth. I agree with the noble Lord, Lord Phillips, in his interpretation that the reference to intervention by the Attorney-General in proposed new Section 2D in Clause 8 refers only to intervention in the course of proceedings. It therefore does not provide for what the Government indicated they were favourably disposed towards—intervention by the Attorney-General in simply seeking an advisory opinion when there are not any existing proceedings.

As a matter of principle, I would be cautious about the Government going down either route, but certainly, for the reasons I have given, I do not think it would be desirable for the Charity Commission for this new tribunal, its important jurisdiction and significant membership appointed by the Lord Chancellor to be simply used as a lawyer substitute facility.

Lord Best

I beg to differ with the noble Lord, Lord Borrie. I am very supportive of the amendment. The Joseph Rowntree Foundation, of which I am the chief executive, took a case to the High Court to test the law on whether or not the housing provided for older people who purchased their sheltered flats, and therefore were not in poverty, but for whom some care and support would be provided when they lived there was a charitable endeavour.

In those days, before the new tribunal existed, we had to go through a cumbersome and extremely expensive court case, which stretched over a lengthy period of time. But we did so with the full consent, backing and approval of the Charity Commission, which was very supportive of our taking the matter through the courts because it wanted to know the answer.

A great deal of time and trouble could have been saved if the amendment had been in place and it had been possible for the Charity Commission, rather than relying on our charitable foundation to pay all the legal costs we incurred in so doing, to have itself sought the opinion on behalf of ourselves and many other bodies which provide housing for relatively affluent people but include some care within it. I strongly support the amendment.

Lord Bassam of Brighton

I think that the Committee would agree that conferring on the Charity Commission and the Attorney-General the power to refer matters of charity law to the Charity Appeal Tribunal for its interpretation, review or determination would significantly extend its remit beyond what was originally intended. As far as we can tell, there is no other tribunal that can consider points of law outside of its considerations related to a substantive appeal.

The amendment of the noble Lord, Lord Hodgson, would extend the scope of the tribunal even further beyond matters of charity law and into legislation which is applicable to charities. That would or could include legislation governing various matters, from planning law to child protection legislation. The Charity Appeal Tribunal would have limited expertise, or perhaps no expertise, to determine such matters and we do not believe that it would be appropriate for the tribunal to deal with matters other than charity law.

In order to take this forward we believe a number of issues would require further consideration. These would include the circumstances where it would be appropriate for the commission or the Attorney-General to refer matters to the tribunal; whether the tribunal's interpretation or determination would be binding on the Charity Commission; whether the agreement of the other party would be required before such a referral could be made; and determining the most appropriate avenue of appeal from a decision of the Charity Commission which had been based on the interpretation of the tribunal. I am sure the Committee will agree that we would not want the tribunal to end up considering an appeal against a decision on which it had previously provided its interpretation or determination. However, the alternative would be for the avenue of appeal to be to the High Court.

6.45 p.m.

Having said that, which I am sure some noble Lords will see as being entirely negative, we appreciate that there might be benefits for the Charity Commission in being able to refer matters to the tribunal for its interpretation or determination—I listened with some care to what the noble Lord, Lord Best, said in that regard—for example, where it is considering a complex case about charitable status. It would also have potential benefits for applicants in removing the need for an applicant to submit an appeal.

To sum up, we are not convinced that the amendments as drafted will have the intended effect. We understand what the underlying principles behind them are striving towards but we would want to ensure that the scope of the tribunal is limited, in any event, to considering matters of charity law only.

We can see a number of difficulties in taking these amendments forward but we are happy to give further consideration to these issues with a view to seeing whether the scope of the Charity Appeal Tribunal could be usefully and appropriately extended to consider referrals from the commission or the Attorney-General on points of charity law. So while we are happy to go some way towards where the noble Lord wants to be, if we were to go much further we would run into considerable difficulty.

Lord Hodgson of Astley Abbotts

I am grateful for the Minister's answer and for his comments. I accept his point about the law being widened to planning and other statutory matters quite outside charity law. That is not what we were driving at. We were driving at charity law only and 1 accept that the amendment is inappropriately drafted.

I accept what the noble Lord, Lord Borrie, said about the tribunal being over used, but it would reveal a lack of grip by the management of the Charity Commission if we ever got into that situation. If the Charity Commission were to allow it to be put to that use, I fear for what the regulation of charities would become like if that was the quality of the management of the Charity Commission. But I take the point that there is a concern in that area.

I am grateful to the noble Lord, Lord Best, because a good example is worth a thousand dry discussions here. He made a very interesting comment and gave a helpful example.

I look forward to seeing what the Minister is able to come up with. I accept the points that he made about the faults in the amendment as presently drafted and I beg leave to withdraw it.

Lord Phillips of Sudbury

Everything the Minister said by way of criticism seemed to be addressed to the amendment of the noble Lord, Lord Hodgson. My amendment has none of the defects that the Minister laboured to outline.

Perhaps he will ask his officials to produce for him the case of the North Tawton Rugby Club, which is a classic example of why such a provision would be hugely helpful. In that case, the commission produced a 15-page decision which, in effect, said, "We feel that this is such a big decision that it should be taken by Parliament or the High Court". As the club could not afford to go to the High Court, that held back the development of charity law vis-à-vis amateur sports clubs by years and led to wholly unnecessary legislation in relation to community amateur sports clubs, in which the Minister was involved with myself. It is a perfect example of why we need the provision.

I should say to the noble Lord, Lord Borrie, that it would be in my dreams that we would have a number of cases referred to the Charity Appeal Tribunal for interpretation of charity law because the whole sector has been so held back and encumbered by the absence of regular judicial oversight of key issues. Such oversight would help the Charity Commission, it would help the sector and it would be wholly positive. While I understand the noble Lord's general point, in the circumstances it is an unnecessary anxiety.

Amendment, by leave, withdrawn.

Lord Swinfen moved Amendment No. 89: Page 9, line 3, at end insert—

"2CA SUITORS' FUND

There shall be a suitors' fund under the control of the tribunal and capped at £100,000 per year which shall be used to pay the costs of charities and other parties, but not those of the Charity Commission, to enable cases of public interest to be taken to the court."

The noble Lord said: Amendment No. 89 follows on naturally from the previous group of amendments. Although the Bill will ensure that charity law continues to have the flexibility to evolve over time through case law, steps must be taken to ensure that this happens in practice. As the noble Lord, Lord Phillips, said in relation to the previous group of amendments, there is remarkably little case law.

I suggest in the amendment that there should be a suitors' fund to enable charities, trustees or other parties to take appeal cases of public interest from the tribunal to court. I suggest that the fund should be capped at £100,000, although that may be a little on the low side. I have always found that lawyers charge very high fees—with one exception, of course.

The fund would be under the control of the tribunal. As I said, the development of charity law is at a snail's pace. It would be extremely useful to have a fund of this kind, which would probably produce benefit far disproportionate to the sums involved. I beg to move.

Lord Shutt of Greetland

This seems like a good idea but perhaps 1 might ask the noble Lord, Lord Swinfen, who will decide whether a case is of public interest?

Lord Swinfen

I think the answer is that it will be the Charity Commission with the tribunal. The fund will be under the control of the tribunal and it will have to authorise expenditure. However, I am open to suggestions on this. I am not a lawyer. I am a fairly humble individual most of the time and I am quite prepared to take advice on it. I shall be interested to hear the Minister's response in due course.

Lord Borrie

There is a great deal to be said for the amendment of the noble Lord, Lord Swinfen. It has far more future in terms of reasonableness and the costs involved than the amendments which have just been proposed by the noble Lords, Lord Hodgson and Lord Phillips. I noticed during the course of that debate that neither they nor the Minister referred to the costs of, or who was to pay for, these references by the Attorney-General or the Charity Commission to the tribunal to get the law clarified. Someone has to provide the lawyers to present the arguments, and the tribunal itself will have costs in hearing those arguments, but neither of the sponsors of the earlier amendments mentioned them.

I am sorry to refer back to those amendments but we are trying to get an answer to the real life anxiety of whether a certain kind of project is or is not charitable. The Charity Commission, in particular, and perhaps the Attorney-General, will want an answer to that, but someone has to pay the costs involved in getting that answer, however it is done. It seems to me somewhat more suitable that there should be a fund available and a proper case brought, and so on, than the methods proposed in the previous amendments.

Baroness Howe of Idlicote

I agree with what has been said and support the amendment. It becomes clearer and clearer that there is a need for such a sum of money to be available where charities cannot individually afford to go further and a kind of class action is necessary. I would suggest that the fund should not be in the hands of the Charity Commission but should be managed by the appeals tribunal itself.

Certainly the case outlined by my noble friend Lord Best has sharply focused our minds on the need for a provision such as this in the Bill.

Lord Phillips of Sudbury

As I said earlier, I am sympathetic to the amendment of the noble Lord, Lord Swinfen. The costs cap of £100,000 a year could be exhausted by a major case, especially as there would be a strong likelihood of an appeal by either party to the High Court.

In response to the noble Lord, Lord Best, I say that the advent of the tribunal has all kinds of virtues. However, we should not deceive ourselves about the question of costs before the tribunal. The costs are in the lawyers, and the legal argumentation before the tribunal will be exactly the same as that before the High Court. Frankly, I do not think that big cases of charitable status will be much different.

I come back to the thought, reverting to what the noble Lord, Lord Borrie, said, that it is entirely proper that the Charity Commission and/or the Attorney-General, depending upon who is making the reference, should bear the costs of that reference. That will be a part of their funding requirements and will be dealt with in the normal way.

If it is said that it is an awful lot of taxpayers' money to invest in such legal escapades, my answer is very simple. The charity sector is bigger than the motor industry and bigger than the agriculture sector. It is an enormous, hugely important part of our national life. Given that this is a common law system which we all applaud, I think that money spent on deciding these few cases—and it will be only a few—in order to clarify and give shape and more certainty to key aspects of charity law, will be money extremely well spent.

I say that advisedly because I realise that most of the costs will go to the lawyers concerned. Frankly, however, this is one area of life where there is no way of avoiding that. It is crucial that we move on in terms of the clarity, evolution and modernity of charity law.

Lord Bassam of Brighton

It has certainly been an interesting debate. At the moment, Charity Commission decisions can be challenged only through the High Court. But it is interesting that the Strategy Unit concluded that, because the process of taking the commission to court is costly, time consuming and daunting, there was a perception that the commission was virtually unchallengeable in practice. That has meant that people affected by Charity Commission decisions had no realistic recourse to action against it.

At the outset the Strategy Unit considered two alternative proposals as a means of addressing that problem. The first was to create a new tribunal to hear appeals against commission decisions—the tribunal, for reasons which we went over earlier, being a much cheaper, quicker, and, to use the expression of the noble Lord, Lord Phillips, user-friendly option than the court.

The second proposal was to follow the course suggested by the noble Lord. Lord Swinfen, and to create a suitors' fund, which would essentially be a pot of money to pay the costs of people or charities who could not afford to bring an appeal to court but where the outcome of the case would be in the public interest. An example of that might be a particularly complex case involving an issue that could have wider significance for a range of organisations—for example, how one of the charitable purposes is defined.

The Government believe that the creation of the tribunal will improve the commission's accountability more effectively than establishing a suitors' fund. Of course, the amendment seeks to establish a fund in addition to the tribunal. However, we believe that the streamlining of the Charity Commission's decision review procedure to a single stage, and the creation of an independent tribunal to consider appeals, will enable smaller charities to launch effective and less expensive challenges against the commission's decisions.

We accept that there might be a small number of cases in which the issues are of clear public interest, such as the example I gave earlier, where the issues are so complex that only a lawyer could he expected to represent them effectively. In some of those cases the appellant might not have the resources to engage legal representation. I agree with the noble Lord, Lord Phillips, in his estimate that there will probably be only a very small number of cases of that nature in any given year. We intend that the Attorney-General will be copied into all cases being presented to the tribunal, and we believe that in such cases he might want to exercise his power to be a party to the proceedings and to argue them before the tribunal. In that instance, it would relieve the appellant of much of the cost of engaging legal representation.

It is also the case that the Legal Service Commission is able to grant exceptional funding for legal representation before a tribunal in certain cases. While exceptional funding is rare and applications are means and merit-tested, a common reason for granting funding is because a case is in the public interest or is a test case.

I could see the justification for a suitors' fund if, as now, the cost of bringing an appeal was, in practice, a real disincentive even to appellants who have a respectable case. The introduction of the tribunal would significantly reduce the cost of bringing an appeal as compared with the cost of appealing to the High Court under the present arrangements. We do not, therefore, believe that a suitors' fund to take cases of public interest to the High Court will be necessary for the reasons I have outlined. Therefore, I hope that the noble Lord will withdraw his amendment.

7 p.m.

Lord Swinfen

I shall withdraw my amendment in due course because we are in Grand Committee. The fund that I have proposed would be under the control of the tribunal, as the amendment says. I agree that the cost cap is too low, but one has to start somewhere. I do not know what the figure should be but there should, in my view, be funds available to take the very occasional and unusual case to the High Court. I believe that despite the tribunal, there will still be that need. The tribunal will reduce the need but will not remove it altogether.

The Joseph Rowntree Foundation could take this step because it is a big charity with large funds. The very small charities cannot. The income of the charity I run is so small that even to contemplate going to court and having to see a solicitor and a barrister on more than one occasion would quite likely run it out of funds and it would not be able to carry on with its valuable work.

I shall read with care what the Minister said because he gave a long and fairly detailed answer. However, I reserve the right to come back to this subject on Report. I give the Minister fair warning that I am extremely unlikely to forget about it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury moved Amendment No. 90: Page 9, line 18, after "expedient" insert "whether or not pursuant to a direction under subsection (2),

The noble Lord said: This is a probing amendment. Given that in Clause 8, under proposed new section 2D(4), the Attorney-General may, intervene in the proceedings in such manner as he thinks necessary or expedient",

the amendment is designed to elicit from the Minister whether the Attorney-General is acting pursuant to a direction under subsection (2). I hope that he will be able to reassure me that that is the case otherwise the noble and learned Lord's power of intervention in subsection (4) would be too restricted. I beg to move.

Lord Bassam of Brighton

As the protector of charities, the Attorney-General will, we believe, have a valuable role to play in relation to the Charity Appeal Tribunal. The noble Lord will have heard what I said earlier on the previous amendment. The Attorney-General might argue cases before the tribunal where he considers it to be in the public interest.

We certainly agree with the spirit of the noble Lord's amendment, but the Bill already conveys a power on the Attorney-General to intervene in proceedings in a manner that he considers necessary or expedient. For that reason, the amendment is not necessary. Indeed, proposed new section 2D(5) of the Charities Act 1993, as inserted by this clause, clarifies that the Attorney-General can use his power whether or not the tribunal or the court have given a direction under proposed new section 2D(2) that all the necessary papers should be sent to him. We agree that it is for the Attorney-General to decide when to exercise the power to intervene in proceedings. For that reason, the Charities Bill does not limit its use. For those reasons, I should quite like the noble Lord to withdraw his amendment.

Lord Phillips of Sudbury

The noble Lord will, and does, beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 91 not moved.]

Lord Hodgson of Astley Abbotts moved Amendment No. 92:

Page 9, line 25, leave out subsection (3).

The noble Lord said: Amendment No. 92 seeks on a probing basis to remove Clause 8(3), which gives effect to Schedule 4. Subsection (3) and Schedule 4 are important because it is Schedule 4 that provides the basis for the rights of appeal against Charity Commission decisions to the new Charity Appeal Tribunal.

However, paragraph 1(1) of Schedule IC to the 1993 Act—to be incorporated into that Act by Schedule 4—continues to limit the general right of appeal by limiting it to specific provisions, now set out in a detailed table in the Schedule, but still not extending it to instances of delay or impasse in the decision-making process of the commission. The Charity Law Association strongly agreed with paragraphs 7.79 and 7.80 of the Strategy Unit report Private Action, Public Benefit, which in recommending the introduction of the tribunal envisaged that it would hear appeals against legal decisions of the commission (Paragraph 7.79) and be able to make determinations in the case of delay or impasse in the commission decision-making process (Paragraph 7.8).

Instead, the consultation draft of the Charities Bill included a right of appeal restricted to specified major orders of the commission. The Bill currently provides a significantly extended right of appeal, but the following problems remain. First, in being so specific in the Schedule 4 table—which runs to seven pages of the Bill, between pages 79 and 86—there is a danger of significant omission, or inappropriate provision. which may be corrected only by order of the Secretary of State approved by each House of Parliament— Schedule 4(6). That seems an inflexible model for a major new institution and decision-making process.

Further, and more importantly, the right of appeal still does not extend to instances of delay or impasse. It is not expressly stated in general terms that an appeal may be made against a decision resulting in no action as well as one resulting in action. An express statement to that effect is desirable. I beg to move.

Lord Bassam of Brighton

We obviously believe that it is important for the tribunal's jurisdiction and remit to be set out clearly in statute. As the noble Lord, Lord Hodgson, said, Schedule 4, which inserts new Schedule 1C into the Charities Act 1993, provides a table that makes it clear which Charity Commission decisions would be subject to appeal, who would be able to submit an appeal in each case and the powers of the tribunal in relation to those decisions.

While it would have been possible to group some of the decisions together, we believe that it is simpler to list the decisions in the order in which they appear in the Charities Act 1993. In that way a lay person can quickly identify whether the decision they are concerned about falls within the jurisdiction of the tribunal and whether they are eligible to appeal. It is necessarily long and complicated in order to be effective.

There is one exception to that, which is the rights of appeal related to the regulation of public collections. However, the rights of appeal are clearly set out in Part 3, in Clause 54. As Part 3 contains a new scheme for the regulation of public collections and it might be the only part of the Bill of direct relevance to some organisations, it is clearer and simpler to include those rights of appeal in that part rather than provide for them separately in Schedule 4.

Schedule 4 inserts the appeals table as part of new Schedule 1B to the 1993 Act, whereas the public collections provisions in Part 3 are freestanding provisions. The table is longer than it appeared in the draft Bill but that is because, as the noble Lord acknowledged, we have extended the matters that could be subject to appeal. in line with the Joint Committee's recommendation.

I hope that the noble Lord will agree that the table provides a quick reference guide for the lay person about the jurisdiction and remit of the tribunal and that it is inevitably long as a product of that. Without the table provided by Schedule 4 the tribunal could not operate, as there would be nothing to state which decisions would be subject to appeal, who could appeal and what the jurisdiction of the tribunal would be. I am sure that additional clarifying guidance on the table will be provided. I hope that that will help those who seek to understand better exactly what the Appeal Tribunal will cover.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister. I understand why there was a wish to extend the table to seven pages. One of the concerns that charity lawyers have put to us in response to the table is: does it flatter to deceive? What have we missed in this, when it is all set out so extensively? That is the basis for our probing amendment.

I did not hear the Minister say anything about no decisions; that is to say, appeals against failure to take a decision. One of the issues that charity lawyers have found tricky is that in some cases the commission ducks taking a decision and the charity is left stranded. The noble Lord, Lord Phillips, may comment on the matter better, as he has more experience than I have. I am not clear whether the Minister was able to answer the question in my opening remarks: can you appeal against the commission's failure to do something?

Lord Bassam of Brighton

My guess is that that would be covered by the ombudsman and the Independent Complaints Reviewer, as it would be a failure of administration and process. The process would not have reached the point where a decision had been made. The failure to act would probably be challengeable through that route.

Lord Phillips of Sudbury

The noble Lord, Lord Hodgson, should look at Amendment No. 97, which is coming round the bend, as it deals exactly with the point that he makes.

Lord Hodgson of Astley Abbotts

I note what the Minister has said and am grateful for the comment from the noble Lord, Lord Phillips. I shall wait to hear the debate on Amendment No. 97, read what the Minister has said and see whether we are satisfied that his solution to unconscionable delay meets the case in the real world. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

Schedule 3 [The Charity Appeal Tribunal]:

Lord Hodgson of Astley Abbotts moved Amendment No. 93: Page 75. leave out lines 31 and 32.

The noble Lord said: This schedule deals with the operation of the Charity Appeal Tribunal. The amendment would remove sub-paragraph (3) of paragraph 6, which is concerned with the constitution of the tribunal panels on page 75 of the Bill. Paragraph 6(2) says: Panels of the Tribunal shall sit at such times and in such places as the President may direct".

Sub-paragraph 3 says: Before giving a direction under sub-paragraph (2) above the President shall consult the Lord Chancellor".

That seems to add an unnecessary layer of bureaucracy and potential delay.

This is a probing amendment. We simply wish to ask the Minister whether there is a good reason why the president of the tribunal should have to consult the Lord Chancellor each time he or she issues a direction on where and when the panel of the tribunal should sit. I beg to move.

7.15 p.m.

Lord Phillips of Sudbury

I strongly support the amendment. It would deal with a piece of bureaucracy that encumbers the satisfactory working of the tribunal. If the Lord Chancellor does not have confidence in the president to issue these directions sensibly, that person should not be the president.

Lord Borrie

As I have been so critical of so many of the amendments of the noble Lord, Lord Hodgson, this afternoon, may I say that this seems an eminently sensible amendment? I cannot see why the Lord Chancellor or. indeed, the officials in the Department for Constitutional Affairs, should get their knees dirty in such a mundane matter as this.

Lord Bassam of Brighton

I am quaking now. The principle argument against accepting the amendment—and this may amuse the noble Lord, Lord Hodgson—is that doing so would impede the efficient functioning of the tribunal.

Noble Lords

Oh!

Lord Bassam of Brighton

Well, I did say it would amuse your Lordships. I almost sense that we are talking at slight cross purposes. So while I continue to resist the amendment, having listened to what the noble Lord has said I will at least take it away and give it fair consideration. However, it needs to be understood that the Lord Chancellor has overall responsibility for operational matters, which includes the provision of the tribunals, their location and sitting times, as well as the regional administrative staff. The role is different from the judicial role; that is undertaken by the president of the tribunal, who is responsible for the tribunal's judicial operation.

I shall have another think about this because we might have been at cross purposes. However, I am sure that we are at one in the desire to ensure that the tribunal works in an efficient and effective way.

Lord Craig of Radley

Before the noble Lord sits down, I should like to ask whether this is a question of consulting or seeking approval. From what the noble Lord was saying, it sounds as though it is "seeking approval", although the wording in the Bill is "consult". It seems to me that consulting means no more than simply telling the Lord Chancellor that the tribunal will meet somewhere. While the Lord Chancellor takes note of that information, he does not appear to have any way of stopping the tribunal meeting if he wants to.

Lord Bassam of Brighton

It will probably reassure the noble and gallant Lord to know that there is an expectation that the president would consult the Lord Chancellor in determining where the tribunal would sit. This will enable the Lord Chancellor to ensure that the appropriate resources and staff are in place. That is the effect and how it should work in practice.

Lord Hodgson of Astley Abbotts

The Minister did the best he could with a difficult speaking note. I am grateful to the noble Lord, Lord Phillips, and to the noble Lord, Lord Borrie, for having ridden over the hill at the appropriate hour. We look forward to what the Minister will have to say when he has reflected further on the amendment. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts moved Amendment No. 94:

Page 75, line 39, at beginning insert "with the consent of the parties to the proceedings,"

The noble Lord said: In moving Amendment No. 94, I shall also speak to Amendment No. 95. We are looking at the ways in which the panel is constituted in paragraph 7(2) of proposed new Schedule 1B on page 75. The provisions cover the arrangements for the constitution of the panel. The first two ways in which the panel may be constituted are, as the President sitting alone and, as a legal member sitting alone".

Our amendments insert before these two arrangements the words, with the consent of the parties to the proceedings".

As I have said many times this afternoon, I am not a lawyer, but if the president seeks to constitute the panel as simply a panel of one—and, furthermore, seeks to make himself the only member of the panel—it seems contrary to general best practice and principles to allow the president to act in such a way and to nominate himself or herself without a requirement to obtain the consent of the parties to the proceedings, who may have personal reasons for wishing the matter to be considered by someone other than purely the president. This amendment would avoid that undesirable eventuality.

If the Minister is inclined to resist the amendments, perhaps I may draw his attention to paragraphs (e) and (0 at line 43 on page 75 and line 1 on page 76 respectively. If the consent of the parties is required in cases where the president sits with one member or the legal member sits with one member, why not when they sit alone? I beg to move.

Lord Swinfen

I support the amendment. There may be reasons why parties before the tribunal do not want to sit with just the president or one legal member. There may be a personality clash or the reputation of the individual sitting on the tribunal may be a factor. Human frailty being what it is, it could cause trouble and could mean that the parties feel that they have not had a fair hearing. We are trying to ensure that parties who come before the tribunal feel that they have a fair hearing. I strongly support my noble friend's amendment, which would provide that if one person sits alone both parties must agree.

Lord Bassam of Brighton

I thank the noble Lord for tabling the amendment, which has provided an ideal opportunity for us to review the arrangement for the constitution of the panels of the tribunal. The noble Lord has rightly noticed that while the president can make arrangements for determining which members of the tribunal will constitute a panel for the purposes of hearing an appeal, in some circumstances the consent of the parties is required but in others it is not.

The Bill provides that the consent of the parties is required when the panel is to be the president sitting with one other member or a legal member sitting with one other member. We believe that it would be helpful to require the consent of the parties in those circumstances as the decisions of panels so constituted might not be taken by a majority vote as one member would have a casting vote.

As I understand it the purpose of the amendment is to extend the requirement for the consent of parties to arrangements where the president is sitting alone or a legal member is sitting alone. On reflection, we now believe that it should be for the president alone to decide which members should constitute a panel for the purposes of hearing a particular appeal, so we do not believe that it would be appropriate to extend the requirement for the consent of the parties in this way. The president, and not the parties to the proceedings, would have the necessary experience in dealing with appeals and the issues involved, so he would be best placed to decide the constitution of the relevant panel. We do not now believe that it is appropriate to give the parties to the proceedings a right of veto of the president's decision.

The Bill provides that the consent of parties is required for certain constitutions of the panel, and I am sure that the noble Lord will not be surprised, in the light of my remarks, that we intend to table an amendment on Report to remove those references. In doing so, we would be bringing the Charity Appeal Tribunal in line with other tribunals where it is for the president alone to decide the constitution of the panel. I hope that, having heard what I have said. the noble Lord will understand why we believe that it would be appropriate to withdraw the reference to, with the consent of the parties from paragraph 7 of new Schedule 1B to the 1993 Act. I hope, therefore, that the noble Lord will withdraw his amendment.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister and to my noble friend Lord Swinfen for his support. I am slightly nonplussed because the result is different from what I expected: I thought that we would have more rather than less consent. Therefore that will require a bit of thought.

I am glad that the Minister did not try to argue that one plus one with a casting vote is more dangerous than one sitting alone. That is much more dangerous than one plus one with a casting vote. In the light of what the Minister has said I shall withdraw the amendment. I shall think about the absence of any consent anywhere and may on reflection wish to return to the matter. For the time being, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 95 and 96 not moved.]

Schedule 3 agreed to.

Schedule 4 [Appeals and applications to Charity Appeal Tribunal]:

Lord Phillips of Sudbury moved Amendment No 97: Page 76, line 36, at end insert "or against any failure or unconscionable delay in reaching or making any such decision, direction or order

The noble Lord said: This amendment seeks to address the very important point recently made by the noble Lord, Lord Hodgson, that a charity is up a gum tree if the commission does nothing. The amendment would give any charity dealing with the commission the power to make an appeal to the tribunal in effect against the failure to reach a decision or to make a direction or order. I suppose that the words in the amendment, or against any … unconscionable delay",

are superfluous. Perhaps I should have added the words, failure by reason of unconscionable delay".

However, the intent is clear enough. I shall be interested to hear how the Government respond to this matter because it needs to be dealt with one way or another. I beg to move.

Lord Bassam of Brighton

The noble Lord, Lord Phillips, gave a hint in respect of my reply as this is a matter with which we dealt in part on an earlier amendment.

We do not believe that it is an appropriate role for the Charity Appeal Tribunal to consider matters of administration. That, in essence, is what lies at the root of this amendment. The tribunal is an independent body to hear substantive appeals about the Charity Commission's decisions. It is not for the tribunal to consider the administrative workings of the commission, although I accept that those are important in themselves.

We believe that cases where the Charity Commission has failed to make or excessively delayed a decision amount to complaints about the commission's standard of service. Anyone concerned about the commission's standard of service should submit a complaint via its established complaints procedure. In doing so, for example, the independent complaints reviewer might recommend that the commission should reach a decision about the relevant direction or order and pay a consolatory payment for the excessive delay in doing so. I gave examples of figures regarding how that works currently.

I am sure the noble Lord will agree that it would be better for what really constitutes a complaint about the commission's standard of service to be dealt with via its established complaints procedure and that it is not appropriate territory for the tribunal. It is for the independent reviewer can consider administrative procedure and, in some cases, the parliamentary ombudsman. That is their field of expertise.

Lord Phillips of Sudbury

Does the Minister really believe that a consolatory payment deals with the problem? One could be dealing with a hugely important issue for consideration by the commission. Often the delay is caused by a succession of people dealing with the same matter. I know of one case where a sixth person is dealing with the matter. Each person starts every time de novo. The charity in question is suffering grievously because it is holding back a hugely important project, grant programme or whatever. Will the Minister consider the power of the tribunal to give a direction in important and serious cases because I do not think that the present administrative ombudsman-like arrangements deal with the matter satisfactorily? Certainly, consolatory payments are beside the point. I leave the matter there and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton

This may be a convenient moment for the Committee to adjourn until Wednesday at 3.30 p.m.

The Chairman of Committees (Lord Brabazon of Tara)

The Committee stands adjourned until Wednesday at 3.30 p.m.

The Committee adjourned at half past seven o'clock.