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

HL Deb 09 February 2005 vol 669 cc57-120GC

(Second Day)

Wednesday, 9 February 2005.

The Committee met at half past three of the clock.

[The Deputy Chairman of Committees (Lord Brougham and Vaux) in the Chair.]

Clause 2 [Meaning of "charitable purpose "]:

Lord Hodgson of Astley Abbotts

moved Amendment No. 9: Page 2, line 23, at end insert— ( ) in paragraph (c) "religion" includes belief in a supernatural being, thing or principle, and acceptance and observance of canons of conduct in order to give effect to that belief;

The noble Lord said: We had a preliminary canter over this ground when we discussed Amendment No. 4, tabled by the noble Lord, Lord Wedderburn. From reading Hansard, given the length and depth of the debate, it was not so much a preliminary canter as a full-scale cavalry charge. I shall endeavour not to repeat much of what was said then.

I have no wish to provoke the noble Lord, but I have not always found it easy to follow his line of argument. An example is his intervention on my Amendment No. 8 on animal welfare. I did not understand what he was trying to get at. Fearing it might be my hearing or comprehension, I held my peace. Having read Hansard, I am not sure that I am any clearer. I am aware that he awarded the luckless noble Lord, Lord Bassam, a beta minus for his response, so I fear that I shall have to contend myself with a gamma for this.

Amendment No. 9 is concerned with Clause 2 and the meaning of "charitable purpose". The Committee knows that one of the original four "heads" of charitable purpose that existed before the number of such purposes was increased to 12 was "the advancement of religion". That remains under Clause 2(2)(c). The amendment inserts, in Clause 2(3), a definition of "religion".

We have had briefings on the subject from a number of people and groups, including Daoud Rosser-Owen, who is the co-founder of Religions Working Together and president of the Association for British Muslims. The Joint Committee's third recommendation was that the Bill should include a definition of religion in Clause 2, making it clear that non-deity and multi-deity groups can satisfy the definition of religion for charitable purposes. Indeed, it might help to satisfy the noble Lord, Lord Wedderburn. It seems eminently sensible because, according to the Charity Commission's current criteria, Buddhism, some aspects of Hinduism and even some Christian denominations such as Unitarians and Quakers are excluded from the definition of religion in charity law.

The Government disagreed, however, seeing it as unwise to include such a definition in the Bill. Their reasons were explained in their reply to the report from the Joint Committee, which stated: The Government considered, in preparing its response to the Strategy Unit's review of charity law and regulation (September 2002), whether or not there should, for the purpose identified by the Joint Committee, be a statutory definition of 'religion' in charity law. The clear evidence we found was that non-deity and multi-deity groups can already satisfy the (common law) charity law definition of a 'religion' and thus qualify for charitable status. There are, for example, over two hundred charities registered with the purposes of advancing the Buddhist faith, and a similar number with the purposes of advancing the Hindu faith. The Charity Commission began registering some such organisations from the time the register of charities was being created in the 1960s, so their recognition as charitable is well-established. The Government's conclusion in considering the Strategy Unit review was that there was no need for a statutory definition of 'religion' in charity law. That remains our view. We therefore do not accept this recommendation".

It has been pointed out to us that, for the past four years, the Charity Commission has asserted that there is a definition of religion peculiar to charity law. and that that definition required belief in a supreme being and worship of a supreme being in a certain fashion. The Charity Commission's current documents unequivocally state that religions that do not meet those criteria are not religions for the purpose of charity law. Daoud Rosser-Jones provided for the Joint Committee an extract from the current Charity Commission booklet CC21 Registering a Charity, which states in the section which deals with the advancement of religion: For the advancement of religion to be charitable the religion has to be founded on a belief in a supreme being or beings: and involve expression of that belief through worship". That definition is reiterated by the Charity Commission and other publications including one published on 4 October 2004 specifically commenting on descriptions of charitable purposes in the draft Charities Bill. In that document the commission states: The criteria that we use to decide whether an organisation is advancing religion, as that is understood by charity law … are [that] adherents have belief in a supreme being [and] adherents worship the supreme being".

Given such criteria, Buddhism and the various other religions that I have already mentioned would not fall under the definition of religion in charity law. Moreover, although as the Government observed, the Charity Commission has registered such groups in the past, it also states on its website that it intends to go through the register and ensure that all currently registered charities meet its criteria. The Charity Commission's existing published statements do not agree with the Home Office's regarding the definition of religion in charity law. That is surely an untenable position which raises the further question, who will make the final call when decisions on religious matters are made—the Home Office or the Charity Commission? Since their views on religion as a charitable purpose appear to be incompatible, that area could cause conflict. That is probably one of the reasons why the Joint Committee recommended that a statutory definition of religion had to be included in the Bill. I have no doubt the noble Lord, Lord Phillips, will want to comment on that because he was on the scrutiny committee.

Additionally, contrary to the Home Office's assertion that there is no clear English common law judicial decision on the meaning of religion—which includes non-deity religions—although it is true that common law countries such as Australia, New Zealand, the United States and Canada have all adopted broad definitions, there is no similar judicial decision yet by an English court.

The simple way to sort this out is the amendment that the Charity Law Association provided which is the definition of religion as accepted in Australia and New Zealand. It would insert into the Bill a new paragraph which would read, in paragraph (c) 'religion' includes believe in a supernatural being, thing or principle, and acceptance and observance of canons of conduct in order to give effect to that belief". The amendment would provide a straight definition of religion on the face of the Bill and remove any potential difficulty that could result from the contradictory definitions given by the Home Office and the Charity Commission.

The Bill as drafted appears also to have not insignificant human rights implications. Many well-known religious denominations are in the position of not knowing whether they are accepted in English law as a religion or if they are entitled to charitable status. Some argue that to leave that state of affairs is a violation of Article 9 of the European Convention on Human Rights as it inhibits the freedom to manifest one's religion. It is also argued that it is a violation Article 14 which prohibits discrimination since some religious denominations face this problem while others do not. It is a dilemma that surely should be resolved and one that can best be resolved by amending the Bill as suggested by including the definition of religion as given in Amendment No. 9. I beg to move.

Lord Phillips of Sudbury

I rise to support this amendment. I have added my name to it and I am grateful to the Charity Law Association for drafting it. It is idle to pretend that this is anything but an intensely difficult part of charity law. Indeed, I would suggest that it is the most difficult aspect of charity law altogether. In the normal course of things, if we were not in the middle of a Charities Bill that was to some extent codifying what charity means in 2005, 1 would let sleeping dogs lie. The Charity Commission does manage in a crab-like fashion—although I am not suggesting that I could do any better—to evolve the meaning of religion for the purposes of charity in a way that has, on the whole, satisfied the majority of those who have sought charitable status.

However, we are in the middle of a Bill and the point about this Bill is that it does not only codify existing charity law in subsection (2) of Clause 2. Subsection (3) provides three clarificatory additions to the categories in subsection (2). Why does it do that? It does it because it considers that charity law needs that clarification; that it will be aided by that clarification. That is why in respect of the questions of, the advancement of citizenship or community development … the advancement of amateur sport … the advancement of health", it provides clarificatory wording.

All that we are seeking in this amendment is to put the advancement of religion on precisely the same footing. The clarificatory words in this amendment will help the public to understand what charity law is all about. If ever there was a branch of law that the general public should have some chance of understanding, it is charity law, which affects volunteers in their millions.

The wording devised is not incendiary. It does not actually take the position any further than the position currently reached by the Charity Commission, but by Jove it clarifies things. CC21 on the Charity Commission website says: For the advancement of religion to be charitable, a religion has to be founded on a belief in a supreme being or beings and involve the expression of that belief through worship". I believe that the noble Lord, Lord Hodgson, gave that quotation. We know well that the law takes a much broader view than that. Buddhism, for example, is not within that statement. This is an area of case law, and if you take, for example, the 1948 case of Re Doering, which accepted the Tenets of Emanuel Swedenborg as believed in by the Church of New Jerusalem as charitable, that does not come anywhere near the guidance given by the Charity Commission website.

This amendment is modest. I would call it a "man in the street" amendment, and I hope that the Government feel that they can accept it. The arguments adduced by my noble friend Lord Lester on Second Reading as to the human rights consequences of the present state of affairs are themselves powerful additional arguments for this amendment.

The Lord Bishop of Southwell

I repeat what I said on previous occasions, both at Second Reading and in Committee last week. Certainly, speaking for the Church of England, we welcome both the broad tenor and the aspirations of the Bill. Openness and transparency, the common good, and public benefit, are the sort of things that make for the integrity that we look for in every aspect of public life. It is for the good of society as a whole in England if we can create a climate of trust and confidence in all charitable activity, which draws out further financial generosity and more volunteering in the charitable sector, helps to make society more cohesive and achieves many of the good purposes that individuals and groups aspire to, and which we can never expect the state to meet.

On Amendment No. 9 standing in the name of the noble Lord, Lord Hodgson, there should be a wide gate on this issue, with groups for the promotion of belief systems being eligible for charitable status provided that the public benefit requirement is met. As we understand it, the charity commissioners and others are agreed on that. The issue as regards Amendment No. 9 seems to be about what are the best means to an end. If the end is accepted, we do not think it necessary or appropriate for us necessarily to express a view on the precise means to that end.

Members of the Bishops' Benches could try the patience of the Committee, and other committees, by engaging in esoteric ruminations on the definition of religion, faith, belief, and belief systems, but I do not intend to try noble Lords' patience any further.

3.45 p.m.

Lord Dubs

I am not well versed in ways of religion, but how wide would the effect of the amendment be? In other words, what about the nuttier religions, those that are off the wall? Perhaps I had better not say more than that, but I think we all know what they are. Would they be covered by this amendment?

Lord Hodgson of Astley Abbotts

A certain amount of case law has developed in Australia and New Zealand, where they have such a measure built into their charity law and they do not appear to have had any difficulty. The noble Lord, Lord Phillips, is a charity lawyer of huge experience, but I am not a charity lawyer, as I have made clear several times during this Committee stage. No particular difficulties have arisen from my reading of what has happened in Australia and New Zealand.

Lord Phillips of Sudbury

One needs to remember that we have a public interest test that will affect religions in a way that has not happened hitherto. Although some of us are inclined to think that the public interest test, as prescribed by Clauses 3 and 4, is somewhat meek and mild, it will certainly give judges the duty to decide in a contested case whether a religion is or is not for the public benefit. I suggest that the nuttier cases, to which reference has been made, might have difficulty in satisfying the Charity Appeal Tribunal or indeed the High Court about that.

The amendment says, a supernatural being, thing or principle". The qualifying adjective "supernatural" applies to all three nouns, "being, thing or principle". It will be quite difficult for some of the more way-out, smaller entities to claim supernaturalness in a way that is credible. In saying that, I do not pretend to deny that there will be contested cases and that it will still be difficult to draw a line between the sheep and the goats.

Lord Dubs

I do not wish to take up the time of the Committee, as this may open the door to all kinds of wide-ranging arguments. We all know what I mean by "nutty religions". A couple of years ago on the London Underground, someone from one of those nutty religions came round with a collecting box. People were putting their hands in their pockets, but I had an altercation with the person, saying that it was disgraceful and I condemned the nutty religion, as I am sure all noble Lords would. All those who had coins in their hands put them back in their pockets and the collectors went off, but I cannot travel around the country putting a stop to that kind of behaviour.

Seriously, by having a definition that is much wider than the original, simpler one in Clause 2, I am concerned that we are making it harder for the Charity Commission and the courts to decide who is nutty and who is not. I do not want the Charity Commission to be lumbered with difficult claims that may have to go to court as that would waste a lot of time. I hope that that would not open the door to such a process.

Lord Wedderburn of Charlton

As the noble Lord has been careful with the drafting of the amendment, I am sure he would accept that Satanists would be included.

Lord Swinfen

Would there be a problem if some religions had more than one supernatural being?

Lord Phillips of Sudbury

The "life" stance taken by the noble Lord, Lord Wedderburn, has slipped. The Satanists would not pass the public interest test.

The Minister of State, Home Office (Baroness Scotland of Asthal)

Perhaps I can pour some oil on troubled waters. I thank the noble Lord, Lord Hodgson, for elucidating the Government's position for me. His exposition of the commission's view is not absolutely accurate. The most recent commission publication was produced on 8 February. If I read it the Committee will see that the commission and the Government are not far apart—some would say there is not a paper's breadth between us. In paragraph 10, under "The advancement of religion", the commission says: The advancement of religion includes many different faiths and belief systems, involving belief in one Supreme Being or many, including for example Christianity, Judaism and Islam as well as Hinduism and Buddhism. The criteria that we use to decide whether an organisation is advancing religion, as that is understood by charity law, are set out in full in the Charity Commissioners' published decision (of 17 November 1999) on the application for registration by the Church of Scientology (England and Wales)". It then sets out the definition.

The Government's stance on this matter has essentially been as follows. The Charity Commission has the function of deciding whether or not an organisation seeking registration as a religious charity is a religion within the charity definition of religion. Of course, the commission has no latitude for making up its own definition of religion but is bound to follow the decisions of the courts on that definition. The Charity Commission has decided that, by applying the common-law definition of religion developed by the courts, the non-theistic and polytheistic faiths can be religions in charity law. Today, no one has taken the commission to task about that; nor has anyone taken it to court or invited the court to overturn that decision. Therefore, there would seem to be no practical need to legislate to the effect that non-theistic and polytheistic faiths can fall within the definition of religion. However, such has been the interest generated by this debate that we recognise that legal uncertainty about a non-theistic and polytheistic base continues to exist. While we agree that the definition proposed in the amendment of the noble Lord, Lord Hodgson, would encompass the beliefs of such faiths, we also believe—not for precisely the reasons given by my noble friend Lord Dubs but for other reasons—that it may be too wide. Therefore, we hope to come up with an alternative provision that deals more precisely with the uncertainty, and we shall return with that on Report. I hope that I have spread a little balm and have been able to generate a feeling of comity in relation to this issue.

Lord Phillips of Sudbury

Before the noble Baroness sits down, she said that no cases have been brought on this issue of late. That is true; it is a question of cost. But let us not forget that the Scientology application led the commission to produce a 49-page justification for its refusal. Therefore, with the tribunal coming forward, I am sure that what the noble Baroness said at the end of her response will give great encouragement because we are all batting on the same wicket.

Lord Hodgson of Astley Abbotts

I am very grateful to the noble Lord, Lord Phillips, for his support for the amendment and I am grateful, too, to the Minister for her positive response. If the commission's document was produced on 8 February, that was yesterday. I am sorry if we have not quite managed to keep up with the flood of paper coming through on this issue. In her further considerations, will the noble Baroness give thought to the two issues that have been raised with us concerning Articles 9 and 14 of the ECHR?

Baroness Scotland of Asthal

We shall certainly take all those issues into account. We shall also very much bear in mind what the noble Lord, Lord Lester, said during the Second Reading debate. I know that he was very attracted by the proposal advocated today by the noble Lord, Lord Hodgson, and supported so ably by the noble Lord, Lord Phillips, and so we shall look at the matter. We think that we have a narrower gateway, but we hope that we shall be able to meet the needs and concerns raised during the debate on this issue.

Lord Hodgson of Astley Abbotts

I am very grateful to the Minister for that further reassurance. I am happy to withdraw the amendment and look forward to her further advice in the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Wedderburn of Charlton

moved Amendment No. 9A: Page 2, line 23, at end insert— ( ) in paragraph (b) "education" does not include education in an elite institution; The noble Lord said: In moving Amendment No. 9A, which deals with the purpose of advancement of education, I shall speak also to Amendment No. 17, which defines the term "elite schools" by excluding secondary schools where at least two-thirds of the students pay fees or have fees paid for them. As we noticed last week that noble Lords like to roam around the Marshalled List somewhat, we have also grouped this amendment with Amendment No. 29, which is relevant.

I shall not follow the noble Lord on the Opposition Benches, who prefers to play the man and not the ball; I shall speak as briefly as I can at this first opportunity that we have had for 35 years to raise the matter in Parliament.

First, there is a lot wrong with the drafting. In Grand Committee, proceedings as regards drafting are not very important, but obviously one should pay attention to it. I apologise to my noble friend for leaving in the words, "or other bodies" in Amendment No. 17. I understand the manuscript amendment has removed them and that the Deputy Chairman was going to point that out.

Secondly, we have not gone deeply into the drafting to remove all mention of schools that deal with special educational needs. Obviously, we shall want to draw up a long amendment to deal with that. Schools for the deaf, disabled, blind or autistic are not within the spirit of what is being moved.

Amendment No. 9A takes up the constructive discussion in the Joint Committee of your Lordships' House and the Members of the Commons on the draft Charities Bill in September 2004, which I assume most Members of the Committee will have read. In paragraphs 84 to 93 that committee noted that charitable status was of immense importance to the running of private hospitals and private, fee-paying schools, which, to the mystification of our American cousins and French friends, we call public schools in Britain, or at least in England. I do not speak today about Scotland; so anyone with a speech on Scotland need not make it. The key benefit of schools being charities is that the law currently grants them a big immunity from burdensome taxation as institutions for the advancement of education.

It should be noted that under present law, and even under the Bill, not every fee-paying school would satisfy the law for two reasons: first, the public benefit test. The Home Office document on the Bill states: It must be expected [after the Bill becomes law] that some fee-paying institutions — may fail to satisfy the public benefit test at the point of registration".

Secondly, which our amendments address, is the primary issue of charitable purpose for the advancement of education. We want to ask at the first opportunity for so long why tax exemption should be the automatic companion of independent fee-paying schools. It is an exemption to which all contribute in paying their share of the tax kick-back, whether or not they want to and whether their children ever get near such an institution.

The Joint Committee suggested that this fundamental problem had a solution. It stated that, the best long-term solution might lie in those organisations [public schools] ceasing to be charities but receiving favourable tax treatment in exchange for clear demonstrations of qualified public benefit". I say no more about that suggestion, except that the Government immediately rejected the idea.

Of course, that idea is much more revolutionary than our gradualist amendment, which could be the base of an evolutionary approach to what my party for 80 years has designated a central problem of education.

As I have suggested, there is a problem about advancement of education for fee-paying schools. In 1951 Mr Justice Dancwerts in a judgment said that, at the beginning of the 18th century it was held that a school must be a free school if it was to come within the Statute [of Elizabeth]. The institution of a school for the sons of gentlemen is not, in popular language 'a charity'. But … 'now all schools for learning are so to be considered' … unless they exist for purely profit-making purposes"— a point that I had forgotten. He said that sometimes there are preparatory schools, known as cramming establishments, which would not qualify.

But reformers have often suggested that the link between the term "charity" for the purposes of education and automatic tax-exempt status should be broken, or, at any rate, amended. By the 20th century that link became a crucial legal test that draws the frontiers of our class matrix along the borders of tax exemption.

4 p.m.

Whatever benefit to society they may offer, fee-paying public schools profit from this subsidy. Quite rightly, they dominate such rational debate as we have had since 1941, only a few years before the great Butler Act on education. Many people, including Winston Churchill, suggested that the idea that after the war public schools must be integrated in a new, diverse educational system was to be welcomed.

I could declare a special interest in this matter. Some 43 years ago, I was one of a group of admissions tutors in a college for six years. and I have taken part elsewhere in admissions to universities from schools. There were then 3,300 schools recognised or registered with the Ministry of Education, and their pupils constituted just under 6 per cent of the school population. The number of pupils at independent, fee-paying schools has fluctuated rather little. It rose after 1955, when a fund raised by industry refurbished every public school laboratory, and science came in. It fell to 5.8 per cent in 1978, and today it is just over 7 per cent of the school population. That is a fact, which constitutes an elite stratum in educational and social terms, whether or not people have scholarships there, the number of which is rather fewer than some people suggest.

We notice also that Oxford and Cambridge have 2 per cent of all British university students, and some 50 per cent of their undergraduates, more or less, are from public schools. Oxbridge turns out—I am a part product, so I do not brag about it—most of the judges, 77 per cent, and 80, 60, 70 per cent of all sorts of other top strata. It is a central feature of our social structure. It is important that over 50 per cent still come from 7 per cent of the school population. It is changing, as I shall suggest to your Lordships, very slowly.

It is not their fault, but today's financial subsidy for public schools sits squarely with the new business elite allied to the ancien regime; the new rich and the old toffs, as some people say. In the last decade, the increase in inequality has been marked. The richest 10 per cent increased its ownership of wealth from 48 per cent to 54 per cent; and it doubled its percentage of total income in percentage terms.

We are saying in this amendment that if you want to dig into a real debate about what advancement of education should mean in the days of our children and grandchildren, rather than take a quick whistle around the lighthouse with the Whips, you should actually discuss this problem with recognition of, not ignorance of, the social functions that charity law has affected and will go on affecting.

Charter 88, an interesting organisation. said in its report, Class and the Constitution, in 2003, that public schools now represented: Educational apartheid, built on … burgeoning economic inequality—one of the most important facets of Britain's segregated society … This [inequality] is a 'stark reflection of the divide between the Underclass and the Super class'". It went on to discuss the more general advantages for public schools, which are still of major significance. Public school numbers have recently grown slightly, despite the fact that in real terms fees have increased threefold since 1960. According to the report of the Sutton Trust in 2003: In about a third of secondary schools with council estate catchment areas, many pupils leave at 16 with virtually no qualifications … On the other hand, there are the independent schools, not small bastions of exclusivity … but private institutions which now educate one in five of all sixth formers and half the entrants to Oxford and Cambridge". The Sutton Trust report concludes that, old class, old institutions, new poverty, new elites—the four are now inextricably intertwined in modern Britain". Charity law sits in the middle of that.

I agree with my right honourable friend Charles Clarke, who remarked a year or so ago. Cambridge is an elite institution". He added, That's not necessarily a dirty word. There is a place for elites". Of course there is. There is no society worth talking about in Europe that does not have an elite. The école normale is as much an elite institution in France as Oxbridge is in England. The top independent schools and top universities still educate an elite. But in Britain, that encompasses an elite intertwined with business and government and the old class structure in a way quite different from the meritocracies in most modern democratic societies.

Exemption from taxes by reason of charity law in education is one of the most carefully guarded privileges. It is scarcely the subject of conversation in polite circles. I especially remind my noble friends that this educational issue in our movement has never been a matter of Right and Left in the party. In fact, many people on the Left, at a time to which I shall refer, would not accept the proposals which were made by that exceptional Minister of Education, Tony Crosland, who was said to be on the Right, and the Labour Party programme of 1964 and the years which followed to "assimilate" or "integrate" public schools into a new national system of greater diversity and greater opportunity for all. The proposal was not so much a failure as abandoned after the first whiff of grapeshot was fired across the bows of the Cabinet which had, as Barbara Castle wrote in her diaries, understandably, so many other things to do.

The failure of the integration plan left Britain's secondary education in a sink of apartheid, despite the many wonderful and devoted efforts of those who tried to create a comprehensive education for those left in the state sector—an endeavour which I will not yield in praising to anyone.

Back in 1958, when a few of us took over admissions in our college at Cambridge, we had perhaps the totally misguided belief that we could somehow modify the class intake of the college, which was quite exceptional in taking a vast number of people from independent schools. Of course the system was not daft and never has been. There is always a segment of meritorious state school students and working-class rockets regularly arrived in Oxbridge. But the change has not been that great.

By 2002, what surveys usually call the "top 13 universities", from Oxbridge to York, Bristol to Edinburgh, which took half their students from the same source back in the 1960s, still took 39 per cent of their intake from the schools which educate 7 per cent of the school population. That is why I declare the interest of trying to do the job there, but my subsequent experience in different universities did not pose the same acute problem.

When we set about trying to introduce more fairness into admissions, we had more tests of ability, more essays, more tests adapted from American law schools and team interviews —especially interviews. Somehow school masters—masters generally but masters at independent schools especially—taught their small classes how to deal with that game and a lot of other games too. One friend of mine invariably opened our interview by asking, "What did you read on the train coming up?". Most of the applicants were ready with their answers as they knew about it—it is not improper to train people to answer tests. Only once came the answer, "Coming up? Well, actually, sir, I drove". People must exercise great restraint in order to keep to the game.

Over a period of five years, which I experienced, we found it difficult radically to modify the class composition of under-graduates. Even when young women were admitted over the protests of a Fellow who had threatened to resign his Fellowship if the matter was put on the agenda, the percentage was nowhere near the target suggested by the Higher Education Funding Council. I say to the Opposition Lords present never to forget that in 1958–60 targets were suggested to us in the universities. They are not new.

Many admissions tutors felt that it would be wrong to adjust objective results of A-level or other marks to allow for social disadvantage, as many colleges now quite openly do and as the head of the Government admissions task force has proposed. Professor Schwartz suggested a year or two ago that: It is possible that a candidate who struggled through a poor school and achieved a B at A-level may have just as much potential for higher education as an A-scoring candidate who was better supported at a middle class or other school".

I always found that that was regarded with some trepidation by admission tutors. They were anxious about being fair to all applicants, from whatever families, who had worked so hard to produce the required results in examinations. Nor were we unaware of the figures for adolescent suicide among those young people, irrespective of their school, who spent the dark nights worrying about getting the right grade for entry.

There are still cases in Oxbridge of gross injustice, such as the case of Laura Spence, which noble Lords will remember. In my experience, for the most part Oxbridge has tried hard to reduce to smaller proportions the entry of those who have had the great privilege of smaller classes, of more intensive trainings and all kinds of other advantages about which noble Lords will know. Their parents did not pay for nothing. But there is a strict limit to what internal university reform can do to save society from the self-inflicted wound of bolstering and subsidising the secondary level educational apartheid.

That is no reason for complacent inactivity. This is the only opportunity that Members of the Committee are likely to get to discuss the matter. But a fairer and more community-based secondary school system, a slow reduction and eventual elimination of the division between the 93 per cent sheep and the 7 per cent goats can gradually solve this problem for our children's children, with greater diversity and wider opportunity for all. It is time that debate was had. It can only be had on the Bill because the immunity to taxation of such educational establishments is at the centre of social advantage.

A first step would be to take a pace towards the old concept of charitable purposes "in the statute of Elizabeth" for "advancement of free education". As Christopher Hill said, appeal to history for your reforms.

Confining tax advantages to those schools that take a serious step towards increasing the number for whom fees are not paid is the central objective set out in Amendment No. 9A. This will hit the smaller public school first, long before it reaches Winchester and Eton. But they will use that unfairness to protest and say, "This is not fair". But in the words of a judge who interrupted counsel when he suggested that the law was not fair—the Committee will find this in the Law Reports, but I am not going to give the reference: I recall that my nanny used to say to me, 'Life's not fair. and the sooner you realise that, the better"'. Of course it is not fair—nanny was right as usual. But the question for us is whether we have the spine to confront an unfairness and whether we dare to cut any track towards more equality and greater diversity and opportunity. You cannot do that unless you confront the taxation advantage of charities for educational purposes in public schools. It is on that thought that our amendments are based. On Report, when we come out of the phoney war of 1939 into at least the Battle of Britain, or perhaps the Blitz, I invite your Lordships to advance an opinion on this matter which will be helpful in moving towards greater equality in our society. That is why I beg to move.

4.15 p.m.

Lord Campbell-Savours

Perhaps I may intervene briefly. I was a member of the Joint Committee and this issue was clearly the most controversial in our deliberations. I do not want to go down the road that my noble friend Lord Wedderburn followed during the course of his very comprehensive discussion because I do not really want to argue the case for or against private education. But there is an issue of which I think the Minister should be aware: this is rebellion material in the House of Commons, and this is the opportunity to deal with such material because the Bill is starting in the House of Lords.

In the committee, we came up with a compromise which we did not include as a recommendation because, while the compromise was that this matter should be dealt with generally under Finance Bill legislation and not under charity legislation, one or two members of the committee were not of that view. In the committee, the position that we took on the use of tax law outside charity law was supported right across the political spectrum. We made it clear that we were not opposed to private education but we were very opposed to the use of charity law in this way.

Charity law is being made an absolute nonsense of by this provision in our law. If anyone wanted the evidence for that, they had only to sit where I sat during the course of the Joint Committee's proceedings and watch the faces of the people—many of whom are here today—as they gave evidence and were asked questions on these issues. It was quite clear that, apart from a few, the general view of those giving evidence was that this was an embarrassment to the whole charity sector.

I cannot understand why the Government do not take up the little, or minor, proposal in our report that it be dealt with under other areas of law. Why cannot we deal with it by putting it in a Finance Bill, bringing it before Parliament and letting Parliament decide on these matters? It would not mean, as some Ministers clearly believe, that Parliament would take away the subsidy—I do not think that it would happen in that way—but at least it would no longer bring the law as it exists into disrepute. When my noble friend responds, I ask her to address that issue. I know that some explanation was given in the Government's response, but why cannot this matter be taken out of this whole sector, thus bringing the law back into repute?

As I said, this is rebellion material in the House of Commons. During my 21 years in the Commons, repeated arguments took place behind the scenes on this subject. For once, let us sort it out.

Lord MacGregor of Pulham Market

The contribution of the noble Lord, Lord Campbell-Savours, has brought out what lies behind this issue. Today, in a debate on the Charities Bill, I do not want to get into an argument about whether or not private education should exist. I want to talk about whether these amendments should be in this Bill and whether they would achieve the purpose that the noble Lord, Lord Wedderburn, set out. I believe that it would do exactly the opposite.

Let us be clear. If this amendment were accepted, the vast majority of independent schools would fail charitable status because they would not be able to reach the figure of 68 per cent of pupils who were not paying fees. That is what would happen. I do not want to take up the time we took at the last session when we did not make much progress, so I want to advance briefly some arguments why it would be wrong for the matter to be tackles in this Bill.

The first is the Joint Committee's own view. Not having been on the committee, although many of its members are in the Room at the moment, I did not know exactly what its debates were, but I suspected that they had all the indications of a compromise. I am pleased that the noble Lord, Lord Campbell-Savours, said that that was the case.

We should be clear what the Joint Committee, in its compromise, said in paragraph 95. It pointed out that some arrangement of this sort would be, radical and we have not been able to take evidence on the full implications". A great deal of evidence has been taken on the whole of the Charities Bill, except on this one issue. The committee went on to mention the considerable definitional problems, which perhaps explains why the noble Lord, Lord Wedderburn, said that the amendment was defective and that there would have to be a list of independent schools which retained charitable status.

The Joint Committee went on, perhaps expressing the other side of the argument: Furthermore, a solution which leaves independent schools in the charity sector and encourages them to make charitable contributions to the community may have something to recommend it". I shall return to that point later. The committee concluded that, the Government should consider reviewing the charitable status of independent schools and hospitals with a view to considering whether the best long term solution might lie in something along those lines. First, the committee did not take evidence; secondly, it was not arguing that the provision should be made in this Bill; and, thirdly, it was saying that it would be a long-term solution.

Secondly, in Amendment No. 29 there is a suggestion which the noble Lord, Lord Campbell-Savours, has correctly mentioned as being the way to find some alternative for the independent schools. It is the recommendation that consideration should be given to a provision being included in a Finance Bill, presumably roughly along the lines of what is proposed in this Bill; in other words, charitable status where the tax benefit is retained, provided that there is some public benefit solution. During my time in the other place, I was involved in many Finance Bills—about 27—and I know that there is no guarantee that should anything of this sort come forward it would be accepted. Indeed, the whole tenor of the attack of the noble Lord, Lord Wedderburn, in describing this as a financial subsidy, would suggest that he would be opposed to similar tax reliefs in a Finance Bill. So there is no guarantee that this would happen, and therefore there is no indication to the whole of the sector that this is a solution with a quid pro quo. It does not have that balance. We remove the charitable status and possibly might never have the additional provision suggested in Amendment No. 29 of something in a Finance Bill.

My third point comes straight to the financial subsidy aspect. The noble Lord, Lord Wedderburn, made great play of the tax reliefs which are available to the independent sector as a result of charitable status. These tax reliefs amount to about £100 million a year, if one includes the business rates and everything else involved. In fact, the amount of benefit in fees, bursaries and so forth which the independent sector now gives to those in the independent schools is about £300 million a year. That is done because there is a great belief in widening access, with the result that about 30 per cent of all fees in the independent sector have some kind of financial contribution from the schools themselves. That is the whole approach.

But it also means that from the point of view of the public sector as a whole, the reliefs to the independent schools are £100 million and their contribution in an educational and social direction is £300 million. What is more, if, as would happen under the proposals. the vast majority of independent schools cease to have their charitable status, they would cease to have the pressure to prove the public-benefit test. That would be one implication.

On the effect on the public sector as a whole, one has to remember that the benefit to the public sector of having children independently educated, and not therefore in the maintained sector, is that their parents still pay their full tax contributions in general tax, the effect of which is to increase the maintained sector budget by £2 billion. So I do not see how one can argue that there is a huge benefit to the parents but that the community as a whole does not benefit.

On the public benefit test, I believe that the whole of the independent schools' sector strongly supports the public benefit test being in the Bill. One of the great benefits of the public benefit test is that it has hugely encouraged a number of matters that we all want to see: the increase in fees and bursaries, the opening up of the many excellent facilities that independent schools have to the maintained sector, and public/ private partnerships which the Government are very keen to encourage.

I do not want to make a long speech, although I could speak for about half an hour on all the changes to the benefits, which I could quantify, that have taken place between 1997 and 2003, the period when the two surveys took place. The problem is that if one removes the tax benefits of charitable status, one removes the pressure on a number of schools to continue to increase the public benefit. Therefore, I believe that one would have the reverse of what the noble Lord, Lord Wedderburn, suggests.

A further point is that independent schools with charitable status—not all of them have charitable status—have to reinvest all their surplus income to further charitable purposes, which basically means that they all reinvest in all the facilities, including the facilities that are now available to the wider community. Lose the charitable status and they would no longer have to do that.

Finally, even if one were able to get the balance right, if the changes were made in the Bill and if a suitable change were made in the tax status through a Finance Bill, I am not clear what would be achieved. The tax position of the independent schools would remain the same, but they would not have the charitable status. Here I come to the point that I believe has been missed in the debate. Charitable status does not just mean receiving a tax relief— I have already explained that it is not, in the balance of matters, a real benefit in the financial sense—but it also has a wider meaning. It indicates to all those who work within the independent sector that they are engaged in an activity that is for the public good and very often, as I have indicated, it is of great social benefit as well.

A large amount of exchange takes place between teachers in the maintained sector and in the independent sector. In the new teacher recruitment schemes for mature students, the independent sector plays a more than proportionate role because it has the charitable status which is regarded as a public good.

For all those reasons, I believe that these amendments would greatly disadvantage the whole education scene, that they would not achieve their purpose and that is why I believe that the Government have it right. I believe that the position of the Government is totally correct and that is why I support the Bill.

The Earl of Onslow

I declare an interest, first, in that I was educated in the holidays and after I left Eton and, secondly, I am a governor of King Edward VI Grammar School in Guildford, which is one of the most intellectually stimulating schools. It has a very successful and good board of governors, all of whom receive no money whatever for their training. We have a much better relationship with the state system than we had 30 years ago when the school came out of the state system and, consequently, deprived many of the children of Guildford and Surrey of the benefit of that particular grammar school education. We provide bursaries and subsidies to children as much as we can. Without the contribution and sense of great service of that board of governors, and if the school was not a charity, it would become a money-making operation that would involve dividends and God knows what—including a paid board of governors, which is not in the interests of the people of Guildford. Surrey or the country as a whole, as it would not benefit them.

4.30 p.m.

Baroness Turner of Camden

I put my name to the amendments because I support them. Nowadays, it is quite unacceptable to regard as charitable institutions schools that provide an education for the privileged, where parents pay large sums for the education of their children. Some of them—perhaps all—may claim to provide some places for a few non-paying pupils from less privileged backgrounds. I understand that that happens, but that the number of places is very small.

As for what the noble Lord, Lord MacGregor, had to say, surely those institutions are largely run on commercial lines. It seems inappropriate for them to be regarded as being in the same category as schools that provide an education on a non-paying basis for most of the population, who are less well off. In any event, as my noble friend Lord Wedderburn indicated, our third amendment provides some flexibility, because we suggest favourable tax treatment where there is agreed and seen to be a public benefit. I hope for a favourable response to the amendments from the Minister.

Baroness Howe of Idlicote

I shall be brief, not least because the noble Lord, Lord MacGregor of Pulham Market, said almost everything that I wanted to say. At Second Reading, there was clearly nervousness about the area. One needs to test the concordat agreed between the Charity Commission and the Home Office. We pressed the point and I outlined a number of benefits, most of which were put much more clearly by the noble Lord, Lord MacGregor.

However, I add two points, which are not all that small. The first is that the private sector —the independent sector—has a certain benchmarking from which schools in the public sector can benefit and have benefited. The second is that, within the charitable status set-up in which such schools have been allowed to continue for many years, they encourage the parents—who pay for the education of their children, thus lessening the amount payable by the state for those children—to pay even more into facilities for that school. Increasingly, those facilities are used for the public good. The public benefit test will apply.

Therefore, I hope that the Minister will confirm the words of the noble Lord, Lord Bassam, who replied to the debate at Second Reading. He made it clear that the Government intended to keep the independent sector within the concept agreed in the concordat.

Baroness Warwick of Undercliffe

I shall be similarly brief, and my point is much narrower. I certainly do not want to get into the discussion about independent schools. My concern arises from the potential exclusion of universities, given the amendment's wording. I should declare an interest as chief executive of Universities UK. I would be grateful for some clarification.

The amendment is linked to Amendment No. 17, in which "elite institution" is defined in a way that would certainly incorporate universities. I understand from a brief comment by my noble friend that that is not the intention, but I am responding to the wording of the amendment as it stands. Our universities teach 18 and 19 year-olds, who pay tuition fees even if those fees are deferred—

Lord Wedderburn of Charlton

The words "or other body" should not now appear in the amendment. They have been withdrawn through the Clerks. To my knowledge, the noble Lord the Deputy Chairman of Committees knows that they have been withdrawn by the Public Bill Office. How they ever got there, I do not know; no doubt it is my fault. The noble Baroness need not address the problem of universities on any of our amendments.

Baroness Warwick of Undercliffe

I thank my noble friend for that clarification. In reading the revised amendment, perhaps I will feel completely reassured on that point.

The Deputy Chairman of Committees (Lord Brougham and Vaux)

I should make it clear that the words "or other body" have been deleted from the amendment.

The Earl of Caithness

As I am speaking for the first time in the Committee, I declare my interest in having served on the Joint Committee, with various other noble Lords present. I also declare my interest with a number of charities, most of which are, admittedly, north of the Border, so I will not bore the noble Lord. Lord Wedderburn, with them, important though they are.

As the noble Lord, Lord Campbell-Savours, said, this is the most controversial area of our discussions. It surprised some of us that we got a common agreement on our wording in the end. It could have been the issue where the whole of our report came apart; we might have had a minority report, or perhaps even two reports. However, after all the evidence that we received, we came to a sensible and workable conclusion.

Everything that the noble Lord, Lord Wedderburn, and the noble Baroness, Lady Turner, said applies to some hospitals as well. If one is to be consistent with their argument, you have to apply that to hospitals. They did not say a word about the hospitals that have charitable status. If they wish to take Parliament and the Government down the road about which they are talking, they have to address that issue as well if they want to be consistent and considered seriously.

My noble friend Lord MacGregor pointed out many of the difficulties that would arise from the amendment. Clearly the issue will keep recurring. Having listened to all the evidence and taken part in the discussions, I think that the Government and the Joint Committee have got things right, but it will not please everyone.

Lord Swinfen

I am not a lawyer or an educationalist, but the noble Lord, Lord Wedderburn of Charlton, said that the amendment would exclude universities. I wonder whether it really does. Universities have schools of art, law and medicine. I wonder whether he is totally right, given the wording.

Baroness Carnegy of Lour

I want to make one point. The noble Lord, Lord Wedderburn, will not allow me to mention Scotland, and I speak from experience there. There are a number of schools in Scotland and, I am sure, south of the Border where children are educated with fees paid by local authorities, because they are too difficult for the local authority to educate, for whatever reason. I am particularly thinking of the Steiner schools, which would be ruled out by the amendment. The amendment would not do what he wants.

Lord Hodgson of Astley Abbotts

We had a most interesting speech from the noble Lord, Lord Wedderburn. I wrote down some of the phrases about elite institutions, forcible integration and social engineering. It had something of a flickering black and white film—a throwback to the past. I do not doubt that he holds his views extremely sincerely, although I do not share them.

The noble Lord moved beyond reality when he talked about how the Sutton Trust—an excellent organisation that does great work—had reported that comprehensive schools existed from which people left with no GCSEs, and that the results were rather better in private schools by comparison. He seemed to attribute that difference entirely to charitable status.

If he is doing that, he is not being realistic. It is not realistic to believe that the difference in performance between a comprehensive school in a more deprived area of the country and a private school is down entirely to the existence of charitable status. It is a much bigger issue than just charitable status and an important one that needs to be addressed. However, it will not be addressed through this Bill.

I speak with some passion on the subject because, as I declared at Second Reading, I am an honorary fellow of an Oxford college of recent foundation—founded by a Bishop of Liverpool. We have made particular efforts to encourage people from comprehensives in the north-west to come to the college. We have visited schools in the area and the staggering thing learnt when talking to pupils at the schools is not that they are not bright, because they are, but there is insufficient aspiration. The problem is getting them to aspire. The noble Lord, Lord Wedderburn, spoke of Oxford and Cambridge elitism, but I believe that we need to address the raising of aspirations.

Among the issues that concern those pupils are leaving home—moving from Liverpool to live at Oxford or Cambridge—and—dare I say it?—the image—the "Brideshead factor". I am afraid that the noble Lord, Lord Wedderburn, by his very speech, enhances and increases this aspect in the public mind. He makes it out to be a very special place where ordinary people cannot hope to prosper. Nothing could be further from the truth. In making such comments about Oxford and Cambridge in our Committee—and of course they should be broadly based and have a wide-ranging social intake—he produces an effect which is the reverse of what he is seeking to achieve.

We have been over the arguments already and I will not weary the Committee by deploying them again. However, there is the employment-creation issue; the tax-saving issue underlined by my noble friend Lord MacGregor; the balance-of-payments issue from overseas students; the centres-of-excellence issue; the spread-of-good-practice issue; the bursary-and-scholarships issue; and the freedom-of-choice issue. I do not deploy arguments to support each of those issues and our position on them, in eager anticipation that the Government's policy on this issue remains unchanged and the Minister will be rejecting these amendments. But if she is tempted not to do so, I must serve her notice that we on these Benches will vigorously oppose them.

Baroness Scotland of Asthal

I can reassure the noble Lord that the Government will not be changing their position. It is right to acknowledge as have a number of Members, not least the noble Earl, Lord Caithness, that the consent from all sides in relation to our position is both surprising and pleasurable. It is of some importance that that accommodation between wide-ranging views has been possible. There has been the joining together of the need to promote charity and to ensuring that it spreads to all and has a direct public benefit. That is a state that we should directly celebrate.

I say to my noble friends that the Strategy Unit recognised in its review in 2002 that there was some public concern about charities which charge high fees for the charitable services or facilities they provide. Concerns about such charities centre on the extent to which the levels of fees tend to restrict access to their services and facilities by people of ordinary means—in particular, whether there are any charities whose services and facilities are in practice available only to wealthy people. That is the import of my noble friend's amendments.

The Government therefore endorsed the Strategy Unit's recommendation that fee-charging charities should be looked at by the Charity Commission to check that they continue to provide a genuine public benefit. The commission has agreed to carry out those checks. For those reasons, I am sure that for that reason the noble Lords, Lord MacGregor and Lord Hodgson, and the noble Baroness, Lady Howe, have concentrated on issues of public benefit. It is important that we recognise that the charitable sector, particularly the schools, acknowledge that the issue of public benefit—that is, of access—is of real importance and one that they must address.

4.45 p.m.

My noble friend's amendment ranges rather broadly. I accept immediately that the other institutions have been struck out, and therefore we need not concern ourselves about the effect that the amendment would have had on universities. I am also very grateful for the indication given by my noble friend Lord Wedderburn that he would also exempt from any such definition institutions which cater for children with special educational needs.

But, even if we were to make those exemptions, the definition would still cover, for example, a small nursery school that charged modest and affordable fees to the same proportion of its children. Had they not been specifically excluded, it could cover the other types of educational establishments to which we have already referred, including those of real vulnerability. So the amendment would exclude from charitable status all the institutions that I have mentioned, and I know that my noble friends acknowledge that that would not be right.

The noble Lord, Lord MacGregor of Pulham Market, reminded us of the complexities of the definition for that reason. In order to address the mischief that one would wish to address, one would need the acuity provided by that definition, and that does not appear to be obtainable with any great ease.

Having recognised the public concern and having recognised that there are to be checks, we go on to look at the amendment in its broader terms. I shall turn to the last amendment because I think that both Amendments Nos. 9A and 17 have been responded to. However, again, Amendment No. 29 gives the definition of elite educational institutions, and I hope that I have explained why we have difficulty with that. But if the institution can show the Charity Commission that it is established for charitable purposes and for the public benefit in a way that satisfies the public benefit requirement, then it meets the criteria for charitable status and we think that, in fairness, it should be allowed to take its place within the domain of charity.

At one stage, my noble friend Lord Wedderburn appeared to suggest that we should build in an element of unfairness in order to encourage the change that he seeks. We argue that that would be difficult to obtain.

I listened with great care to the comments of my noble friend Lord Campbell-Savours, who has worked hard on this issue and has made a great contribution to the committee's work. The Finance Bill could deal with the taxation of independent schools, but to treat schools differently from other bodies with charitable purposes would involve us considering the ECHR ramifications of so doing. It is right that the noble Lord, Lord MacGregor of Pulham Market, reminded us of the difficulties that that, too, may present.

We believe that in the Bill we have managed to come to an accommodation which both enables us to take advantage of the educational opportunities and underscores the importance of public benefit. I know that when we come to discuss those specific provisions later, the noble Lord, Lord Phillips, and others will want to make further comment about that. But I regret to say that I am unable to accept the amendments of my noble friends.

Lord Campbell-Savours

Before my noble friend sits down, will she tell the Committee whether the Treasury was consulted about the statement in the report dealing with changes in the tax structure? Did the Treasury come back to the department and brief it on why it resisted?

Baroness Scotland of Asthal

My noble friend will know that as with all legislation, it would go through the Domestic Affairs Committee. I can reassure him that the Treasury was consulted and that this is the Government's position.

Lord Wedderburn of Charlton

I thank everyone who has taken part in the debate. It is the beginning of a new debate which had gone underground since the plan for integration, as my party used to put it, took a subterranean turn.

I am grateful to the Minister. We will have other forums in which the matter can be discussed. I limit myself to saying that she and I accept that public benefit will be more important in the new regime—even more important than now. Last week, when the noble Baroness was not with us, I welcomed the lack of presumption—be it on grounds of religion, education or anything else—and the need to prove public benefit.

However, I believe that the greatest public benefit in our historical circumstance that schools can provide, together with good teaching and the smallest classes they can manage, is to offer to the local population, meant in a wide sense, an opportunity on a basis of equality and not of wealth. We must reduce—a point which I noticed no one took up—the apartheid which in social terms currently exists.

I must not say too much about small nursery schools because it touches a tender spot. One of my best friends runs a small nursery school and was interested in it even before I married her. Parents pay a little and they pay voluntary donations. The local authority also pays a small grant. However, I must tell my noble friend that all the pressures from above are, for curious reasons, for the local authority to reduce, if not abolish, that. Much more thought needs to be given to the position of pre-schools, about which I shall talk on another occasion. I do not believe that the Government's plans for pre-schools have been made with those who have work in them.

I say only to my noble friend the Minister, because it needs saying, that of course the thought behind our amendments is a rolling programme. If 66 per cent of pupils paying or not paying fees is the wrong cut-off point because it would do enormous damage, that is why we tabled Amendment No. 29. We realised that we did not know enough to know what figure should be inserted. However, it should be one which pushes forward an opportunity on an equality basis and we thought that the Charity Commissioners should have the right that is set out in Amendment No. 29.

I have to say to noble Lords that I do not know much about private hospitals. I have spent 50 years of my life, on and off, in higher education and I do not know what the answer is, especially when the Government are bringing private hospitals into the National Health Service. The situation is not covered by the thinking behind our amendments. I saw the National Health Service brought into existence by Aneurin Bevan and I believe that that was a wonderful moment for our society. What should happen to private hospitals, tax exemption and the like, I do not know. I have one other thought. I think that the noble Baroness, Lady Howe, mentioned and the noble Lord, Lord MacGregor, suggested that parents save the state money by paying taxes and then paying fees to schools. The figure suggested was £100 million. I do not accept that. But if they gain £100 million and pay out £200 million, they cannot be so worried about the tax problem and those with endowments of course will not be so worried.

Ordinary people go to public schools. Perhaps I may say that their problem is that they do not know they are ordinary. There is a social class issue at stake. Ask any American visitor or your French friends whether they think England—I say "England"—is more of a class society than they are used to. They all have their meritocracies, but of course it is. It is one of our problems. Those who know about it and those who have risen into it do not look into the mirror and see it. I cannot say other than that. We shall no doubt continue the debate on Report because it deserves a wider audience.

I am not wholly satisfied with my noble friend's response, much though I liked it. Therefore, the matter will probably return on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

moved Amendment No. 10: Page 2, line 28, leave out from "responsibility" to end of line 29 and insert "and volunteering The noble Lord said: Clause 2(3) clarifies the meaning of subsection (2)(e) of Clause 2. Subsection (2(e)reads, the advancement of citizenship or community development". That is one of the new charitable causes the Bill intends to introduce. Subsection (3)(b)(ii) explains that the advancement of citizenship or community development includes, the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities". Our amendment seeks to remove the words, the voluntary sector or the effectiveness or efficiency of charities". So subsection (3)(b)(ii) would read, and be confined to, the promotion of civic responsibility and volunteering".

We have sought the removal of these words in order to highlight what we believe is a circular definition of "charitable purpose". If those words were to remain, the promotion of the voluntary sector, or the effectiveness or efficiency of charities, would, of itself, be a charitable purpose.

No doubt there are charities that fall within this remit. But, in many cases, this will be a commercial activity, and, one might argue, so it should be. It is one thing for the Charity Commission to have, as we shall see when we reach Clause 7, a charitable resources objective, which is defined as, to promote the effective use of charitable resources"; it is another to have charities being advised by other bodies which may be taking commercial advantage of charitable status. The line between charitable endeavour on the one hand and commercial endeavour on the other is a fine one. We argued that the drafting of this subsection could encourage the organisations advising charities claiming charitable status, which in reality are commercial operations.

We have other doubts about the wording of the subsection. It should be understood that the voluntary sector and volunteering are not synonymous with charity. Many voluntary sector organisations are not charitable. I refer to the amendment we discussed at the end of our last meeting about anti-vivisection organisations as well as some campaigning groups.

So it is hard to see how promoting volunteering or the voluntary sector, if the sector contains purposes that are not charitable, can be a charitable object. Statistics have been quoted a great deal. There are over 500,000 voluntary organisations in the United Kingdom. Only one-third are registered charities. That leaves some 330,000 that are not registered charities. For example, NCVO might be a typical organisation with members across the voluntary sector, many of which are outside the charity sector. Examples of voluntary organisations that are not charities but which are members of NCVO include the Campaign for Real Ale, the Trade Union and Professional Association for Family Court and Probation Staff, campaigning groups such as Friends of the Earth and Greenpeace, the British Union of Anti-Vivisectionists, Animal Aid and the National Anti-Vivisection Society. How could it be charitable to encourage volunteering for CAMRA? I have nothing against CAMRA, it is a splendid organisation, but it is not a charity.

5 p.m.

The Association of Medical Research Charities, which briefed us on this point, is a registered charity with the object of increasing the effectiveness of the charity sector in medical and health research. Its membership is limited to those organisations that have a charitable purpose to further health or medical research. The confusion arises here from using the term "voluntary sector" so widely. We need to narrow it to ensure that the promotion of civic responsibility and volunteering is limited to the charity sector. I look forward to hearing the Minister's response and I beg to move.

Baroness Scotland of Asthal

The Strategy Unit recommended as the fifth item in its proposed new list of charitable purposes the purpose of "social and community advancement". Although the Strategy Unit's intention was clear, the form of words proposed does not exactly correspond to any purpose or purposes which are regarded as charitable under existing charity law. In the draft Bill, therefore, the Government proposed a slightly different formulation—paragraph (e) of subsection (2), namely, the advancement of citizenship or community development". The words in paragraph (b)(ii) of subsection (3) which are the subject of this amendment further have the effect of making it clear that the advancement of citizenship and community development includes, the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities". Those are all charitable purposes already recognised by the Charity Commission.

The noble Lord asked whether commercial organisations could be considered charitable if they promoted volunteering. Promoting the voluntary sector is a charitable purpose. Charities may charge fees for charitable services, but purely commercial bodies will fail the public benefit test, which would be true of the examples given by the noble Lord.

The Joint Committee made no comment on the formulation. The words that form the subject of this amendment have been included solely for the purposes of clarity. Their omission would have no practical effect as the promotion of the voluntary sector and the promotion of the effectiveness or efficiency of charities are already recognised as charitable purposes under existing charity law and would remain charitable by virtue of Clause 2(4)(a). Whether or not they should be included is a nice judgment, but the Government believe that it is best to go for clarity. Therefore, the Government believe that the user of the legislation would be best served by the continued inclusion of these words in the Bill. With that explanation, I hope that the noble Lord will feel more content.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister and I accept her comment about the second part of the test—the public benefit test, which will have an impact on what we are driving at. As I said, there has been concern in the sector about those groups that are purely charitable. Other bodies that have a mixed purpose may take advantage of the particular wording in subsection (3)(b)(ii). However, I will read carefully what she has said and think further. I may want to bring the amendment back, but I am probably content with what she has told me. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Chandos

moved Amendment No. 11: Page 2, line 29, at end insert— ( ) in paragraph (f) "culture" includes cultural communication through popular media such as film, radio and television;

The noble Viscount said: In moving Amendment No. 11 standing in the name of my noble friend Lord Puttnam and myself, it may be for the convenience of the Committee if I also speak to Amendment No. 14.

I should declare an interest as a trustee of a number of charities, including the Esmé e Fairbairn foundation. More relevantly to these particular amendments, I am chairman of the Television Corporation, which is not a charity, but a significant independent producer of television programmes.

I will speak very briefly, since I acknowledge that this is a relatively narrow issue, certainly in comparison with the grand themes that have preoccupied the Committee to date. They are not, on the other hand, entirely divorced from those grand themes. Some people. in analysing the woes that they perceive in contemporary society, might argue that television has become, if not a religion, then at least a substitute for religion. At its best and, notwithstanding the views of the Daily Mail, that is at least as often as has ever been the case, television indisputably contributes to the advancement of education.

However, I do not think that any Committee Members would disagree that the most appropriate charitable purpose in the context of television is that contained in paragraph (f); the advancement of the arts, culture, heritage or science". I believe that there is a widespread if not universal view that television represents the central even dominant part of contemporary culture and that there is a substantial public benefit from its advancement and the promotion of excellence within it. The long-established and deep attachment in this country to the principles of public service television is an eloquent confirmation of that.

The reason that I have thought it appropriate to seek clarification on this issue is the evidence that, under the existing legislation, the Charity Commission has not found it easy to agree with this analysis. At the end of last year, the Charity Commission reviewed the operation of the Royal Television Society, which is widely acknowledged to have contributed substantially to the advancement of popular culture through television over a period of 75 years. In the review, the Charity Commission wrote: However, as was stated during the review visit meeting, it is difficult to see how the promotion of television is viable as a charitable object. Neither is the promotion of excellence in television likely to be a charitable object, unless it is more closely defined".

To support the argument that the promotion and advancement of television is very much a suitable charitable object and for the public benefit. I would offer one quotation from Michael Jackson, the distinguished former chief executive of Channel 4, who, in 2003, returned to this country from his position as chairman of Universal Television. He said the following about the biennial conference at Cambridge organised by the Royal Television Society: This conference would be completely impossible in America. It would not be hosted by a charity, it would be hosted by a bank. There would be no talk about programmes. It would all be about money … Public service broadcasting has been eradicated from American TV. PBS is a pimple on the surface of American TV". I beg to move.

Baroness Howe of Idlicote

Almost certainly, this amendment is to be regarded as a probing amendment because, clearly, in the discussions that were carried out with the Charity Commission, the Royal Television Society was left in a certain amount of doubt. It would be extremely helpful if the Minister could give a rounded view of how the promotion of the public interest in public service broadcasting falls within the category of "charitable purpose" within which it has always been assumed to have fallen.

I found it difficult when reading what the Charity Commission said to believe that it had got it right. Therefore, without further ado, we should hear how both tests are perceived— the charitable purpose and particularly the public benefit test—with regard to public service broadcasting. I would have thought that it fulfilled the purposes set out in this Bill 100 per cent.

Lord Brooke of Sutton Mandeville

This is the first time that I have addressed the Committee and I will be extremely brief. When we are debating these long lists of definitions in the early stages of Bills and government responses are elicited, it is a great mistake to enlarge the list indefinitely. I am not speaking against the amendment moved by the noble Viscount, Lord Chandos, except to remark in this context that the department of which I was the second Secretary of State, after my great friend David Mellor, was entitled the Department of National Heritage. In their wisdom, the present Government decided to change that title and turn it into the Department for Culture, Media and Sport. I am sorry to say that in doing so they suggested that the media lay outside culture.

Lord Phillips of Sudbury

I rise only to say to the noble Viscount, Lord Chandos, that I am entirely behind the sentiments of the two amendments, but I think that they are superfluous. He will find in the constitution of every single charity that is formed these days voluminous references to radio, television and the popular media as a means of promoting virtually every charitable purpose under the sun.

Lord Hodgson of Astley Abbotts

We are dealing with subsection (2)(f), the advancement of the arts, culture, heritage or science", and I am looking forward to hearing the Minister's response to the amendment moved by the noble Viscount, Lord Chandos. However, I wonder whether I could tack on something about heritage? I am sorry to do this at the last minute, but my briefing arrived almost as late as the Charity Commission's latest publication on the definition of religion. It is from the Historic Houses Association and therefore concerns heritage.

The association represents 34 major charities, including some outstanding properties of world importance such as Chatsworth, Burleigh and Wilton. The retention of charitable status is critical to their survival. The association argues that "public benefit" includes public access, education, local employment, economic generation and, of course, tourism, which benefits the balance of payments. It has some concerns that the public benefit test could be drawn in a way that does not take sufficiently into account the contribution to the leisure and tourist industries, which are in themselves obviously profitable.

Secondly, that test may also lead to some prejudice against donor families, many of whom still live in the properties. The association points out that the presence of these families means that the properties are living examples of our history rather than just museums. I hope that the Minister will forgive me if I raise that point in asking for reassurance when she comes to wind up this particular amendment. If she needs more time to reflect, I would be happy to be written to.

Lord Bassam of Brighton

I am grateful to my noble friend Lord Chandos for moving this amendment because it enables us to spread a little clarity on the issue. As the noble Lord, Lord Brooke, said, Clause 2 (1) concerns lists of descriptions of charitable purposes. I can well understand why the provision has been raised because this is not the first time that it has come up in our debates on the Bill.

The advancement of culture is a charitable purpose by virtue of its inclusion in the purpose which reads, the advancement of the arts, culture, heritage or science". Charitable purposes in connection with film, television and radio could fall within the advancement of the arts, the advancement of culture or the advancement of education; it would depend on what the promoters of the charity were seeking to achieve. There is no definition of "culture" in the Bill because the Charity Commission will consider the object of each new or existing charity on its own merits.

The point about existing charities answers the question of the noble Lord, Lord Hodgson, on heritage houses. I can offer him the reassurance that he is seeking. Historic houses will continue to be charitable under the Bill on the same basis that they are charitable now. "Public benefit" will be interpreted as it is now, so they can expect to continue to benefit from the definition and its interpretation.

A number of organisations which are connected with film, television and radio are already registered charities. I hope that that reassurance will satisfy the noble Viscount and he will feel able to withdraw the amendment—and hopefully not bring it back, although I will understand if he is tempted to do so. Like the noble Lord, Lord Phillips, I am sympathetic to what is behind the amendments.

5.15 p.m.

The second amendment in this group deals with advancement. I can see where the amendment is coming from, and I certainly understand why it has been put before us in terms of what the noble Viscount thought were worrying words. In seeking to partially define which activities are potentially capable of being charitable, we have refrained from including the definition of activities that are not capable of being charitable for a number of reasons. The range of activities that charities carry out is so wide that even starting to put together a list would be very difficult indeed.

If a definition were included in the Bill—even if it were non-exclusive—as I said in our first session there would be a danger that the list would come to be seen as definitive and that those activities that were not on the list were in some way less charitable or less deserving of that designation. It would be necessary to choose certain activities and exclude others. To include such a specific particular as the promotion of excellence through awards without including a long list of other activities would, for that reason, be undesirable.

It is for the Charity Commission to determine whether a charity's activities further that charity's charitable objectives. In its publications, the commission gives some guidance as to what kind of activities may be charitable for organisations with certain purposes. Where trustees are in any doubt about whether a proposed activity would fall within their objects, the commission will obviously give advice to that organisation to ensure that it conforms to what it seeks to achieve.

I could perhaps best address my words of reassurance to the noble Viscount on this particular issue by looking at an example. The example on which I would draw, which is perhaps closest to where the noble Viscount is coming from, is the British Academy of Film and Television Arts—Bafta—which is a charity. It is there for educational purposes, and we know that it holds a famous ceremony. It is certainly seen as advancing an important side of the industry in terms of encouragement and educational work. Obviously, it is also recognised as an international gold standard.

I do not think that the noble Viscount needs to worry. Those organisations that are already charitable will continue to be charitable, and the definitions are sufficiently widely cast through custom and practice to enable the object, especially the Royal Television Society, to be considered as a charitable purpose. I hope that, having heard that, the noble Viscount will feel able to withdraw his amendment and not bring it back on another occasion.

Viscount Chandos

I thank my noble friend the Minister for his comments and for the comments and support from other Committee Members who have spoken. I guess that there is a problem with definitions. I enjoyed the noble Lord, Lord Brooke, pointing out the change in the name of the department. It reminds me of a discussion that we had at the Esmée Fairbairn Foundation when we were looking at the allocation of money from the arts and heritage budget. There was a pie chart that showed music and theatre. With my known enthusiasm for opera, I asked where opera fell. The director of arts and heritage said, "Heritage". Television, as we have heard, seems to touch on a wide range of objects and touches large parts of our lives.

I hope that I can be reassured by my noble friend's comments. I find it a little difficult to reconcile them with the bald statement that the Charity Commission made to the Royal Television Society. However, as the Minister has observed, there does not appear to be any question—unless there is something going on that we do not know about—of Bafta's charitable status. To return to a previous discussion, if ever there were an elite institution, Bafta is one. The Royal Television Society is an even more popular one, so I will happily withdraw the amendment and hope that I do not have to consider bringing it back at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

moved Amendment No. 12: Page 2, line 30, leave out "skill" and insert "or mental skill (or both) The noble Lord said: We have moved one line down on the clause to subsection (2)(g), the advancement of amateur sport". This is similar to some of the other amendments that we have tabled. We are concerned that the amplification given in subsection (3)(c) is not sufficiently wide. It states: in paragraph (g) 'sport' means sport which involves physical skill and exertion". Our amendment would widen the definition to include the use of physical or mental exertion as the meaning of sport. We believe that that gives a fuller and more accurate definition of "sport". We thought that the present drafting could unintentionally preclude certain sporting activities and the Law Society contacted us to make the same point.

Guidance is required on the types of sport that are intended to be excluded from access to charitable status to avoid an inconsistency of approach developing. For example, would motor sport, chess or bowling clubs be excluded? Chess is a good example on which to centre the debate. We, along with many other Committee Members, have received briefings from Mr Gerry Walsh, the chairman of the Mind Sports Council as well as the British Chess Federation and the World Bridge Federation.

There has been long-standing concern that mind sports such as chess and bridge have been overlooked as sports and had to forgo lottery grants and the benefit that can be gained with charitable status. The reasons behind their ostracisation have never been entirely made clear. Chess clubs and the chess federation believe that our brightest stars would get the public support that they need if the benefits could be felt at every level. Local chess clubs and junior associations would be able to apply for grants. Funds might become available to bring chess to a much wider audience and of course they would not have the burden of VAT if clubs could obtain charitable status.

The dismissal of chess as a sport on the basis of its lack of physical movement and effort is hard to justify. The Minister will not be surprised to know that I wish to quote from a debate in another place on 15 March, 1999. The question debated was that this House recognises that chess is a sport. The then Minister for Sport, the Minister's colleague, Mr Tony Banks, was arguing for the inclusion of chess as a sport and amending the National Lottery rules and so forth so that chess clubs could get lottery grants. He said: I believe that the definition used is too restrictive. It appears to be rooted in a belief that mental activity does not require physical effort. That is an old-fashioned notion, based on a caricature that I experienced when I was a kid at school, that the bright ones read books and the thickos play sport. I read an article by Jon Speelman in The Independent today, in which he describes Nigel Short losing a stone in weight during a week-and-a-half match. It is clear that top chess players, if they want to excel at technical level, need to be physically fit to do that; the two cannot be divided".—[Official Report, Commons, 15/3/99; col. 863.]

European countries also appear increasingly to recognise chess as a sport. Austria, Finland, Germany, Greece, Italy, the Netherlands, Portugal and Spain all do so, and in many cases chess is part of the national Olympic body.

The question was subsequently agreed to in the House of Commons. However, chess and other contest games that do not involve physical exertion cannot yet obtain charitable status or gain lottery grants. We believe that including mental exertion in the definition of sport draws the remit broadly enough for all reasonable amateur activities to be included as potential charitable purposes. That seems to be entirely sensible because it is not as though they automatically gain charitable status because they still have to pass the second part of the test and prove their public benefit. I beg to move.

Lord Phillips of Sudbury

I rise to speak to Amendment No. 13, which is grouped with Amendment No. 12. I could say to the noble Lord, Lord Hodgson, that there is a simple way round the chess dilemma, if I can call it that. We could do what they do in Iran, which is to have very large chess courts, rather like tennis courts, where you can run around shifting your pawns and kings. Then we would have both requirements.

Short of that, Amendment No. 12 was more ambitious than mine in that it would change the definition of charity law. Of course, Clause 2 is not meant to do that. Rather it puts into statutory language what the law already is. I tabled this probing amendment because of the words that I want inserted; "stamina, strength or suppleness" in place of "exertion", are the words used by the Charity Commission on its own website in relation to sport and charity and they are more useful words. For example, are old people cut out of some of these sports because they are incapable of running around? I suppose that we could say that exertion is relative to the physical circumstances of the person. Charity law is endlessly subtle and no doubt the Minister will say that. However, whether she does or does not, I suggest that the Charity Commission's language on its website is better than that in the Bill.

Lord Wedderburn of Charlton

I will speak briefly to Amendment No. 12 and address myself to Amendment No. 13 in the name of my noble friend Lady Turner and myself. On Amendment No. 12, our debates do not really relate sufficiently what is proposed in the Bill to the existing law. I say that not merely because there are lots of interesting cases, but because what the judges have already said about some things is relevant to amendments that are made. Sometimes it seems that they have said nothing, but judges have said quite a lot about Amendment No. 12 and "mental skill".

If I may abbreviate Tudor on Charities, it points out that many things can be educational for the young. A trust to provide treats can be charitable if the treats are either educational or advance education indirectly. There are a lot of cases on that. Similarly, in 1945, Justice Vaisey—who some Committee Members will know had a very enquiring mind—in a case that raised the question of an annual chess tournament in Portsmouth for young men under the age of 21 said that it was charitable, but it was very near the line. What he said was very relevant to what the noble Lords, Lord Hodgson and Lord Phillips, said.

He said: One feels perhaps that one is on a rather slippery slope. If chess; why not draughts; if draughts; why not bezique; and so on through to bridge. whist and by another route stamp-collecting and the acquisition of birds' eggs".

5.30 p.m.

The noble Lord's amendment is meritorious, but it has much greater difficulty than he recognises, but which Mr Justice Vaisey recognised very quickly. It suggested in the books that the trust for the advancement of chess was only charitable because it was restricted to the young. Does the noble Lord, Lord Hodgson, think that? A trust to promote chess playing among adults, says Tudor, would probably not be charitable for the advancement of education. Would it be within the amendment? Would it be within the Bill?

I forebear to quote the judgments that deal with trusts for rides on elephants, which raise even greater difficulties judicially. We are not discussing the existing law in relation to these matters. I want it to be discussed; not because I am a lawyer, but because it is relevant. If we do not ask the questions that the judges have raised already in the same area, we are not doing our job. This is the only place where it will get any mention; I doubt whether it will get a mention elsewhere. The case law is important to the way in which the courts will continue to approach what we say in the Bill and what we say in the amendments.

I must turn from Amendment No. 12 to that in the name of the noble Baroness and myself, Amendment No. 13A. This is a very English text, in the Bill at page 2, line 14, the advancement of amateur sport". It is not just English; it is very Home Counties. You go a little way north of Watford, and they will soon tell you what this is about. "This is about amateur rugby clubs", they will say. I do not know of any that are amateur in Rugby League; they have become professional. They will not see the merit of the south having Rugby Union and the north having Rugby League, which is excluded.

There is no easy answer to this, and I am not sure that our amendment is sufficient. If you go to some clubs in various sports, especially to local cricket clubs, they may have some professionals, and they may have some amateurs. At least that ought to be included. The amendment is meant to spark the question in the minds of noble Lords as to how far one should go with that. I am not suggesting that we should subsidise football clubs such as Manchester United or Arsenal—certainly not Arsenal—or even the best managed poor club in the Premier League, which is of course Charlton Athletic, meritorious though the club is. I am suggesting that just leaving on the face of the Bill "amateur sport", and not considering sports in different parts of the country that have professionals and also encourage amateurs to take up the game is not sufficient. Cricket is very relevant, if people care about cricket. It is at risk in modern society. I, for one, would welcome a subsidy for cricket clubs, certainly at local level—

Lord Phillips of Sudbury

I am most grateful to the noble Lord for giving way. Is he really proposing by this amendment to subvert the whole of British charity law, which is based on the principle of exclusive charitableness? If his thesis prevails, you do not have to be exclusively charitable any more, you can just be predominantly charitable.

Lord Wedderburn of Charlton

There are lots of cases that show that you can have charitable and non-charitable objects. I will not read them all, but if the noble Lord would like to look it up in Tudor, he will find a long discussion of that. "Exclusively charitable" has received some rather bizarre interpretations.

What I am saying is that you cannot simply let a statement go through in the Bill that only totally amateur clubs receive the blessing of the state. That is not good enough. It is very Home Counties. It is very 19th century; and it will not do. I am not advancing the text that I have put forward as having final merit, but I suggest that your Lordships will frankly look a little silly if we do not consider whether only amateur sport, totally amateur clubs, should receive any of the benefits of being a charity. We might think about that before Report.

Lord Brooke of Sutton Mandeville

I congratulate the noble Lord, Lord Wedderburn, on his enthusiasm and sympathy for cricket and his attempt to assist it in his amendment. I think that I am right in saying that the school attended by Mike Gatting, in Willesden, and subsequently by Phil DeFreitas and Chris Lewis, no longer plays organised team games. Consequently, one of the sources of people coming into professional cricket has been denied and can only be resuscitated by clubs. I am grateful to the noble Lord, Lord Wedderburn, for his recognition of that.

I also congratulate him on the skill with which he masked his suggestion that it was wrong to be advancing chess with all the other arguments that he did, when chess includes an elite that consists of kings, queens, bishops, knights, and castles.

Lord Bassam of Brighton

This debate turned out to be more interesting than perhaps it appeared when the amendments were tabled. The noble Lord, Lord Hodgson of Astley Abbotts, quoted Tony Banks in the debate, and that is always good for entertainment value. We have had the noble Lord, Lord Brooke, reminding us that there was a subtext to the comments made by the noble Lord, Lord Wedderburn, on Amendment No. 12.

I will deal with the amendments in turn; the first amendment is the "chess and bridge amendment". In general terms, the Government agree with the Strategy Unit recommendation that the promotion of amateur sport be recognised in the list of charitable purposes. The Strategy Unit found that sport, rather than being based on a list of eligible activities, should be defined as encompassing activities involving an element of physical skill, which promote and maintain health. In his comments, the noble Lord, Lord Hodgson, argued that chess might do that. I might take a slightly different view, but in the end it is for the Charity Commission to make a determination based on applications.

The definition that we have accepted broadly builds on the Charity Commission's review of the register in 2001, which recognised the promotion of community participation in healthy recreation by the provision of facilities for playing particular sports. The Strategy Unit clearly envisaged that organisations would not qualify for charitable status under this new purpose if the activities they offered were not capable of providing a health benefit.

The commission considered the high level of public interest in sport as a means of promoting health and the vital role that sport plays in improving the health of the nation. It concluded that bodies that set out to encourage community participation in healthy sports could be recognised as charitable.

There are other charitable purposes that may be furthered by the promotion of sport, such as the advancement of education for children and young people, or the relief of disability, and the Charity Commission has registered a number charities in these cases. For example, there are over 500 charities on the register that provide horse-riding for the disabled. and a number of chess clubs established for the education of young people. In some circumstances, obviously, chess would be included.

When it accepted community particiption in healthy sport as charitable, the commission did not accept that it would be charitable to provide facilities for an activity that does not promote physical health but which might contribute, in some cases and in an incidental way, to mental health and mental wellbeing. Nor did the commission accept as charitable the provision of facilities for an activity that does not promote physical health, but which might result in participants developing particular physical skills. An example of that would be playing computer games, which you could argue, in the same terms as you could argue for chess.

Sports that are capable of providing "healthy recreation" are those sports which, if practised with reasonable frequency, will tend to make the participant healthier—that is, fitter and less susceptible to illness. It is the beneficial effect of sport on a person's physical health that is recognised as charitable. A common feature of the majority of activities in definitions of sport is that the activity requires a combination of, in varying degrees, physical skill and bodily exertion. You could add to that a mental facility as well. The definition of sport in the Bill reflects that. Activities that involve physical skill and exertion could be expected to provide a health benefit to participants, and should therefore be recognised as charitable. The Government are not persuaded by the argument that the promotion of sports that do not involve physical skill and exertion should be charitable. For those reasons we cannot accept the amendment.

I can see why the noble Lord, Lord Phillips, has put down Amendment No. 13. The words, "stamina, strength or suppleness", add something but, as the noble Lord says, in essence those have come from the guidance that the Charity Commission provided. They are a background to the use of "exertion". I take the view that we are best left with having "exertion" in the Bill, and those further refinements could be considered in an advisory term. It would be interesting legislation that included the use of "suppleness" as one of the measures. It would not greatly advance where we are in defining amateur sport as a charitable activity.

I can see what the noble Lord, Lord Wedderburn, is suggesting, and I understand his concern to ensure that sports that do not appear to be entirely amateur might want to seek to qualify for charitable status. If we were to go along the route that he suggests, we could end up in a situation where definitions become badly blurred. For that reason, we cannot accept the amendment. We do not see that using "predominantly amateur" would be defensible in law. At what point does something become "predominantly amateur" or predominantly professional? I can understand his concern, particularly when he talks about cricket, where you can get a professional playing for an otherwise amateur club. I cannot see that the provision would necessarily be caught out by that.

These are difficult areas, and we must be careful. It would be extremely unwise to incorporate a term that brings vagueness—as "predominantly" does—and a question as to whether something is amateur into a definition in the Bill. For that reason, we cannot accept that amendment either.

Lord Wedderburn of Charlton

I ask the Government, through my noble friend, to reconsider their attitude on some of these matters, particularly that which falls into this group of amendments. It will not do to pass an Act that is clearly uncertain in the present law, half-deal with it, and leave it to the Charity Commission.

Let me give an example. It is expressly recognised in the case law that bridge playing in schools may be charitable. The textbooks tell you that it is highly uncertain whether a fund for the purpose of advancing bridge playing for adults is for a charitable purpose. Two things happen if we pass the sort of Bill that we have before us. The first is that no guidance is given at all—that is to say, as Mr Justice Vaisey suggested, if chess is all right, why not bridge, why not bezique, and so on—and the Charity Commission has to make it up. Someone is bound to object.

On the other hand—I include in my comments what I said last week; that the Government have been very brave in trying to set out a longer list and they have met the natural difficulties as to whether there should be a big list—if in the big list you put the advancement of amateur sport, you by inference exclude professionals. If you specify, you by inference could be understood to be excluding mental talent. I do not believe that that is good enough. The question of how far you can go with this has been ranged in the case law since the 19th century and it has not been settled.

The Government really cannot go on by answering amendments by saying, "Let's leave it to the Charity Commissioners". They are an admirable body, but it is the job of Parliament to legislate. If you put out a long list you must face, brave though you are, the consequences. So I ask my noble friend whether he will take back the question not only of amateur sport but the question of mental of physical skill and see whether the Government cannot take an attitude at least to the issues which are expressly unclear in the present law. Will they give the Charity Commissioners a little more help?

I do not criticise the noble Lord—it is not his fault; it is that of the Government as a whole. I do not know whether such issues are discussed in Cabinet or on the sofas of policy makers. I do not suppose they are. However, someone has to think of them. The noble Baroness, Lady Scotland, is with us today, and she will know that the case law is extremely difficult. The Government have a list, which I said last week was very brave. However, if they are brave enough to compile such a list, they cannot escape the ambiguities or consequences of it, and they must seriously consider amendments and not just leave the matter to the Charity Commissioners.

5.45 p.m.

Lord Phillips of Sudbury

It may help the noble Lord, Lord Wedderburn, to know that amateur sport was considered on the sofas of No. 11 Downing Street, when the Treasury decided to allow the creation of an entirely new class of quasi-charities called "community amateur sports clubs". There is a great deal in that legislation because it sets out the criteria of what constitutes "amateurness".

Lord Wedderburn of Charlton

I am grateful for that information, but I shall not be lured into the problems which surround Nos. 10 and 11 Downing Street—nor into those of the Finance Bill, which would be quite the wrong place to deal with this issue. People cannot get away with saying, "Oh, well, we will put it in a Finance We have a Charities Bill before us and this is charity law. Whatever No. 11 has done with its financial legislation will not answer the question that your Lordships funk and do not deal with. Only this House will ever deal with such points, so, for Heaven's sake, let us face the difficulty now.

Lord Bassam of Brighton

Arguments do not necessarily improve for being repeated. I have heard what the noble Lord. Lord Wedderburn, has said, but I believe that we have been well served by the Charity Commission. Ultimately, the noble Lord is right that it is the job of Parliament to legislate. However, here Parliament's role is to set out "broad categories". It is not possible for Parliament to see every eventuality and every development.

The noble Lord, Lord Phillips, in our last session made the point that the beauty of the way in which charity law has changed is that it has been able, through its flexibility, to respond to new and emerging circumstances. In a sense, that is the answer to the dilemma which the noble Lord, Lord Wedderburn, sees in our approach to this. There are some circumstances, as I hinted in my earlier comments, where clearly chess or bridge may form part of a charitable purpose. That is accepted and understood and there are examples of it in what has been accepted as being a charitable purpose by the Charity Commission.

The noble Lord asked us to clarify ambiguities. With respect to ambiguities, one of the problems with his Amendment No. 13A is that it creates another level or a new potential for ambiguity. We are trying to close off as many ambiguities as we can.

I am not persuaded by what the noble Lord, Lord Wedderburn, said. I do not think that we can return to the matter with the confidence that he would like. What we have is probably a workable situation. Although I understand the argument made by the noble Lord, Lord Hodgson, for chess and bridge, we cannot accept them as a sport in the terms in which he suggested.

Lord Wedderburn of Charlton

May I respond as we are in Grand Committee, where time is not of the essence?

Noble Lords

Oh!

Lord Wedderburn of Charlton

It really will not do to say that, simply as a technical matter. I resist the notion that I was in any way criticising the Charity Commissioners; I was saying that Parliament is not helpful enough to them and does not give a lead. I still do not know whether physical skill in sport excludes bridge. Does amateur sport include bridge played by amateurs and not professionals? There are such people.

Those questions will be asked in court. Why should society have to pay an enormous amount of money to learned lawyers? They are always under attack, but it is actually not the fault of the lawyers if legislation is that obscure; it is the fault of Parliament, and especially of this House, which gives itself airs about being knowledgeable on such matters. As a parliament, you cannot dispense obscurity of that sort. I could read out a lot more of it. We know very well that this is highly obscure law, and obscure law is costly to people who try to clarify it. That is not good enough.

On Report, we will raise the question, "Where is bridge?". That question involves all the other matters that have been discussed on the amendment. I honestly hope that the Government will look again a bit at the approach to drafting and realise that if you say, "A is included", it may well imply that B is excluded. That thought does not seem to have passed through the Government's mind when they were being enormously brave in advancing the longer list.

Lord Hodgson of Astley Abbotts

We come to the end of a very interesting debate. As I have said many times, I am not a charity lawyer, but I hear the noble Lord, Lord Phillips, talk about the dangers of changing charity law. I understand that. The Minister draws my attention to the dangers of computer games if the amendment were to be accepted. The noble Lord, Lord Wedderburn, produces fantastic case law on the point. No doubt the chess and bridge people will feel that they have had an airing, but it seems that we will have to come back to the point. In the mean time. I fear that the noble Lord, Lord Wedderburn, has given the Minister a gamma for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amenthnents Nos. 13 to 14 not moved.]

Lord Hodgson of Astley Abbotts

moved Amendment No. 15: Page 2, line 41, leave out paragraph (c).

The noble Lord said: Amendment No 15 seeks to leave out Clause 2(4)(c). Subsection (4) details the "other purposes" that are listed as the last charitable purpose under subsection (2)(1). The Charity Law Association alerted us to the possible confusion that the subsection could cause. To understand why we have tabled this probing amendment, it is necessary to read what the other purposes are defined as under subsections (4)(b) and (c). They are defined in subsection (4)(b) as, any purposes that may reasonably be regarded as analogous to, or within the spirit of, any purposes falling within any of those paragraphs or paragraph (a) above". In paragraph (c), they are defined as, any purposes that may reasonably be regarded as analogous to, or within the spirit of, any purposes which have been recognised under charity law as falling within paragraph (b) above or this paragraph".

One of the principal reasons for preserving the common-law basis for charity, rather than replacing it entirely by statutory provisions, seems to be the flexibility which it will give us in future. Giving the balance a statutory basis appears to be one of the most delicate challenges that the Bill's drafting has to meet.

The original accepted "fourth head" of charity covered, other purposes beneficial to the community". That could have been added to the Bill's list of specific charitable purposes, but the Bill seeks to incorporate more detail of the way in which the "fourth head" provision is to operate. Without the detail in Clause 2(4), the basis for adding new purposes would be open-ended. It would leave the Charity Commission, subject to the oversight of the Charity Appeal Tribunal and the courts, to decide what was "beneficial to the community". It can be argued that that would be a viable approach, because the commission would no doubt apply its public benefit test on the basis of existing jurisprudence. But the concern which the uncertainty of the public benefit test has already aroused demonstrates the desirability of giving proper statutory underpinning for the approach to be adopted for the critical issues of adding new charitable purposes.

Charity law has evolved from the list of purposes set out in the preamble to the Charitable Uses Act 1601—the 1601 preamble. It is well established that the list itself is not a closed definition. In the words of Lord Wilberforce in the judgment on Scottish Burial Reform and Cremation Society in 1968, the courts, have endeavoured to keep the law … moving as to new social needs arising or old ones becoming obsolete or satisfied". That has been described as, the equity of the Statute of 1601".

On the basis of court judgments, the Charity Commission has for many years adopted the principle of analogy. It set that out in its path-breaking decision in 1983 that the promotion of good community relations should, in the changed circumstances of the times, be accepted as charitable. Since then, and in particular since it set up its review of the register of charities in 1997, the commission has accepted a number of new purposes as charitable. Its approach is set out in a publication that it issued in 2001 as part of the review, entitled Recognising New Charitable Purposes (RR1A).

The commission says that it adopts a two-step test for deciding new purposes—whether the purpose is analogous to a purpose previously accepted as charitable, and whether it satisfies the public benefit requirement. That is in paragraph 22 of RR1A. The Bill as first published sought to incorporate that test by the three-stage process of including: purposes not specified among the 11 specific purposes; purposes analogous to the 11 and those in that first category; and purposes analogous to those accepted under that second category. That was open to two objections—that the notion of a chain of analogies was artificial; and that it put too much weight on the concept of analogy.

Annexe B of RR1A sets out a number of examples of the way in which the commission has been able to accept new charitable purposes. Those include promoting ethical standards in business and corporate responsibility—we commonly know that as whistleblowing—and fair trade. It is very important that the commission should be able to be at least as constructive in taking initiatives under the Bill in future.

Analogy is a good metaphor for the process of building up new charitable purposes under the Wilberforce modernisation principle that I quoted, but it is quite loose as a statutory concept. More importantly, as the commission itself acknowledges, the courts have not adopted the analogy principle rigorously. An alternate way of expressing the approach is that of considering whether a novel purpose comes, within the spirit and intendment", of the preamble.

The Bill as now introduced has been amended to reflect, in modern wording, that approach of looking for the spirit as opposed to the letter of the preamble, and the tradition of charity law as it has evolved. Clause 2(4)(b) as it now stands—allowing purposes which are analogous to, or within the spirit of, any of the 11 specified purposes and others accepted as charitable under existing charity law—seems fully sufficient. But the omission of paragraph (c) seems preferable as it simplifies the Bill; it reinforces the existing approach of charity law to new charitable purposes; and it avoids confusing and possibly unintended questions about how the line should be drawn between new purposes which are acceptable and those that do not meet the "analogy by analogy" test. I beg to move.

6 p.m.

Lord Phillips of Sudbury

I do not follow the noble Lord, Lord Hodgson, on this point. I hope that he will notice that so far I have quoted a good fewer cases than he has. This involves a very practical issue. If one considers the law of charity and the definition of charity before this Bill, one will find that most points in Clause 2(2)(e) to (k) were charitable only by analogy under what is called the fourth head of charity. By hauling them into the Bill under this new definition, which is no more than pulling together the common law threads, they now have formal charitable status. Subsection (4)(b) will in future allow charities that have analogous purposes in terms of spirit or purpose to be treated as charitable under subsection (2)(1).

However, consider the position if the Bill is not passed and charitable heads (e) to (k), therefore, do not become charitable heads as recognised hitherto. Then, I suggest, one will see the point of subsection (4)(c) because one will want to be able to form charities in the future on the evolutionary principles that are analogous to the new analogous heads—if I can call them that: advancement of citizenship, advancement of the arts, advancement of amateur sport, and so on.

As I see it, this additional paragraph, which as the noble Lord, Lord Hodgson, rightly said, is analogy upon analogy, is really looking to the future when we have new fourth head charities that are not part of any statutory definition and when we will, therefore, need, if we are to have continuing creativity, the possibility of analogy upon analogy.

I end with one example that the noble Lord quoted: fair trade is now accepted as a potentially charitable head. It is not one of the named new charitable heads and yet I would say that we definitely need to be able to form new charities analogous to fair trade. Incidentally, it took me seven years of argument with the Charity Commission to register the Fair Trade Foundation, so the evolutionary process is long. We do not leap to sudden conclusions. It is a wearing away of stone by water. but we need it.

Lord Wedderburn of Charlton

Curiously enough, I believe that there is more merit in Amendment No. 15. The Committee will remember that last week I had a problem with Clause 2(4). It deserves closer consideration. Paragraph (a) speaks of purposes recognised as charitable purposes outside paragraphs (a) to (k) of subsection (2), under existing charity law or by virtue of section 1 of the Recreational Charities Act 1958". That is clear enough. Paragraph (b) says: any purposes that may reasonably be regarded as analogous to, or within the spirit of, any purposes falling within any of those paragraphs or paragraph (a)".

That is curious drafting, but I shall put that aside for the moment. I do not like the wording "within the spirit of". I do not know the authorities for that, but I am sure that there must be a legislative precedent. I suppose it is all right, but it is an odd phrase. However, much more important in paragraph (b) is the phrase, purposes falling within any of those paragraphs or paragraph (a)". Paragraph (c) is quite different. As paragraph (a) introduces something different, I agree with this point: any purposes that may reasonably be regarded as analogous to. or within the spirit of, any purposes which have been recognised under charity law as falling within paragraph (b)".

That phraseology could be understood to point both to purposes and to the benefit test. I appreciate that the heading to Clause 2 is "Meaning of 'charitable purpose"', but that is not binding in interpretation. However, it is right to say that the formula is not regarded as falling within an analogy with the previous paragraphs, but it has reasonably been regarded as analogous to purposes that have been recognised. It seems to me that that ties in the future law with the present case law, I suppose probably by the commissioners. It would be more useful if the subsection said whether it includes what has been recognised by the commissioners under charity law, as in paragraph (b).

Paragraph (b) is the important paragraph, of course-"the advancement of education". Why does paragraph (b) receive special treatment? Why does it desert the objective test of whether something is analogous to a purpose falling within the paragraph and resurrect all the old law for education only, in paragraph (b)—purposes that have been recognised under charity law under paragraph (b)?

Lord Hodgson of Astley Abbotts

Far be it from me, as a non-lawyer, to correct the noble Lord, but we are talking about the paragraphs under subsection (4). We are not referring to paragraph (b) under subsection (2), which refers to the advancement of education. If I am wrong, I have certainly misread it all.

Lord Wedderburn of Charlton

The noble Lord may be right. The subsection begins, The purposes within this subsection (see subsection (2)(1))". Clause 2(1) states, a charitable purpose is a purpose which— (a) falls within subsection (2)". So the noble Lord may be right. that it refers only to paragraph (b) in this subsection, but it certainly is not clear. I know that some people have understood it to be a reference back to paragraph (b) in the list. If that is wrong, I am still uncertain why there is this separate formula of existing law being brought in as against the objective test of subsection (4)(b) which is a test of what is analogous by falling within those paragraphs. There must be answers to the question of what "within the spirit" means and there must be answers to the matter in paragraph (b). I suggest that the drafting should be looked at again.

Lord Swinfen

I support the noble Lord, Lord Phillips of Sudbury. Modern technology is changing very fast and can be used in innovative ways for charitable purposes. Some six years ago, with my family I formed the Swinfen Charitable Trust to use Telemedicine to help doctors in the developing world. At that time, when trying to register the charity, the Charity Commission could not see how Telemedicine could produce any patient benefit or any medical education. To register the charity we needed to educate the officials at the Charity Commission by sending them various articles on the benefits of Telemedicine.

All kinds of matters are changing and technology is changing faster and faster. The Charity Commission, because of the job that it carries out, cannot keep up with the advances in technology. I am sure that what the noble Lord, Lord Phillips, has said is pertinent to the problem that I had at that time and will be pertinent to the problems that other people setting out on other charitable purposes will have in the future. I am sorry to say to my noble friend that I do not support this amendment.

Baroness Scotland of Asthal

I hope that no one will think that this is lawyers clubbing together.

Lord Swinfen

If the noble Baroness will forgive me, I am not a lawyer; I am just out to prove that she is right.

Baroness Scotland of Asthal

I am grateful. 1 was going to refer to the division between the noble Lord, Lord Phillips, with whom I agree, and my noble friend Lord Wedderburn with whom, regrettably, I have to disagree. The drafting has been crafted to allow for the precise development to which the noble Lord, Lord Swinfen, has already made reference. This area is developing very rapidly.

I could not possibly improve on the analysis given by the noble Lord, Lord Phillips. He is absolutely right about how paragraphs (a), (b) and (c) of subsection (4) work together. He is right that we need paragraph (c) because this is an area that will develop. We shall need those matters that are analogous to the new defined list, which is therein set out. I can reassure my noble friend that there is a good deal of jurisprudence on what "spirit" and "analogous" mean and that should not cause us difficulty. Therefore, I hope I can reassure the noble Lord, Lord Hodgson, that this particular hare is not worth chasing.

Lord Wedderburn of Charlton

I cannot allow the occasion to pass without saying that I am totally convinced by my noble friend and I believe that she is absolutely right.

Lord Hodgson of Astley Abbotts

We were alerted to this issue by the Charity Law Association. It is quite technical for us laymen. I shall read carefully what the Minister has said and I suspect that the Charity Law Association will be content with the opinions that have been expressed in the Committee this afternoon. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 16 to 19 not moved.]

Clause 2 agreed to.

Clause 3 [The "public benefit" test]:

The Lord Bishop of Southwell

had given notice of his intention to move Amendment No. 19A: Page 3, line 11, at end insert "provided that any purpose falling within section 2(2)(c), which is presumed to be for the public benefit under the law relating to charities in England and Wales in force immediately before this section comes into force, shall continue to be presumed to be for the public benefit

The right reverend Prelate said: I am most grateful to the Minister for replying to my points, for the reassurances he gave and for the invitations he held out on the previous day of the Grand Committee proceedings. I am happy not to move the amendment.

[Amendment No. 19A not moved.]

Lord Phillips of Sudbury

moved Amendment No. 20: Page 3, line 14, at end insert "from time to time

The noble Lord said: This is a probing amendment. I want to be certain beyond any doubt whatever that providing guidance on the public benefit test, and construing what it means, will be carried out on a rolling basis. That is to say that the term "public benefit" must be understood in relation to the law on charities from time to time because if there is not a dynamic element, it is a dead duck. I hope to have a clear answer. I beg to move.

Baroness Scotland of Asthal

I am able to give the noble Lord the assurance he seeks. Clearly, it is implicit that when, in future, we talk about the law relating to charities in England and Wales, we shall mean the law as it stands at that particular time. The meaning of the phrase, the law relating to charities in England and Wales", is not altered by the inclusion of the words "from time to time". Therefore, we do not believe it is necessary to include the words "from time to time", although I absolutely understand that the noble Lord wanted me to have an opportunity to confirm that what he would most wish to happen will be the case. I am more than happy to do that.

Lord Phillips of Sudbury

I am most grateful. Amendment, by leave, withdrawn.

Clause 3 agreed to.

6.15 p.m.

Clause 4 [Guidance as to operation of public benefit requirement]:

Lord Phillips of Sudbury

moved Amendment No. 21: Page 3, line 19, after "the" insert "meaning and

The noble Lord said: These amendments are small, perfectly formed and quite important. They insert the words "meaning and" in Clauses 4 and 7. Both clauses talk about the objective of the Charity Commission in relation to the public benefit objective. Later we shall come to amendments that are more substantial when, unfortunately, I shall have to say a good deal more.

It seems to me to be important that the guidance provisions affecting the Charity Commission, and which after all will have a great deal of importance vis-àvis the new public benefit test, should be clear and specific. It seems to me obvious to say that if the objective of the Charity Commission is to promote awareness and understanding among the public about what public benefit is, the first thing one starts with is the meaning of public benefit and one then goes on to see how that works out in terms of operations or activities.

The heading to Clause 2 is, "Meaning of 'charitable purpose""'. The Charity Commission spends a great deal of its time and substance—it is its major function—deciding the meaning of charity. It is appealable to the tribunal and then to the High Court, but the Charity Commission is the guardian of the meaning of charitable purpose. Similarly, it will become the guardian of the meaning of public benefit, which is also appealable against. I view inserting those two words in Clause 4 and 7 as a common sense necessity. I beg to move.

Lord Best

I want to speak to this amendment and to Amendment No. 23.

Lord Bassam of Brighton

Amendment No. 23 is in a different group.

Lord Best

I may range more widely than I should in speaking to Amendment No. 21. My name appears in support of these amendments and I join the noble Lord, Lord Phillips, in pressing the case for clarity over the ways in which the Charity Commission is to interpret the new public benefit requirement in the Bill.

In supporting the noble Lord, Lord Phillips of Sudbury, I should pay tribute to his energetic and persuasive role on the Joint Committee on the draft Bill, of which I was a member. He gave comprehensive and expert advice, not only to members of the Joint Committee, but also to many of those presenting evidence to us.

During the course of the committee's work, it became clear that there were differences of opinion between the Home Office and the Charity Commission on the extent to which the removal of presumption of public benefit would make very much difference to the organisations already registered as charities, in particular to charities for the advancement of religion and the advancement of education, but also in respect of those concerned with health.

An important outcome of the committee's work was that the Home Office and the Charity Commission were brought together and their differences, to a large extent, resolved with the production of a concordat between the two. This agreement sets out principles for judging whether or not a charity—whether an existing one or a new one—meets the public benefit requirement and the concordat indicates that, rather than relying purely on case law from the past, the Charity Commission will develop new criteria which take account of social and economic changes in society. These amendments to Clause 4 seek to support that agreed position which was greatly welcomed by the Joint Committee within the legislation.

It has been good to hear of the Charity Commission's intentions to consult very widely and very carefully on what this means, not just for fee-paying schools and religious charities, but for the whole sector. While the Charities Bill is undoubtedly a very necessary and significant new measure, the downside has been to raise questions in the minds of many charities. Are we at risk of losing our charitable status? If so, what can we do to ensure that we will pass the public benefit test? If we find it is impossible either because of our constitution or because we cannot afford to make the changes required of us to satisfy the public benefit test, what will happen to us?

Until the position is made clear, many charities will feel anxious about their futures. Case law takes years to evolve. Although the Charity Appeal Tribunal should avoid the need for cases to be taken to the High Court and should speed up the process of establishing the legal position, it seems essential that the Charity Commission can carry on with the job of presenting a clear definition of public benefit as speedily as possible. Ultimately, of course, the final decision remains with the High Court, but the Charity Commission needs to issue its guidance promptly, consulting fully and sensitively along the way. The Joint Committee felt that there should be clarity on the basis on which the Charity Commission will do that, particularly on whether it can legitimately take account of changing circumstances in society.

The Joint Committee was so anxious about the blurred edges and opportunities for confusion here that it concluded that the basic principles for a definition of public benefit, as set out in the Home Office and Charity Commission concordat, should be replicated either in non-exclusive criteria included in the Bill or in non-binding statutory guidance issued by the Secretary of State". Those of us who served on the committee recognise that that recommendation may be a step too far. We are not seeking to table amendments to achieve exactly what the Joint Committee recommended, but this lesser amendment would give the Charity Commission the confidence and security to issue its guidance clearly taking account of changing social conditions— "changing circumstances". That clarification would seem very necessary if continuing wrangles and ongoing uncertainties are not to be perpetuated indefinitely following the passage of this important Bill. This is Parliament giving a lead to the Charity Commission. I support these amendments.

Lord Hodgson of Astley Abbotts

I apologise to the noble Lord for not having been in my place when he began his remarks, but I was when he finished. On these Benches, we have some difficulty with this amendment because we are very conscious of the delicate balance that has been struck on the issue of public benefit, which comprises the four elements of: first, removing presumption on the four great tests; secondly, handing the public benefit definition over to the Charity Commission; thirdly, allowing for the Charity Commission to make revisions; and, fourthly, requiring continuous compliance with the public benefit test monitored by the Charity Commission. Therefore, adding anything to this very delicate balance seems to us undesirable unless there are very strong arguments for it.

I am not clear what "meaning and" adds to awareness and understanding. It seems to me that the pressure that is on now to promote awareness and understanding essentially encompasses what the noble Lord seeks to achieve. For the reasons that I have explained, we are reluctant to meddle with the balance in any way, lest the delicate nature of it be upset.

Lord Wedderburn of Charlton

I should perhaps raise this point later, but I am physically unable to be here tomorrow. In replying, will the Minister say something about the Government's approach to the suggestion in the Joint Committee's report, after paragraph 97, of Professor Warburton's proposed definition on public benefit? I am not sure whether much good will come from advancing a long definition of public benefit, but if it can be put right, that would help to remove obscurity, as noble Lords have said. It may be that the Minister's brief refers to the point later on, in which case I shall happily read it, but I cross-reference the point here.

Baroness Scotland of Asthal

The noble Lord, Lord Phillips of Sudbury, has tabled a number of further amendments on which we will be exploring the precise nature of benefit. I hope that we will reach those amendments this evening, and I hope that my noble friend Lord Wedderburn will still be with us when we enjoy that part of the debate. I understand the nature of the inquiry that has been made by the noble Lord, Lord Phillips. For the reasons expounded by the noble Lord, Lord Hodgson, it would not be right to change. I will explain how we see it, as it may provide a little comfort for those noble Lords who may have concerns.

Clause 4 requires the Charity Commission to issue guidance in pursuance of its public benefit objective. That objective is in new Section 1B of the 1993 Act, as inserted by Clause 7 of this Bill. The guidance will have to promote awareness and understanding of how the commission intends to operate the public benefit requirement mentioned in Clause 3. It seems to me that in preparing and issuing the guidance in pursuance of its objective, the commission will have to do four things principally.

First, it will have to explain in its guidance what the public benefit requirement is—in other words, the nature and meaning of the requirement, which is what the noble Lord is seeking in the amendment. Secondly, it will have to explain in its guidance how it proposes to operate or apply the requirement in practice to charities of various types and characteristics. Therefore, I can understand the anxiety that the noble Lord, Lord Best, has highlighted that exists in charities not knowing precisely what these changes will be. Thirdly, it will have to carry out the public and other consultation mentioned in Clause 4. Fourthly, it will have to disseminate the guidance in a way that is calculated to raise awareness and understanding of what is written in the guidance. I know that some of the small charities—which do not have the full panoply of lawyers and people to come to this House and the other place to lobby on their behalf—do worry about that.

I am at one with the noble Lords, Lord Phillips and Lord Best, in believing that it is essential that the meaning of the public benefit requirement be explained to those charities and others to whom it is relevant. However, I am clear that this is already firmly implicit in the requirement as drafted, because the commission would scarcely be meeting its objective of promoting awareness and understanding if it failed to explain to people who were not aware and did not understand what the public benefit requirement was.

The amendment proposed by the noble Lord in fact adds nothing to the clause that is not already there, and I invite him to withdraw it. I am confident that the commission fully understands what the discharge of its duty under this provision will entail.

Lord Phillips of Sudbury

I am grateful for the explanation of the Government's position given by the noble Baroness. Perhaps I do not understand it, for she conceded my point that in promoting awareness and understanding the first thing that must be grappled with is meaning. She says that it is not necessary to put it in the Bill, although it goes on to talk about the operations requirement. I shall have to think about it. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts

moved Amendment No. 22: Page 3, line 22, leave out "from time to time

The noble Lord said: Amendments Nos. 22 and 23 are grouped with Amendment No. 24, proposed by the noble Lord, Lord Phillips. This is about frequency of revisions to the guidance as to the operation of the public benefit requirement. As we have just been discussing, the central objective is the promotion of awareness and understanding of the operation of the public benefit requirement. Clause 4(3) allows the commission to revise its guidance "from time to time". That is rather open-ended, and we wish to remove this option of revising the guidance as often as the Charity Commission wishes. That is achieved by our Amendment No. 22.

Our reason for that is fairly simple. Every time the Charity Commission chooses to revise its guidance on public benefit, there will be a cost to all registered charities—at the very least in checking whether they still meet the public benefit test. That was the point made by the noble Lord, Lord Best. Whether or not they meet the public benefit test under the new regime will be an ongoing concern.

Nevertheless, we accept that there will have to be revisions. A result of Amendment No. 23 is that we permit revisions but ensure that such revisions will occur no more frequently than once every three years. I accept that that is an equally arbitrary interval. We understand that a revision of guidance will be needed if changes in society bring about developments in the legal concept of public benefit. My noble friend Lord Swinfen has already referred to the rapidity with which these things are changing. When that happens, the Charity Commission will justifiably want to react. However, we do not believe that that will happen regularly enough to leave the provision open-ended as it is at present; nor do we believe that it is helpful for the charitable sector to have the rug constantly adjusted under its feet, even if not quite pulled from beneath it. It would be helpful if the Minister could outline how the Government believe that that will be tackled when the Bill becomes an Act. I beg to move.

6.30 p.m.

Lord Phillips of Sudbury

Amendment No. 24 stands in my name and those of my noble friend Lord Dholakia, the noble Baroness, Lady McIntosh of Hudnall, and the noble Lord, Lord Best. This is another probing amendment and it covers the same ground as that referred to just now by the noble Lord, Lord Hodgson of Astley Abbotts. Again, I want to be completely satisfied that, in giving the commission discretion from time to time to revise any guidance issued under this clause concerning public benefit, the commission will do so, in the light of changing laws or circumstances". That appears so obvious that I am sure the Minister will say that the amendment is not necessary, but I am a suspicious sort of fellow.

One problem with the amendments tabled by the noble Lord, Lord Astley, is that, if there were a change in the law—namely, a High Court decision—the commission would have to change its guidance. It could not sit around for three years and put something on the website. I am more inclined to accept the amendment of the noble Lord, Lord Hodgson, vis-àvis "circumstances" because the other aspect of the evolutionary common law principle is obviously that, if circumstances change, the nature of public benefit changes with it.

Everyone who has spoken on behalf of the independent schools in relation to this debate and before the Joint Committee—the noble Lord, Lord MacGregor, remarked on it earlier — acknowledged that the position today vis-àvis the attitude of independent schools towards spreading their public benefit is significantly different for the best of them compared with what it was even 10 years ago.

Therefore, I want to be absolutely satisfied that the Charity Commission must review its guidance in order to take account of what is happening within the sector itself. I do not want the exemplars of public benefit to be ignored as to the way they evolved the public benefit in their own schools.

Lord MacGregor of Pulham Market

I want to ask the noble Lord, Lord Phillips, a question in relation to Amendment No. 24. I am not a lawyer but I am advised by lawyers that this could be a restrictive rather than an enabling provision. I am concerned that social conditions or other things may not come under the definition of changing laws or circumstances and that they could be excluded as a result of agreeing to this amendment. As I said, I am not a lawyer but I am told that the courts, and possibly even the Charity Commission, might operate the legislation in that way. So the amendment might suggest that these are the only conditions that the Charity Commission can use in revising its guidance. That is why I am a little bothered about the amendment; it is nothing more than that.

Lord Phillips of Sudbury

Perhaps I may respond to the noble Lord, Lord MacGregor. He says that he is not a lawyer hut, through his long experience, he is a better lawyer than most lawyers. I believe that the word "circumstances" is about as wide a word as one could imagine and would certainly cover social circumstances and all other circumstances. So I do not accept whatever advice the noble Lord has received. But if this is a meaningful amendment that goes another stage, I should be very happy to talk to him about a change of language.

Lord Brooke of Sutton Mandeville

The right reverend Prelate will recall that the phrase "The weakest go to the wall" was determined by the architecture of mediaeval churches. In this Grand Committee, one might amend the saying to "The weakest and the quietest go to the wall". Speaking from this lowly position, I have to express admiration for the Front Bench speakers on the Opposition side. In Amendment No. 20, the noble Lord, Lord Phillips, on behalf of the Liberal Democrats, sought to insert the words "from time to time" and, eight lines later, my noble friend Lord Hodgson is, in a different clause, taking them out. As a member of the general public, I have to express contentment with the Bill as it is currently written and which I have no difficulty whatever in understanding.

Baroness Scotland of Asthal

If I may respectfully say so, I agree. I understand the concern that the noble Lord, Lord Phillips, expresses. I understand that his beating heart beats a little faster when he looks with a suspicious eye on some of the issues. I understand, too, that the noble Lord, Lord MacGregor, has put his finger on the difficulty raised by the amendment put forward by the noble Lord, Lord Phillips. Therefore, for the avoidance of doubt, perhaps I may set out our understanding of what this provision, as it is currently drafted, means.

The whole purpose of allowing the Charity Commission to revise its guidance "from time to time", rather than at any fixed intervals, is to allow it to make revisions as the need arises. If, for example, as the noble Lord has just indicated, a decision of the new tribunal to be established under the Bill or a decision of the court or an Act of Parliament affected the public benefit requirement, the commission would want to revise its guidance promptly to take account of that event.

Returning to the other amendment, if, for example, a new analogous situation arose as a result of the technical and other data which meant that guidance given previously was obsolete, I am sure that the commission would want to address that issue promptly so that everyone would better understand the type of things which were now to be included in public benefit and, indeed, in charitable purpose.

The amendments in the name of the noble Lord, Lord Hodgson, would prevent the commission doing that if there had been a revision less than three years beforehand. The commission would then be forced to continue with guidance which it, the legal community and perhaps also the charitable sector knew was incorrect, out of date and misleading, but that would probably not be generally known by those who might be adversely affected by it. I know that that is not what the noble Lord, Lord Hodgson, seeks, but I am glad to have this opportunity to clarify that. As always, the noble Lord, Lord Brooke, has it in one.

Lord Hodgson of Astley Abbotts

I am grateful to the noble Baroness. These were probing amendments and we were seeking to avoid capricious revision of the public benefit test, with all that that means for the thousands of charities which have to comply with it. I think that I am satisfied with what the noble Baroness has told me, and therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 23 and 24 not moved.]

Lord Hodgson of Astley Abbotts

moved Amendment No. 25: Page 3, line 24, after "consultation" insert ", including consultation with the charitable sector,

The noble Lord said: We are staying on the same point with this amendment, but we are now working through the consultation aspects, as opposed to the timing aspects, of the revisions to public benefit. If revisions in guidance are being considered, under the Bill as presently drafted the commission has only to carry out such public and other consultation as it considers appropriate. We argue that it is unfair for the commission to make revisions without a specific duty to consult with the charitable sector—the very people on whom its revisions have an impact. Amendment No. 25 inserts the appropriate words in line 24 to ensure that that happens. As drafted, the commission need not consult on revisions when, in general terms, it considers it unnecessary to do so. That is not a strict enough test. As drafted, the Charity Commission has absolute discretion not only to decide whom to consult but whether to consult at all. We accept that it needs some flexibility, and so our Amendment No. 26 ensures that revisions to public benefit guidance do not have to involve consultation when the commission considers that the revisions are de minimis. Restricting non-consultation provisions to de minimis changes ensures that the commission as a body will have to make decisions in relation to the significance and implications of the changes that it intends to make, as opposed to the loose test of what it considers necessary.

Finally, Amendment No. 30 removes the final seven words of Clause 4(5). which states: The Commission must publish any guidance issued or revised under this section in such manner as it considers appropriate". The final seven words clearly give the commission carte blanche to publish the guidance in any form that it so desires. The careful drafting that the Bill team has put in place to underpin the purpose of this important clause, and indeed several related clauses, could be negated by unhelpful or poorly circulated guidance publication. I beg to move.

Baroness Scotland of Asthal

I am not able to accept the amendment. However, I hope that the noble Lord will be content after I have explained why. The Bill gives the Charity Commission the duty to carry out such, public and other consultation as it considers appropriate", before issuing its public benefit guidance. It does not give the commission an express duty to consult charities or any other specific organisations or persons, as the noble Lord made clear. Instead, it gives the commission discretion to consult whomever it considers appropriate.

That provision does not allow the commission to exercise its discretion in a whimsical or unreasonable way. The purpose of consultation is to allow interested parties and organisations to give their views on the matter under consultation, and any statutory consultation must be conducted to that end. In practice, that will require the commission to identify interested persons and organisations, give them the chance to make their views known and take their views into account before finalising things. That gives the commission no latitude to ignore people or organisations with an interest. If it carried out a consultation in an irrational way—by, for example, ignoring groups that had a clear interest—it could be liable to judicial review.

The amendment would give the commission an express duty to consult the charitable sector when it issues guidance, and every time that it revises it. The exception is that, on a revision to the guidance, the commission would have discretion not to consult at all, and it might exercise that discretion if the revision were so minor as not to warrant consultation. That is itself food for debate about what will fall within the categorisation of de minimis.

A duty to consult the charitable sector amounts to a duty to consult, if not each of the 400,000 or so charities in England and Wales, at least a large enough number of charities or their representative bodies to be sure of getting the authentic views of the whole sector. That would certainly be appropriate when the commission was preparing its first guidance, but it might very well not be appropriate for a minor revision—for example, a change to a paragraph which affects only a specific type of charity. To require the commission to consult the charitable sector generally in such circumstances could be inappropriate and wasteful of resources.

6.45 p.m.

The commission has already made public its general approach to consultation before issuing the guidance for the first time. It says that it will aim to engage as wide a group of interested people as possible and that it will welcome the views of people and organisations, including those within the sector, funders, users of charity services and the general public.

If the interest in the Bill is any indication of the interest generally in the sector, I am confident that everyone will know that the guidance is about to be issued, and that all those interested will have an opportunity to have their views heard. The Committee can safely leave it to the commission to decide who it is appropriate to consult in any particular case, and I hope that the noble Lord will be content with what I say. The use of websites and so forth has greatly assisted the frequency with which such information can be debated and dealt with.

Lord Hodgson of Astley Abbotts

I am grateful to the noble Baroness; that seemed a very helpful reply. As I understood what she said, there will be a duty on the Charity Commission to have proportionate consultation—the bigger the change, the wider the consultation. If that is the case—if that is what we have achieved—we are very happy with it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 26 not moved.]

Lord Phillips of Sudbury

moved Amendment No. 27: Page 3, line 28, at end insert— ( ) Charity trustees must have regard to any guidance given by the Commission under this section.

The noble Lord said: Amendment No. 27 adds a subsection to Clause 4, which is the clause that determines the guidance as to the operation of public benefit requirement. I would like to think that it is a common-sense but necessary requirement. As the Committee will appreciate, "have regard to" does not mean that the trustees have to follow guidance, but they have to consider it. The guidance itself does not have the force of law, so this is not something with which charity trustees should have any anxiety.

I note that the requirement that charity trustees must have regard to guidance is in other parts of the Bill. For example, Clause 34, which deals with remuneration of trustees, states that, charity trustees must have regard to any guidance given by the Commission concerning the making of such agreements"— that is to say, trustee remuneration agreements.

Clause 4 is immensely important, particularly as Clause 3 gives no clear indication of what public benefit is. The amendment is necessary, so I beg to move.

Lord Hodgson of Astley Abbotts

I have one question. The amendment seemed unobjectionable but I did not understand why, if the trustees did not act appropriately with regard to guidance, they would not be removed by the Charity Commission. It is within the Charity Commission's powers to get rid of them, so the matter is self-evident.

Lord Phillips of Sudbury

I am sure that the noble Lord will agree that one does not want nuclear deterrents, but to make sure that trustees act sensibly. Although a sensible trustee would have regard to guidance, the provision is in other parts of the Bill and this is a particularly important clause. The amendment is a common-sense and sensible provision.

Baroness Scotland of Asthal

The Government do not believe that the charity trustees should be compelled to read the commission's guidance on public benefits in toto. Elsewhere in the Bill there is a requirement for trustees to "have regard to" guidance published by the Charity Commission. However, the circumstances are a little different. The new Section 73B inserted by Clause 34 enables the remuneration of trustees for providing services to the charity. One of the requirements of the provision is that before entering into an agreement the trustees must have regard to any guidance given by the commission concerning the making of such agreements. This would be specific guidance directed at trustees to advise them of their responsibilities and options. It would be for the trustees to consider that in determining the course of action that they chose to take.

That is very different from the public benefit guidance which the commission will be required to publish under this clause. The public benefit guidance is intended to set out and explain the law relating to public benefit. Its contents will not be in the nature of instructions or directions to trustees, and the guidance will be available to trustees. But the Government do not believe that it would be sensible to compel trustees to read each and every part of that guidance. It is very much on that basis that the Government feel that the amendment is not necessary.

Lord Swinfen

Before the noble Baroness sits down, I agree with her entirely that you cannot compel trustees to read every bit of guidance produced. You can lead a horse to water but you cannot make it drink. But I feel that if guidance is published and the trustees go against that guidance, they should have been aware of it.

There may be a situation where a charity owns a certain amount of property. Quite obviously, as it must maximise the assets of the charity, under guidance it will be invited to let that property in order to maximise the income. But what is the position if the charity has been set up specifically to use property owned by the charity in a village to provide low-cost housing for local people at lower than the market rent because the market rent is set by commuters who are not working in the area? They can have regard to the guidance on the rent to be charged but they do not have to follow it. I know of one instance where a charity has been forced to let at market rent by the Charity Commission and local people have been squeezed out.

Baroness Scotland of Asthal

I hear what the noble Lord says in relation to that example. That is why earlier I made reference to the fact that, when those specific issues come to be considered, noble Lords will see that elsewhere the Bill states that the trustees should have regard to the guidance. On this issue, we are considering whether the trustees should be obliged to read, and therefore inwardly digest, everything in the public benefit guidance.

I can see that this is an area that we should reflect upon, and I shall take it away and come back on Report. I do not by any means guarantee noble Lords that there will be a change, but I think that the matter probably demands a little consideration, bearing in mind that it is something to which the noble Lord, Lord Hodgson, does not seem to raise any objection and it is urged by others. So we shall certainly take away the issue and look at it again.

Lord Phillips of Sudbury

I am grateful to the noble Baroness, particularly for her last words. In explaining the difference in new Sections 73A and 73B concerning a charity wishing to receive guidance on remuneration, the noble Baroness talked in terms of the trustees being instructed. I do not think that that is true. I believe that the Committee will find that that guidance is not instruction, whether it is in new Sections 73A or 73B or here.

My other point is that, with the greatest respect to the noble Baroness—although I am a much older lawyer, she is probably a better one—I do not believe that the statutory requirement to "have regard to" is a statutory requirement to read every word. If it were, there would be a great deal of legislation where that requirement was breached on a number of occasions. I suggest, as does the noble Baroness, that we think about this matter before the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury

moved Amendment No. 28: Page 3, line 28, at end insert— () In carrying out any such consultation in relation to charities which charge for their services the Commission shall consider the extent to which access thereto is restricted and the public benefit consequences thereof.

The noble Lord said: I must apologise at once for the fact that— for the first and last time, I hope—I shall speak at some length on an amendment in my name. The amendment may be somewhat unclear. It stipulates that, in carrying out consultation in relation to charities which charge, the commission shall consider the extent to which access thereto is restricted and the public benefit consequences thereof. When I spoke to the noble Lord, Lord Bassam, about this matter prior to today and told him that there were some important underlying issues, he encouraged me to set them out and so I shall.

First, I refer to the concordat to which the noble Lord, Lord Best, has already referred. Some Members of the Committee will know and some will not that, when the Joint Scrutiny Committee started its work, there was a striking disagreement between the view of the Home Office and the view of the Charity Commission in relation to the impact of the draft Bill vis-à vis public benefit. The draft Bill and this Bill are different in that there was no Clause 4 in the draft Bill. But, as noble Lords will realise, it is Clause 3 which, so to speak, calls the tune here. Clause 4 is merely guidance on Clauses 2 and 3, which is where the law lies. So nothing has changed in terms of the Joint Scrutiny Committee's work on this issue.

I think that the Minister in the other place, Fiona Mactaggart, got stroppy with the Home Office and the Charity Commission and said, "We can't go on like this. We've got to reach some sort of concordat", and that is what they came up with—a so-called concordat. It is explicitly built upon Re: Resch—a 1967 Privy Coucil case—and is the one case to which the concordat refers.

That is also true of the guidelines issued by the Charity Commission last month as to the operation of the legal principles of public benefit. It quotes from the concordat that, an organisation which wholly excluded poor people from any benefits, direct or indirect, would not be established and operate for the public benefit and therefore would not be a charity". Noble Lords should note the words "wholly" and "indirect". That is a direct quote from the judgement of Lord Wilberforce in the case of Re: Resch. He, in turn, quoted one of the great 19th century judges, Lord Linley, who stated in the case of MacDuff: I am quite aware that a trust may be charitable though not confined to the poor; but I doubt very much whether a trust would be declared to be charitable which excluded the poor". The Committee should note that Lord Linley did not say "wholly excluded". That is Lord Wilberforce's gloss.

Lord Wilberforce also called in aid the judgment in Taylor v. Taylor. In that case, the gift was left to set up what in the judgment were called, private lunatic asylums for the benefit of well-to-do persons who could pay for their treatment … The testator has, however, certainly not expressly excluded the poor from the benefit of this trust". On that narrow basis, it was held to be a good charitable gift.

Reference by Lord Wilberforce to "wholly excluded" in the Resch case suggests the same meaning as the phrase "expressly excluded" in Taylor v.Taylor—that is, excluded as a matter of law or purposes and not excluded as a matter of fact. That also seems to be clear from other parts of Resch.

The circumstances in Re: Resch were a gift by will to the Sisters of Charity, who ran a private hospital alongside a public one in Australia. There, too, there was no constitutional exclusion of the poor. However, the Sisters of Charity awarded no bursaries or free treatment, and the cost of obtaining their services was clearly beyond the poor and the poor-ish unless they had taken out costly private medical insurance, which is intrinsically unlikely if one is poor. One argument of the Attorney-General in successfully trying to uphold the gift was that, the test is not would poor people use the hospital but is it available to them? Their unwillingness to use the hospital is immaterial". For "unwillingness" read "inability".

7 p.m.

One can imagine a similar line being pursued by a backward independent establishment after the Bill becomes law, unless Clause 4 is amended along the lines I propose in the amendment.

The court in Re: Resch said that although effectively the hospital was only used by the well-off, there was sufficient public benefit for it to be a charity in that, and this is important: A need exists to provide accommodation and medical treatment in conditions of greater privacy and relaxation than would be possible in a general hospital"— that is, the one alongside.

That all fed into the head-note summary of that case, which states that, it would be a wrong conclusion to draw from the cases that a trust for the provision of medical facilities would necessarily fail to be charitable merely because by reason of expense they could only be made use of by persons of some means". It went on, the test is essentially one of public benefit and indirect as well as direct benefit entered into account and in the present case the clement of public benefit was strongly present since the evidence here showed that the need existed for the type of accommodation and treatment provided by this hospital"— for example, luxury facilities, as some would call them.

It seems clear to me that if these tests were applied to an independent school, which made little or no concession to the poor by way of bursaries or the like—not making its facilities available more widely—it too could claim that it met a need of the same sort; namely, a type of education and schooling which provided smaller classes, better facilities, exclusion of difficult pupils and so on.

That in great brevity is why Professor Luxton and Mr Hubert Picarda and perhaps the Charity Commission. plus a multitude of other lawyers, including myself, consider that for this Bill to go through with Clause 4 unamended would lead at best to confusion and at worse to no change at all in the law regarding public benefit. That, as I said at Second Reading, would be wrong in terms of the avowed intent of the Government in making the public benefit reform, wrong in terms of any modern notion of charity, and wrong too in the view of those whom I would call "the progressive people" within the independent sectors. I only have to think back to what the noble Lord, Lord MacGregor, said earlier today. He said that the public benefit hugely benefits changes that all of us want to see.

So the amendment, which is modest and certainly not radical, would, I believe, entitle the Charity Commission in applying the public benefit test to look at the effect upon access of charging by charities. It would obviously not affect, for example, museums, galleries, theatres and so on, which have no state subsidy and have to make ends meet and in the process impose entry fees which deter some poor people. The same would go for progressive independent schools. But it would, I suggest, cut off an argument for satisfaction of the public benefit test which relied upon the narrow issue of provision of superior facilities, as mandated in the decision in Re: Resch, supplemented by the argument that by taking patients and pupils out of the state sector they were relieving state funds.

For me, the Government's reaction to this amendment will characterise their seriousness of intent vis-àvis public benefit. It is a careful, limited amendment, which, it is no secret, will be thought wholly inadequate by many members of the governing party in the other place. I speak as one who does not want to undermine the independent schools and hospitals, but, as I explained at Second Reading, I think the amendment is necessary and I want such schools to be taken at their word.

Something along the lines of the amendment therefore needs to be done to Clause 4 if the Charity Commission is to be able to do its work without fear of being obstructed, potentially successfully, by the kind of arguments that I have mentioned. The amendment has the strong support of the National Council for Voluntary Organisations. Universities UK and others.

I close by referring to the evidence given to the joint scrutiny committee by the Independent Schools Council. Jonathan Shepherd said that really, "the important point" about public benefit, is the extent to which … independent schools, extend the access to their benefits beyond the class of people who can afford to pay full fees". That puts it in a nutshell.

Finally, I quote Hubert Picarda, and this underlies my concern about the legal uncertainty of the status quo in the Bill. He said that, the mere reversal of the presumption of public benefit cannot change the declared law on this point". The declared law is not changed by Clause 4, which is merely about guidance. Without the amendment I believe that there is a real danger that what all Members of the Committee want to see could be frustrated, not as regards the better schools and hospitals but as regards that minority which basically wants to do little or nothing. I beg to move.

Lord MacGregor of Pulham Market

This is again a very complex legal area. I hesitate to enter into it. The noble Lord has just said that the declared law is not changed by the Bill. So, is the declared law changed by the amendment?

Lord Phillips of Sudbury

Gently.

Lord MacGregor of Pulham Market

My understanding was that, precisely as set out in the amendment, the extent to which access is restricted and so on is part of Re: Resch and would be part of what the Charities Commission would have to do in any case. I have no difficulty in understanding that point and knowing that it would be what it would do.

The point concerning me was a legalistic point. I am told that under the canons of construction of statute, anything that appears in statute assumes that you are seeking to change the law. What puzzles me is whether the courts would then start to say that as this appears the law is changing and the case law would not apply. I should like to reflect on that issue. I shall certainly need to take legal advice on it. That is the point that concerns me about the amendment and I look forward to hearing what the Minister has to say.

Lord Swinfen

I am not sure that what I am going to say is entirely relevant to this amendment. I would like to read the noble Lord's introduction because I sometimes find these things rather difficult to take in. The point has worried and concerned me for a number of years. What is the position of charities that care for children, the elderly, physically and mentally disabled people, on behalf of local authorities who have a legal duty to care for those people, but the charities are caring only for people sent to them by the local authorities? Are they really producing a proper charitable and public benefit? How will the amendment affect that? I have no idea what the answer will be.

Lord Hodgson of Astley Abbotts

I return to the issue of the delicate balance that we discussed earlier this afternoon. We, on these Benches, have no problem with the statement by the Charity Commission that it proposes to begin its review of charitable status by looking at the fee-charging charities. But we have some problem with the idea that charities which charge for their services should have to pass further additional tests or be treated differently from those that do not charge fees. It seems to me that this is one of the thrusts of the noble Lord's amendment.

When it comes to the commission issuing guidance, so long as it passes the public benefit test, surely all charities should be treated equally. Charities are required to be not-for-profit, but that does not mean that they cannot make a profit. Charging for the provision of charitable services does not deprive a charity of its charitable status, even though it may generate such a profit. The extent or size of the fees charged is not specifically limited, but, as I think the Committee agrees, must not be such as to remove the element of public benefit.

I am not going to repeat what the noble Lord has said. Some of the things that I wished to quote from Lord Wilberforce have already been quoted by the noble Lord, Lord Phillips. Re Resch's Will Trusts is a document that is dense, to say the least, but it has become part of my bedside reading. The ruling of the Privy Council was that it would be wrong to conclude that, a trust for the provision of medical facilities would necessarily fail to be charitable merely because by reason of expense they could only be made use of by persons of some means". The court held that the public benefit was "strongly present" in this case because the need for the service was undisputed, even though some of the poor might be excluded. Lord Wilberforce noted that there was an issue here, that, the evidence shows that it cannot be said that the poor are excluded: such exclusion as there is, is of some of the poor". From our point of view, the law will allow the degree to which a charity achieves public benefit to be determined by the commission. Once that has been determined, if the balance is to be maintained special provisions and tests should not be enforced upon fee-charging charities. The conclusions of Re: Resch remain unquestioned. Indeed, the ruling has stood for 35 years. I am concerned. I think that the noble Lord admitted this. He was trying to ease the balance slightly. Making special demands for the commission to treat the fee-charging charities differently upsets the stability and takes us back to the point made by the noble Lord, Lord Best, about concerns about whether charitable status will remain, and has the effect of casting a doubt over the status of any fee-charging charity.

Therefore, I shall be interested to hear the Minister's reply, but I am not sure that I am for shifting the balance, even in the small way—if, indeed it is a small way—that the noble Lord, Lord Phillips, suggests.

Baroness Scotland of Asthal

I know that we are now entering very delicate waters indeed, so I shall try to express the Government's view with an appropriate degree of care and delicacy.

The Charity Commission will be required to publish guidance with the aim of promoting awareness and understanding of the operation of the public benefit requirement. We have already discussed that this evening. The requirement is that a purpose falling within Clause 2(2) of the Bill must be for the public benefit if it is to be a charitable purpose. That will apply to all charities, whether or not they are in receipt of fees. The Bill contains no new definition of public benefit but preserves the definition established and developed by case law over time.

Public benefit is in many senses the very foundation of charity, and the Government attach great importance to it. It is essential that organisations that qualify as charities, and which attract fiscal privileges and public trust as a consequence of their charitable status, are, and are seen by the public to be, organisations which deliver true and identifiable public benefit. Otherwise, the concept of charity itself could fall into disrepute. So all the cases referred to by the noble Lord, Lord Phillips, underpin, highlight and give voice to the truth of that statement. I can reassure the noble Lord that the Government are absolutely serious in their intent in the way that public benefit needs to be viewed.

The commission has published draft guidance to illustrate what it expects its approach to be if the Bill is enacted in its present form. In that document it makes clear that, in carrying out public benefit checks on new and existing charities, it will follow and apply general overarching principles on public benefit, which are explained in a second commission document called Public Benefit—the legal principles. I am sure it is a document with which the noble Lord, Lord Phillips, is familiar. If he does not have it on him this very moment, it is probably crafted on his very heart. That second document sets out the meaning of public benefit and considers a number of factors which affect whether an organisation is for public benefit. One factor is the charging of fees for services. I reassure the noble Lords, Lord Hodgson and Lord MacGregor, that there is no inherent incompatibility between charging for services and charitable status. I hope that that will comfort the noble Lord, Lord Swinfen, as well.

7.15 p.m.

However, it is plain that the charging of fees can in some circumstances affect the level of public benefit that an organisation delivers, and thus affect its charitable status. The commission's documents explain how the charging of fees can affect public benefit and how, in practice, the commission will go about checking the public benefit of organisations which charge fees. For example, a charity running a care home might charge large fees but, if those are paid on the residents' behalf by local authorities, the size of the fees does not restrict access. People of modest means have as much chance of getting a place in the home as wealthy people.

Lord Swinfen

It was not the size of the fee that worried me, but that access was restricted only to those appointed by the local authority to have a place in that home. The duty of the local authority has been entirely taken over by the charity providing the home.

Baroness Scotland of Asthal

The local authority will provide the assessment and access to that place. We do not foresee difficulty in falling within the charitable purpose. To date, there has never been any such difficulty. As structured, the Bill does not change that position in any way. We reasonably believe that those who are currently covered and fulfil that function will continue to be able to satisfy that, so it will cause no real difficulty. I will write to the noble Lord if I have forgotten or failed to look at any new or other case that might change that. However, to the best of my knowledge, he can be confident that no one need be troubled.

The central question on the effect of the fee-charging on a charity's public benefit is the extent to which the charging of fees restricts access to the benefits of the charity's services or facilities being charged for. That will of course be for the commission to examine carefully in the case of individual fee-charging charities or groups of charities. We cannot pre-empt the outcome of the commission's checks, but we are confident that they will be carried out with rigour. We would not be surprised if the commission identified some charities whose fee-charging restricted access to the benefits of those charities' services and facilities to such an extent that they could not demonstrate sufficient public benefit. The commission's checks will, it must be remembered, be carried out after the abolition of the presumption of public benefit that some types of fee-charging charity have enjoyed up to now.

A few charities may have cloaked themselves in the presumption in order to get a charitable status to which they would not otherwise have been entitled. It is clear that that cloak has been removed. We confidently assume that all those who genuinely provide a charitable service will be able to continue to provide those services. Removal of the presumption will mean that any charities which might up to now have hidden behind it will not be able to do so. For some charities that will be routine, as public benefit will be self-evident. It will be absolutely clear in their case, with no questions. For others it might be difficult and, for a few, impossible.

In carrying out the public benefit checks, the commission will look at all the benefits —direct and indirect—that charities purport to provide. A direct benefit is a benefit provided through, for example, a service or a grant directly to a person or group of people whose needs will be met by the charity's provision. An indirect benefit is a benefit that accrues to a person or group even though they are not the direct recipients of the charity's services, grants or other provision. A charity's public benefit, overall, will be a mixture of direct and indirect benefits, and any commission decision on whether a particular organisation meets the public benefit requirement will take into account both kinds of benefit.

The Independent Schools Council agrees that, independent schools will need to demonstrate that they provide public benefit". That is a direct quotation from its publication. It goes on to say that it supports, the change to the law which removes the presumption from educational and other charities". It recognises that, the decision for each school on whether the benefits are sufficiently widely available will be on a case by case basis". It is right that I quote it directly because that is the schools' shared understanding. The council further believes that, indirect public benefit is a factor to be taken into account but is not enough on its own to ensure charitable status".

It appears that the independent school sector and the commission are at one in their understanding of what each will have to be assured of before charitable status will be conferred. That is a very healthy and rigorous position in which to find ourselves.

It is right for us to acknowledge something said by the noble Lords, Lord MacGregor and Lord Phillips. Much has changed in the past 10 years. Many charities saw what was coming on the wind and changed their behaviour to demonstrate more easily that public benefit was being derived. That has inured to the public's benefit. The very existence of the Bill, and the fact that there has been some trenchant conversation on the issue, will have been a further spur to ensure that those who hesitated about making their public benefit apparent will do much more to ensure that it can be discerned.

Although the focus has to a large extent been on independent schools, there are of course other types of charities that charge fees for their services or facilities—for example, the charitable private hospitals about which we heard earlier, recreational charities that hire out their facilities, arts and heritage charities that charge for performances or access to land or buildings, and care homes. The principles on the effect of fee-charging apply to all of them. That is a significant change with the Bill.

As the Bill stands, it is clear that, in operating the public benefit requirement, the Charity Commission must and will consider to what extent a charity's fee-charging restricts access to the benefits provided by its services and facilities. It follows that we do not think that the amendment adds anything to the Bill. However, we rejoice in the fact that there seems to have been a meeting of minds of those who have looked at the Bill in both the independent school sector—a number of people spoke about it—and the commission. It is now absolutely clear that we have unity of purpose and understanding in the way in which the matter will be viewed in future.

Lord Phillips of Sudbury

I am grateful to the noble Baroness for that full response and I am grateful to other Members who have contributed to this mini debate. The noble Lord, Lord Hodgson, adopted a coy and cautious line which I shall look forward to discussing with him, perhaps outside the Chamber.

The noble Lord, Lord MacGregor, said that he had been advised that any change must mean a change in the law. Yes, there is no point in putting something in the Bill if things will not be taken further forward, but we should not forget that Clause 4 is a guidance clause. It is not a law clause in the sense that it does not change the law; it merely talks about guidance in relation to the law.

All that my amendment would do for certain—I shall return to the Minister's remark that it is unnecessary—is put beyond doubt the fact that in looking at public benefit, the Charity Commission must consider access issues. I cannot for a minute blame the Minister for failing to address the issue because she had not heard my boring legal argument. I hope that in the days to come she will consider what I said and that if she is not so certain that the case of Re: Resch supports her position, I should be grateful if she would think again. I am convinced that it does not provide anything like adequate, clear support for the proposition to which we are all adhering. I conclude by saying that the Independent Schools Council has made clear statements about public benefit and how it wants to see the independent sector move on. So have some of the people who appeared before us in the Joint Committee. It is always the best in any group who appear before such committees—always the people who will be able to advocate the line which, without being cynical, they know needs to be heard.

My concern is that when the dust settles and the Bill is passed, things will change. Policy and personnel can change. In any event, the ISC does not have control over its large membership, many of which are not charities at all. I am concerned, and I shall be surprised if the noble Lords, Lord MacGregor, Lord Hodgson and Lord Swinfen, and Uncle Tom Cobleigh and all, are not in agreement that in three years' time we must not have a backsliding on the widening extension of the benefits of independent schools through their communities with a number of schools saying, "We have never done this sort of thing and we do not propose to do so", leaving the Charity Commission with a less-than-good basis on which to challenge—

Lord MacGregor of Pulham Market

I thank the noble Lord for giving way. Surely, schools in that situation are not only independent schools. I can assure him that there has been much consultation and a huge amount of guidance has been given to all the independent schools in the area. Does he not agree that if a school did what he suggested and said, "We do not need to bother about it", it will fail to pass the public benefit test?

Lord Phillips of Sudbury

That is precisely what the argument is about. All of this hinges on a 40 year-old case because there are precious few authorities in this field. The concordat cites only one case—Re: Resch. What I have endeavoured to do today—I am sorry I have spent so much time doing it—is to demonstrate that Re: Resch is a blancmange. It is a foundation for nothing but a sinking feeling. That is why I want the Charity Commission at least to have confidence when it is faced—I will not say if—with some schools which, frankly, will want to do the bare minimum and when it is faced with a legal challenge. Believe me, I know all the legal advice that has been given and I should have declared an interest that my firm does work for the ISC. I am therefore well aware of all the tides and eddies. When that challenge comes, as it will, I do not want us then to say, "My goodness, I never realised that we went to war with a straw lance". That is all.

Baroness Scotland of Asthal

I listened with great interest to the noble Lord's analysis. I can assure him that I will read it again and that we will further consider this matter on the next occasion we meet.

Lord Phillips of Sudbury

I beg leave to withdraw the amendment.

[Amendments Nos. 29 and 30 not moved.]

Clause 4 agreed to.

Baroness Scotland of Asthal

This may be a convenient moment for the Committee to adjourn until tomorrow at 2 p.m.

The Deputy Chairman of Committees (Lord Brabazon of Tara)

The Committee stands adjourned until tomorrow at 2 p.m.

The Committee adjourned at half past seven o'clock.