HL Deb 22 July 1953 vol 183 cc747-848

3.6 p.m.

VISCOUNT SAMUEL rose to refer to the debate in this House on June 22, 1949, on a motion calling attention to "the need for the encouragement of voluntary action to promote social progress"; to ask Her Majesty's Government whether they propose to take any action on proposals then put forward, having regard particularly to the recommendations of the Committee on the Law and Practice Relating to Charitable Trusts, appointed in January, 1950, in their Report published in December, 1952; and to move for Papers. The noble Viscount said: My Lords, the Motion which I am about to move draws attention to a debate which took place in your Lordships' House four years ago. It was a debate on the need for the encouragement of voluntary action to promote social progress.

That debate aroused very considerable interest in the public at large and in the Press, and, as a consequence of the views expressed in your Lordships' House, the Government of the day appointed a Committee to review a large part of that field. The Government on that occasion had as their spokesman the noble Lord, Lord Pakenham, who made a forthright declaration of policy, giving strong support to the ideas that had been put forward in the course of that debate. Now that another Government are in office, it is time to take stock, to give an opportunity to Members of your Lordships' House to present their views on this important subject, and to invite the Government to state what is their attitude with respect to it.

As to the value of voluntary organisations, there can be no two opinions. Modern civilisation realises very fully that the individual cannot be left unaided in the face of circumstance. The words of Thomas Hobbes are often quoted, that without society, the life of man would be solitary, poor, nasty, brutish and short.

Civilisation has set to work for centuries past to bring aid to the individual through churches, schools, universities, hospitals, almshouses, and through all the agencies of benevolence. However, in the last century, and the present, these have proved inadequate. After the Industrial Revolution there were vast populations of great cities and a highly complex society, and it was found that a mere laissez faire individualism, supplemented as it might be by voluntary organisations, was not sufficient. Consequently, the State, including the local authorities, took active steps in many spheres in the matter of education, public health, care for the aged, and national insurance, to ensure for every individual at least a minimum standard of comfort.

We now realise that perhaps during that period, and especially in this century, our thoughts having been too much concentrated upon State action, owing to the rise of the Socialist movement and its emphasis upon nationalisation and the like, it has almost come to seem as though the only factors in society of importance were the individual, on the one hand, and the State, on the other. Now we are beginning to realise that that is not so, and that there are two agencies of supreme importance in between. One is the family, and the other is the voluntary organisation. In an age of bureaucratic institutions, the individual person cannot, in his human relations, do without a family: you cannot expect much mother love from an incubator. But the family is not the subject of our discussion to-day. Your Lordships gave time to it on a quite recent occasion, speaking about the family in itself. To-day I am inviting you to consider that other great field, voluntary organisations—what the noble Lord, Lord Beveridge has described as "private enterprise for social progress. "That, of course, includes friendly societies, trade unions, and the co-operators; and it includes also in this country some 300 great national organisations affiliated to the National Council of Social Service, with local branches numbering many thousands. These are a part of what we call the British way of life; they are indispensable to it, and, indeed, to civilisation in all countries at its highest.

It was pointed out in the last debate that at the present time a new situation had arisen. Conditions are becoming more and more unfavourable to the efficient and successful working of these voluntary organisations—and that for two reasons. One is that their costs of administration, like all other costs, have risen year by year; the other is that at the same time the Welfare State has, through taxation, been draining away the private resources upon which these organisations have always had to depend. The noble Lord, Lord Pakenham, speaking for a Labour Government, said this as a declaration of Government policy—he was referring to a book written by Lord Beveridge on this subject, a book which is now a classic on this matter—I quote from the OFFICIAL REPORT, Vol. 163, Col. 127: The noble Lord's first point is the co-operation of the public authorities and voluntary agencies. In his book, he rightly describes this as an accepted policy. It is certainly the policy of the Government.

Lord Pakenham went on to say: The expansion of statutory social services must on no account be allowed to result in the drying up of voluntary effort. Both economy and the health of our society depend on our strengthening and encouraging the voluntary effort, wherever possible, rather than supplanting it…I wish to make it clear that the Government agree that the matter cannot be left where it is now. We agree that something needs doing, and doing without delay.

That Government took action a few months later, in the appointment of the Committee to which I have referred, as a first step; and I would now ask Her Majesty's present Government whether they are pursuing or are prepared to pursue in principle the same course as their predecessors.

I have dwelt upon this general consideration at some length because it is my chief purpose to try to establish with your Lordships' House this principle of the importance of seeing the voluntary organisations maintained; for if that is agreed, then I feel sure that means will be found to fulfil that purpose. The proposals which were put forward in the previous debate included the overhaul of the present existing charities, which have been most carefully examined by Lord Beveridge in the book, Voluntary Action, to which I have already referred, and which are dealt with also in the Report of the Committee On Charitable Trusts over which the noble Lord, Lord Nathan, presided. That Report, as everyone who has read it will agree, is of the highest value. The Committee found their task a laborious one, but they have fulfilled it in a most able and painstaking fashion; and they have produced a Report which will be a guide for the community for many years to come. It is written in a style which is clear, forceful and human, and it represents another stage in the downfall of officialese as the language for our public Papers. The greater part of that Report deals with legal questions, and particularly with the doctrine known in the definition of charities as cy près. It deals necessarily with a great number of legal niceties. It was said by Rousseau that definitions might be good things if only we did not employ words in making them. But they have to be undertaken, and this Committee have fulfilled that task, as I say, with great ability.

Lord Nathan and Lord Beveridge will be speaking in this debate, and I propose to leave it entirely to them, since they are far better qualified than myself, to deal with the whole question of the reform of administration of existing and future charities. I would say only that I agree wholeheartedly with the conclusions arrived at and with the recommendations made in the Committee's Report. There is only one qualification that I feel; it relates to the proposal that where the terms of existing trusts are to be modified by proper authority, on the grounds that they are out of date, this can be done after a period of thirty-five years from the foundation of the trust. That seems to me to be too short a period. I feel that we ought to be careful not to discourage men and women of philanthropic mind from creating trusts for purposes which they have very close to the heart—perhaps for some particular locality; perhaps for some, to on eyes, minute purpose. Nevertheless, if these purposes are not contrary to the public interest let them create the trust I, they desire to do so, and let them not feel that, by law passed by Parliament, at the end of a thirty-five years' period the terms may be changed. Whether that change is made by the consent of the existing trustees or not does not matter. I wonder, therefore, whether that point might be reconsidered—whether the period of thirty-five years is enough to make it clear that a charity has become obsolete. In fact, it would apply to any charity that was founded at the end of the First World War—which to the older among us does not seem such a very remote period.

In the last debate I urged—and this is the main point of the speech which I shall be delivering to-day—the foundation of what are known in Scotland as "common good funds. "It would be a new principle here to be done on a national scale and almost new on a local scale. In Scotland, these funds exist, and have existed for centuries. In the United States, they have assumed a very wide scope. We all know the value of the great foundations established by philanthropic millionaires, either in their lifetime or by bequest. In America, fine work has been done, of course, by the Carnegie Trust and the Rockefeller and the Ford Foundations. In this country we have the British Carnegie Trust and the Pilgrim Trust, also founded by an American, Mr. Harkness; and fine work has been done, too, by the Nuffield Trust, the National Trust and many others. These do immensely valuable work, and the whole range of wellbeing would be lower if these Trusts had never come into existence.

While millionaires leaving vast sums are able to establish special institutions for their administration, ordinary people of lesser means, who may have as keen a social conscience but not such great wealth to dispose of, may desire to do very much the same if they have no one to whom they feel it their duty to leave their property; or if, for other reasons, they have money to dispose of by bequest—or, indeed, in their lifetime. How are they to do it? They cannot form a separate trust. A trust would not be able to put up a separate administration; it would not be able to enlist skilled advice on investment. Sometimes, in despair, these people leave their money to the Chancellor of the Exchequer, to be devoted to the extinction of the National Debt, a task somewhat beyond their scope to achieve. A local benefactor may desire to leave the money that he has accumulated by his own efforts for some particular benevolent object in his own neighbourhood, perhaps among the special group or class of people to whom he belongs. Therefore, it is now suggested that there should be set up by Statute in England and in Wales a national Common Good Trust, and that in Scotland it should be done if the people there so desire; and, furthermore, that in any suitable local government area, in any city or in any county where the need arises and where the demand is expressed, similarly such a trust should be established, with very wide powers.

The Report of the Nathan Committee mentions that in Chicago the common good fund now has a capital equivalent to £4 million, and an annual income of £150,000. If a city of comparable size in England had that—and possibly in the course of time this figure might grow greatly—how much good it might do for the amenities of the town and for the happiness of the people! I submit to your Lordships, that we should look forward to the future, and consider not only to-day and tomorrow but what may happen fifty or a hundred years hence. If these common good funds are established, and if, by the process I have indicated, they accumulate more and more funds, by donations and bequests, they might in the next generation exercise an almost immeasurable influence for good in the relief of the hardship of individuals and the improvement of the amenities of their environment.

The Committee appointed by the Government, in their Report, made this unanimous recommendation: We are strongly in favour of the establishment of local trusts of this type on a much wider scale than at present…We think that local common good trusts should be spontaneous in origin and unofficial in character, and should have precisely the same freedom of action within the general law of charitable trusts as other charitable bodies have.

Such a step would have to be authorised by Statute, in order to ensure the stability of these trusts and the due observance of any conditions that might be imposed, but they need involve no charge upon the public funds. The Public Trustee, for example, now has about £500 million worth of property under his administration, and that involves no charge on the public funds. The expenses are met by a very small fee for the costs of adminis- tration. So it would be with the common good funds. Many points of detail have to be thought out, in this connection, and the Committee's Report deals with them; but I shall not trouble your Lordships with them to-day. I believe that some great charitable institutions which are strong enough to stand alone have some doubts about the creation of these new bodies, fearing that it might drain away benefactions which might be devoted directly to them. The Committee considered this matter, heard evidence with regard to it, and they came to this conclusion: There is an understandable sense of alarm among voluntary societies lest a common good trust should become a powerful competitor in the fields of voluntary finance, and it is plainly undesirable that a common good trust should enter into competition with existing charitable organisations.

I fully share that view. The Committee went on to say: We think that anything in the nature of public appeals for funds should be discouraged, though the trust must of course be at liberty to make its existence and objects known to the public.

I do not think that those fears on the part of those charitable organisations are justified. In any case, no one can claim a vested interest in philanthropy. The claims of the organisations must depend upon their merits. On the other hand, if it were found that larger funds were flowing into the common good funds and that less were devoted to these particular agencies, they could make application to those common good funds; and it might be found in later years that they might prove to be a very large source of additional revenue which would not otherwise have come to them for their own special purposes.

It was urged in the last debate that if these common good funds are founded, and are to become a great national institution, they must have financial support from the beginning. It is only if they are seen in operation that they are likely to grow with any degree of rapidity, and two suggestions were made. We do pot suggest that there should be any State grant. Many of us have been urging greater economy and lesser taxation, and it would indeed be a contradiction if we were to urge an increase of national expenditure in order to provide funds for these purposes. The two sources were these. In the first place, it is known that there is in existence a great amount of derelict money having no owners: balances in banks where depositors have died—the balance may have been forgotten, no claim is made upon it, and it rests there for years and for decades. The money is invested, of course, by the banks, as part of their ordinary funds, but it has no owner.

Similarly, there are unclaimed funds in the hands of the courts of law, the Court of Chancery in particular, and in the Bank of England and many other quarters. It is not known how much they amount to, but in all probability they run into many millions, possibly tens of millions of pounds. The State has no moral claim upon these funds. Is it not better that, instead of leaving them derelict, they should be devoted to purposes such as those that could be served by common good funds, leaving the investments as they are, if it is necessary, or transferring the investments and using the income for benevolent purposes? That is one proposal. It is one, judging by my postbag after the last debate, and also from the Press cuttings, which aroused by far the greatest interest of any in regard to the matters dealt with in your Lordships' last debate. Of course, any claimant who appears for a fund that is considered to be derelict and who establishes his claim must have a first call upon these moneys, and provision should be made from the beginning to enable such claims to be made. If the period is long enough for obsolescence, probably those claims would be very few and small.

The second proposal deals with intestate estates where there are no next of kin. Those estates at present go to the Chancellor of the Exchequer and are used towards the extinction of the National Debt. If they were to go into the common good funds, it would make a quite unappreciable difference to the Exchequer, but all the difference in the world to the success of this particular movement. The amount is estimated as rather over £100,000 a year. It is not money from taxation. It. has no place in the Budget. It is a sheer windfall, and we would suggest that it should be devoted to this purpose. In their Report the Committee say that the National Trusts should aim at a substantial income, and recommend the transfer annually of the property of intestate estates where there is no next of kin now given in relief of the National Debt. If the Government are in earnest in wishing to assist this movement for voluntary organisations, they will not insist upon the Treasury interest in this £100,000, but would rather say that here is an opportunity to give really substantial help to a most necessary cause, and would agree to this proposal.

My Lords, I do not propose to detain you much longer, as there are many Members of your Lordships' House who wish to speak, and there are two experts who will address you on the subject of the law on charitable trusts. My Motion intentionally draws attention to the dates at which various events have happened in this matter. The first debate was in June, 1949, when, on behalf of the Government, Lord Pakenham said that "something needs doing, and doing without delay. "However, nothing was done during that year. But in January, 1950, the Committee were appointed. They sat for two years and four months. I do not complain of that, because the Committee had an exceptionally difficult and complicated task; moreover, I believe that they were somewhat disorganised, owing to part of their staff being taken away—the staff was not under the Committee's own control. However that may be, it was two and a quarter years before the Report was signed; it was signed in May, 1952. Another half-year went by after the signature before the Report was published, in December, 1952. Then it was reasonable, of course, that the Government should have ample time for the consideration of these proposals, and therefore I did not put down any Motion in your Lordships' House until now, which is July, 1953. I hope the noble and learned Lord the Lord Chancellor will not say that it is impossible to do anything this Session, but if he does I shall not be greatly surprised; and in that case we shall have to go on until next Session. It may be January, 1954, before a Bill is introduced, and in that event probably June, 1954, before the necessary legislation is passed. That would be just five years since the debate took place here, and proposals were made with which at the time everybody agreed. It is an instance of the slow majestic march of our public affairs.

I commend this proposal to your Lordships' House, particularly as I think it is one that belongs to the purview of the House of Lords. It is not one that attracts the support of a large body of voters; it is not the kind of matter that finds its way into Party programmes; it cannot elbow its way on to the crowded agenda of the House of Commons. There-for, I commend it to your Lordships' House, in the hope that your Lordships, as a House, will take an abiding interest in its future. I beg to move for Papers.

3.35 p.m.


My Lords, like the noble Viscount who has just spoken, I do not propose to address your Lordships at any length. There are a large number of speakers, and among them there are many experts on this particular topic. The Motion we are discussing is obviously carefully drafted. The noble Viscount is asking whether the Government propose to take action on the proposals put forward in the previous debate in June, 1949, having regard to the recommendations of the Committee on the Law and Practice relating to Charitable Trusts. The debate of June 22, 1949, was a very memorable debate. It was memorable not only for the speech which the noble Viscount himself made on that occasion; it was memorable, too, for the answer which the noble Lord, Lord Pakenham, gave. It was just as well that that answer should have been given, because there might have been some ignorant or ill-informed people who thought that because there was a Labour Government then in power, and because they were concerned with trying to bring in what is commonly called the Welfare State, to which all Parties are now committed, therefore there was no longer room or need for voluntary action. If anybody did think that, he must have been disabused altogether of the idea by the speech which Lord Pakenham made. Speaking on behalf of the Government he said (OFFICIAL REPORT, Vol. 163, Col. 119): We consider that the voluntary spirit is the very lifeblood of democracy. My Lords, that is true. He went on to say We are convinced that voluntary associations have rendered, are rendering, and must be encouraged to continue to render, great and indispensable service to the community. In that debate three proposals were put forward. The first was that a Committee should be appointed. A Committee was appointed without undue delay, because the Government of the day were very willing to listen to all reasonable propositions, and this was a reasonable proposition. The second proposal made was that there should be a general Statute providing for the establishment of common good funds, and the third specific proposal made was that there should be payment to the common good fund, first of all of the intestate estates—the bona vacantia, where a person dies intestate without relatives. In the course of the last debate it was mentioned that in Chancery there is estimated to be £3,250,000, and there are also said to have been dormant funds which the noble Lord then put at as much as £20 million. I have not the vaguest idea whether these figures are correct and I do not know how one would find out; but, at any rate, undoubtedly it is a fact that there are dormant funds of a substantial amount.

As I have said, the Committee were appointed. Here I should like to join with the noble Viscount in rendering thanks to the Committee for the work which they did. It must have been difficult and laborious work. I think they discharged their task extraordinarily well, and whether one agrees with their conclusions in all respects or not, one must congratulate them upon the language and style which they adopted in writing their Report which makes it quite readable. So far as the common good trusts were concerned, they entirely support that proposal. They suggest that the Commissioners (that would be the Charity Commissioners as they are to-day, or as they would be enlarged) should be empowered to recognise any endowed charitable fund which applied for recognition as a common good trust, if, of course, it is of a charitable nature and the trusts are suitably worded. Then, with regard to bona vacantia, they said that those should be made over. With regard to dormant funds and the funds in Chancery they do not say anything, I think, presumably because those did not come within their terms of reference. I should be inclined to agree with the noble Viscount that if there are those funds they might well be applied for the purpose of the common good.

Therefore I think the noble Viscount, Lord Samuel, may fairly say that as a result of his speech not only did he get a Committee but he got support from the Committee for the specific proposals he put forward in the debate. Of course, the problem we have to consider here is that of striking a balance. On the one hand, with regard to these trusts, if too many privileges to founders and trustees are to be accorded, the public may fail to get the full benefit of the endowments. On the other hand, if too many controls and restrictions are imposed the founders may be discouraged from putting up their funds, and the funds or charity may die out. It is a question of balance. I do not pose as an expert on this subject of the administration of trusts. It was a matter which concerned the Chancery Division, into which I seldom used to stray. The Lord Chancellor is an authority on this particular subject, and he will tell us what the present legal position is. I had something to do with the administration of trusts when I was Attorney-General, and I found then, as the Committee state, that there were no grounds for supposing that there was any substantial maladministration of trust funds. It is important to hear that in mind when we are considering what we should do about this matter. It is not a case of any serious maladministration. On the other hand, these trusts have been administered honestly, fairly, and, I think, well.

I am sure that the Committee were right in not embarking on a new definition of charitable trusts. They suggested instead that they should take the definition of Lord Macnaghten in what was called the Pemsel case, which was a sort of summary of case law, and I am wee that is right. We can all remember the distinguished politician who introduced the Workmen's Compensation Act and declared that he had a short and simple definition which would make things quite plain to all reasonable men and would raise no cases for the lawyers. A vast amount of case law was built up on an ambiguous phrase. However careful we may be, we shall do well if we avoid another series of ease law if we try to reduce the thing to a definite form. For my part, I think it is wise to adhere to the existing definition, either in the original form or in the form of Lord Macnaghten's summary.

I come to the next point of importance—namely, the question of whether there should not be more facilities for getting greater information about trusts. I con- fess that I think there should be. It is very difficult to-day for a founder who wants to put some money in a trust to find out whether the particular subject matter he has in mind is or is not adequately covered. Sometimes, also, it is exceedingly difficult for a beneficiary to know to whom he can go, to learn what is available for him. Therefore there can be no doubt at all that it would be convenient if there were some better method than exists to-day of finding out what trusts there are. On the other hand, it would be idle to pretend that some of these people who are doing most admirable work are not concerned about this matter. They do not like the idea of being registered. I do not feel that difficulty myself—perhaps I have a blind spot in the matter. I never felt any difficulty about identity cards, but some people feel passionately against being numbered. I believe, if my Biblical knowledge is correct, that David got into very great trouble about the numbering of his people. I never could understand why it was a bad thing to do, but perhaps on a private occasion the most reverend Primate the Lord Archbishop of Canterbury, will explain it to me. It seems to me elementary common sense, if one is going to war, to find out what number of people are available, and either Samuel or Gad (I think the latter) announced the most awful penalties which would fall upon the people as a punishment for David's conduct in numbering them.

However, there is that danger. I have had communications from some of these people, who are doing most admirable work and who are apprehensive about this recording. After all, it is only recording in the same sense in which one sends one's name for inclusion in the telephone directory and it is put in. But in this matter, if we find that we are likely to come up against real and genuine apprehension which cannot be removed, then I think it is better that we should not try any more to be logical and that we should not record. But it would be a pity to give up recording. There is, however, to be encountered the apprehension of these people who are frightened lest, once they are put on a list, some functionary or other may come along and order them about. I hope that apprehension can be allayed.

If there is recording, the Charity Commissioners should be the recording body. As I understand the law, there is already power to call for accounts of these charities, but in fact the Charity Commissioners, very wisely, have not interfered, save in those few cases where they have thought that something was going wrong. And although they have complete power to call for accounts, in fact they do not call for them; and that system has worked pretty satisfactorily. I think that as it is recommended that records should be sent to the local authorities, who are to be given power to propound schemes, they may propound schemes mopping up all the proposals which benefactors have made in the past. I agree with the noble Viscount, Lord Samuel, that we ought to be very careful to respect the wishes of those who have settled these sums of money. I believe that the Committee would agree with me that this is not a case where "the gentleman in Whitehall knows best." The gentleman in Whitehall has to consider, to my mind, as a primary factor in the whole matter, the wishes of the testator or the founder of the trust.

I think the right way to approach it is this: not to regard the matter as completely free, as clay under the potter's thumb, but to ask, "What would the founder himself have thought had he been confronted with a situation such as exists to-day?" I feel myself that there is a case for some relaxation of the cy-près rule, but although there must be some relaxation of that rule we must not go too far in the other direction. We must consider, in the light of the wishes of the founder, what we ought to do with the money, if it is not being usefully employed at the present time. Therefore I agree with the Committee—I am not going to talk about the precise lines which it will take, but I am speaking only of the principle involved. We should have a relaxation of the cy-près rule, but we should not go so far as to let other factors come in front of the presumed intention of the founders of the trust.

That, my Lords, is all that I have to say. I welcome greatly the fact that this matter is under the consideration of your Lordships' House, and I sincerely hope that it will lead to a Bill being introduced by the Government—though I would say, in view of my experience of public life, that if we get this Bill produced within five years of the original question being raised, Parliament will not have done badly, having regard to past precedents.

3.50 p.m.


My Lords, I wish, first, to associate myself with all that has been said in praise of the Report. It will always bear the honoured name of Lord Nathan, to whose skill and enthusiasm the Report owes so much. It deals with a highly complicated subject, full of legal technicalities, and the Report might easily have been a most dull and dreary affair. In fact it is written and argued with a freshness and enthusiasm which makes it at every point interesting to read. It is a clear presentation of a confused subject. It gives the whole picture forcefully, and argues its points with restraint and careful wisdom. It is a document of great importance, dealing with a matter of great social importance, and it presents a tidy scheme of operation. It has been widely praised for its honest purpose and its clarity. But I have noticed, as time has passed, a growing hesitation as to some of its proposals, and a fear that, perhaps, for all its good intentions, it is a little too tidy. Whenever men or women begin to tidy up their domestic possessions there is ground for alarm. Husband and wife may easily have different ideas as to what should have been thrown away. And when, as here, the relation is between the robust, forceful partner of statutory action and the frail and delicate but gracious partner of voluntary charity, then one must be more than ever careful.

Statutory action is always liable, with the best will in the world, to be too dominating. The Report is careful to draw attention to that danger, and I noticed several places where what the Committee thought might well be the most efficient course was deliberately rejected as being too rough treatment. But the danger is there. I should like to draw your Lordships' attention to paragraph 106 of the Report and to read it in full. It is as follows: Furthermore, it must be borne in mind that charitable trusts have been acquiring a second and more and more valuable privilege…in not being subject to income tax. At the present time this privilege amounts approxi- mately to the doubling by the State of the taxed income of every charitable trust in the country. This fact must powerfully reinforce the need to provide means by which trustees may be enabled, while paying due respect to the wishes of the founder, to put their trust to the best possible use in the service of the community. Personally, I question the rightness of describing this operation as doubling the income—as though by not taking money away the State was actually giving money. It seems to me to imply a false theory of taxation. Surely everyone's income is, in the first place, his own. The State, for the common purposes of the community, takes part of it by general consent. But if the State exempts charity, believing that because of its nature and the contribution it already makes to the common good it ought to be relieved of any further communal burden, it is not, in principle, doubling charity's income; it is allowing it to use its own income without deduction. That seems to me to be, in principle, a very different thing.

There is no doubt—and very justly—a privilege granted to charity. The Report calls it elsewhere "a hidden subsidy." I should not call it "a subsidy" but a "relief." It is certainly not hidden, because everyone knows that charity is exempted from income tax. But I think it is worth while drawing attention to the lurking danger in the paragraph which I have just read. This exemption, it states, is a valuable privilege. But the climate of our times is not favourable to privileges, and to call it a privilege is to cast suspicion upon it. It is said that it deprives the State of a large amount of money, and the State is always liable to demand a quid pro quo. And all this is held powerfully to reinforce the need to provide means (which means legislation) to enable trustees (which so easily may mean to compel them) while paying due respect to the wishes of the founder"— which so often means nothing more than a pious intention— to put their trust to the best possible use in the service of the community. Who is to decide what is the best possible use—the community or the trustees? And, anyhow, as the noble Viscount has said, why must every trust go to the best possible use—to the maximum service? Is there not a place for a trust which has some subsidiary use of second-rate importance, not anti-social, but historical and helpful and worth preserving? So I argue that though the Report is careful to try to keep this right balance, we still have to scrutinise it rather carefully.

What I have to say relates chiefly to ecclesiastical and parochial trusts. But may I first mention one or two other points in respect of which care is needed? First, I doubt whether every trust should be encouraged to submit to professional audit with all the considerable expense that would be involved. Secondly, there is great uneasiness at the proposal that all trust properties, land and all investments, should be vested in official trustees as a statutory requirement and by operation of law. This may well benefit smaller trusts, and they should certainly be encouraged to take advantage of it, but the bigger national charities are perfectly competent to look after themselves. They have expert advisers, and it would be quite unnecessary, very hampering, and the cause of much administrative delay and a great deal of unprofitable work if they were compelled to put themselves in the hands of the Official Trustees.

Next, like the noble Viscount, I am in general sympathy with the proposal to enlarge the scope of cy près. Such a step is greatly needed for many reasons. I entirely approve the general lines proposed by the Report, with special emphasis, first, on the spirit of the intention of the founder, secondly, upon the particular locality or institution or group of persons that the trust was intended to serve, and thirdly, and in relation to this, the existing conditions. Here, again, special care is needed, and I wish to mention one or two points. It is not in the least obvious why local authorities should have the power to make proposals regarding any trusts operating in their areas. There are many trusts with which they have no direct concern at all. In any case, their power to initiate proposals inevitably gives them an undue dominance, and the right of appeal is a clumsy and expensive method of safeguarding the trust against the local authority. How much better is the power of persuasion. After all these trusts have been recorded, local authorities will know the situation—and I wish that they should—in their area. They will then be free to discuss with the trustees, to call meetings, to suggest the possibility of joint action and do everything else which persuasion can rightly do. But, I submit, it is not wise to give the local authorities powers to initiate proposals. And if we remove that fear, at once, we shall make it far more easy to insist on the compulsory recording of all trusts.

May I, with all respect to the noble Viscount, utter a word of warning about the common good trusts, especially if they happen to be supported by statutory authority. The idea has much to commend it at first sight, but there must still remain the obvious danger that the common good trust with statutory authority behind it will cut across the tremendous efforts which charitable societies are constantly making to maintain their funds. The noble Viscount even suggested as an attraction to the voluntary societies that they might find themselves drawing large support from common good trusts, but that is only to make them dependent on another fund instead of having their own individual link with their supporters who contribute to them.


My Lords, I regard this not as a deterrent but as a stimulant. Churches who want to restore their ancient buildings go to the Pilgrim Trust for extra funds. Why should they not do the same here?


But if I want funds to help children in distress, or girls in misfortune, I should much rather get my contributions straight from the public than gradually—and I only suggest a course of development—fall into the habit of drawing these funds from the common good trust. That is the danger, and I know the societies feel it acutely. There is a danger that by degrees charities will become diverted from the many societies to the common good fund. Such a fund would save individuals a certain amount of trouble, and might come to displace support of the societies and thereby overshadow them. Is there any lack of causes to which any reasonable benefactor can give his money? The noble Viscount spoke of benefactors not knowing what to do with their money. The trouble for the individual is how to choose among the vast number of charitable organisations which exist.

May I pass straight on to ecclesiastical trusts? So far as I can see, the proposals of the Report are intended to apply to Church charities just as much as to other charities, but there are real difficulties about this. Every parochial church council throughout the country would be regarded, I think necessarily, as a charitable trust, either mixed or plain, for it collects money for charitable purposes. If it is a plain charity then, according to the Report, any member of the public, whatever his church allegiance may be, would have the right to apply for an inquiry if there were a prima facie case that the parochial church council was using its resources, not fraudulently but wastefully, and who is to judge what is wasteful? At any rate, it opens a glorious door for people who like to put their noses into other people's business, to take up the accounts of every parochial church council in the country.

But if it is a mixed charity, because of the possession of some invested property as an endowment, as many of them have, then the parochial church council would have to give full and detailed information, year by year, not only of its invested income but of every single collection in church, what the collection was for, and whither it had been distributed. No wonder the Charity Commissioners would have to increase their staff! But I go further. There are many charitable trusts—thousands of them—held by the Church in particular parishes and villages for Church purposes. I ask, is it suitable that a county council, with quite other interests and no direct concern, should have the right to put forward proposals for the use of Church money for Church purposes, or possibly to divert it to other purposes? It really is no concern of the county council at all. It is purely a matter of how the Church uses its own money in Church trusts.

Further, in every diocese there is already a diocesan authority which has statutory responsibility for the custody and supervision of ecclesiastical trusts. My own board of finance in the Canterbury diocese holds and administers between 200 and 250 trust funds on behalf of parishes, ranging in capital value from £10,000 to £10. Why duplicate this work? Surely the diocesan authority is the right body to review all such trusts, not the county council, and to initiate schemes for improvement as they are needed. The extended doctrine of cy près would be very useful. Powers to submit schemes would be very useful. But I would emphasise that that depends upon what is the right body to deal with it.

May I go a stage further? If more powers are needed, surely the Church Assembly is the right body to take action. The Church has its own legislative body, its own legislative procedure, its own statutory dioceses and parishes, and its own regional authorities and machinery. I must think that the Church Assembly, a statutory body with legislative powers over the possessions and property of the Church, and with direct approach to Parliament, would resist strongly any attempt to withdraw these ecclesiastical trusts from the Church's control and submit their fortunes to secular authorities, however wise and experienced. If driven to it, the Church Assembly and the dioceses would no doubt enlarge their administrative procedure to keep pace with any extended secular procedure. But it would entail a great deal of expense, and I have no evidence of any serious faults of any kind in the administration of these vast numbers of ecclesiastical trusts.

May I say one word about parochial trusts? These are trusts not directly for Church purposes. Most of them are very ancient. Here the Church's interest has always been very large. These trusts sprung from Church people, they serve the parochial area and very often are administered by the clergy and church wardens. In urban areas there may well be a case for pooling many of these small trusts; in rural areas should say hardly ever, for in the village charities still serve a recognizable community. Pooling will take it, or may take it, out of every personal and historical link with the parish and the community. In any case, we do well to remember how much is lost by pooling. Every ancient charity has the name of its donor attached to it, and that name lives and is a silent witness to those who have gone before in an ancient village or ancient town, and a silent witness to the continuity of our community life.

In a certain school I once found that Philip Ward, an old usher, had given £20, the income of which was to provide books for scholars. It had been lost sight of. I took great delight in bringing Philip Ward back to life again, so that he remains part of our inherited tradition. We must be careful. We are losing more than we can really afford. I would urge that these parochial trusts should have specially delicate and careful treatment.

With apologies to the noble Lord, the Chairman of this Committee, I have necessarily dealt with some of the difficulties that have come to me. May I end by urging, with all my power, immediate action on four definite proposals. First, the imperfect trust instrument. The Government have already promised legislation to enable us to put these trust instruments in order, but there is delay, and I am told that it is causing much anxiety. I hope we may be assured that the necessary Bill will be introduced very soon.


My Lords, perhaps I may interrupt the most reverend Primate for a moment on that point, as I think a good many Members of your Lordships' House may feel the same doubt. This is a most intricate problem, but, to use a most hackneyed phrase, it is engaging the most earnest attention of Her Majesty's Government. Although I can give no date for the introduction of a Bill, I can tell your Lordships that it is in contemplation that a Bill will be introduced. I am in a little difficulty, as many of your Lordships will appreciate, in that it would not be right for me to anticipate anything that may be in the gracious Speech next Session. I say nothing as to when a Bill will be introduced, but the matter is engaging our earnest attention.


Does that mean a Bill on the specific point being raised by the most reverend Primate?


Yes, on the specific point now raised by the most reverend Primate. If it is convenient to the House, perhaps the most reverend Primate will allow me to say this further word. I am not in a position to declare any general policy of the Government upon the many questions raised in this Report. As I told the noble Viscount, Lord Samuel, when he invited me, and through me, the Leader of the House, to fix a day for this debate, it is quite im- possible at this stage, having regard to the complexity of the Report and the number of Departments interested in considering it, to make any statement of Government policy upon the matters raised in the Report. When I told the noble Viscount that, I thought he agreed with me that the real value of the debate would be in seeing the reaction to it of well-informed opinion; and I thought we should gain that from the speeches which we hoped to hear in your Lordships' House.


We have brought up many matters other than those dealt with in the Report.


Perhaps I may continue my speech, which I hope is well-informed; and if so, I am at least helping the Government by pointing out that there are only four things about which they need bother their heads at the moment. One is the imperfect instrument—and I am glad to know that they have that in hand. The second is cy près. I should hope that they would at once get down to the not easy but certainly important task of enlarging the scope of cy près. Thirdly, would they at once very much enlarge the staff of the Charity Commissioners? I believe that that is the one thing which is needed most of all, and that once that was done a good many other things which the Nathan Report desires would follow. It is ludicrous that the staff of the Charity Commissioners to-day is smaller than it was in 1860. In spite of all the cries for economy, I hope that the Government will seriously consider removing a scandal by increasing the staff of the Charity Commissioners, and in doing that, get rid of what I would call a lot of top-heavy provisions of the Report. Under the Report there is to be a Minister responsible who is to give guidance and directions of a general character only—a sort of grandmother; there is to be an Advisory Committee available for consultation—a kind of aunt; and there are to be, as Commissioners, five to nine men and women of standing and experience in public and charitable affairs. All this is proposed in order to enable the formulation of policy; of large questions of public policy; and a great drive for policy. I suspect all those phrases a good deal. I believe, as the Report says, that each trust is its own thing; you have to look at it by itself. You do not want drives of policy. You want a competent body of Commissioners, such as we have now; but they should have more staff. They should have, if you like, an Advisory Committee to help them in general questions, and there should be the ordinary procedure of bringing things up to date.

Finally, I think it is better to leave policy making until all the facts are known; and it is said again and again in the Report that the facts are not known. Very well. Let us start straight away by getting the facts knows. I am in favour of recording; I am in favour of compulsory recording; I am even in favour of fining the trustees who do not record. Let us get the facts on paper; let it be known where the charities are. Then, if you must, with full information, consider whether there are great matters of administrative compulsion to be introduced. I would say that the authors of this Report might be well satisfied if the Government would at once consider imperfect trust instruments (as they are doing), enlargement of cy près, the proper equipment of the Charity Commissioners, and the immediate steps needed for compulsory recording of all trusts.

4.18 p.m.


My Lords, I find myself in such general agreement with what the most reverend Primate has said that I shall not seek to detain the House for more than a few minutes. I agree that there are valuable suggestions in this Report. Whether it is possible to enlarge cy près, and what the new boundary will be up to which you may go in place of the old one, I have not the least idea; but possibly the Chancery lawyers will in the end work that out. It appears to me to be an excellent feature of the Report that it has not attempted, or recommended a new definition of "charity. "It would be an impossible task to put into an Act of Parliament what is now understood to be a charitable trust, for that is to be ascertained not only by reading the well-known language of Lord Macnaghten or the Act of Elizabeth, but also by studying and understanding a vast number of cases which have been decided on it.

I think it an excellent thing that the Report should contemplate the consolidation of certain small trusts. I quite recognise the value of their recommendations about the Mortmain Act. But the practical question here is: What is there in this Report to which criticism must be directed, in order that the Government, in the light of this debate, may form their policy and decide on their Bill. I must say, with all respect to the authors of this Report, and paying sincere compliment to the efforts that they have made, that I do find in the Report some proposals which appear to me to be undesirable, if only because they are quite unnecessary. I would call attention to the summary which begins at the bottom of page 56. There the Committee say: We are much impressed by the advantages to trustees offered by vesting land in the Official Trustee of Charity Lands and securities in the Official Trustees of Charitable Funds. These Custodian arrangements are offered free of charge and without in any way affecting the trustees' control of their trust; they do away entirely with the tiresome and expensive procedures that have otherwise usually to be adopted when any change of trustee takes place. The Committee go on to recommend that a Statute be passed which would vest all and every asset held by trustees in an official, who I think is to be called the Official Custodian of Charitable Funds; and the authors seem to think that by this proposal they are avoiding tiresome and expensive procedures usually to be adopted on a change of trust. If, by that, is meant that when there is a new trustee appointed it is necessary to execute a transfer, or something of the kind, so that the new trustee may hold in place of the old one, it is certainly true that that is tiresome and may indeed be a considerable expense. But I do not think the authors of this document have realised that in large areas the holding of trust properties is in a body which itself is a trust corporation which never changes, which lives on for ever, and where, therefore, there cannot be any need for the transfer from existing holders to others.

The most reverend Primate, naturally, has spoken of the arrangements that are made in the Church of England. May I respectfully mention to the House the arrangements which obtain in the Nonconformist bodies—the trusts connected, let us say, with a Congregational church or chapel, consisting, no doubt, of the holding of certain premises and of other monies which may be contributed by collections for trust purposes. The trust is more and more being passed into a trust corporation which is looked after by members of the denomination, who are extremely keen to see that it is well done; and they have continuous charge of those properties. There is never any question of their being transferred tiresomely and expensively to anybody else, because the trust corporation is a corporation—it goes on for ever. That is the method that is followed very largely in the Congregational body, and by the Baptists, Methodists and other people, and it really is a strange mistake to suppose that you are going to avoid tiresome and expensive procedures by an Act of Parliament which says, "No, your trust corporations shall not hold your trust properties any more, but they shall, by force of an Act of Parliament, be transferred to an official who is called the Official Custodian of Charitable Trusts. "I am quite certain that this would not have been recommended if the existing system had been understood, and I do not trace among the list of witnesses any clear indication that it was expounded. In a sentence, the situation is this. These denominations have already farmed trust corporations to hold and to administer their trust property. The actual management of the trust is not in the hands of the trust corporation, but in the hands of managers, and if you want a new manager the Church meeting will appoint a suitable person.

The matter does not stop there. There was an Act passed in 1951 which I have in my hand, the Baptist and Congregational Trusts Act, which authorises the creation of these trust corporations as trustees, and which provides for the whole machinery which is now in operation. It is plainly, therefore, a mistake to urge that what is needed is the creation of a new official in whom, by Statute, this possession should be vested. It is just a mistake, but I hope that I may be excused for pointing it out. There is no valid argument for transferring to an official such religious trusts now held by such trust corporations. The denominations which I know best in this matter would, I think, feel it a great hardship, and would greatly resent the taking out of the hands of people who are really interested in it, as being devoted to the purposes of the denomination, the hold- ing of these properties and vesting them in a gentleman who, however public-spirited he may be, after all, is an official.

There is a second point. This Committee recommend, I think without any exception, that any charitable trust should submit audited accounts annually to the Commissioners with a view to their examination. The most reverend Primate the Lord Archbishop of Canterbury has already referred to this proposal. I do not think it can have been appreciated to what sort of bodies this would apply. Take a small Nonconformist church in a country district which has the support of its members and worshippers. They appoint one of their body who is trusted and respectable as a treasurer, and the expenses of the institution are met out of funds which may, in some cases, include a small endowment but which, for the rest, arise from what we may call Sunday collections. If you say, "That does not matter; I am going to have a uniform rule, and there must be audited accounts of this trust, "what do you mean? Do you mean that accounts are to be audited by a professional auditor, a chartered accountant, for which, very properly, in large cases, a fee is paid? If you do mean that, it would impose upon these small bodies a burden which they could not bear. If, on the other hand, a professional auditor is not needed, the matter is not advanced by calling it "audited accounts."

I feel quite convinced that there are large number of well-conducted trusts of a religious kind, certainly among the Non-conformist bodies, which could not be put under this direction without the gravest consequences as to their willingness to accept it. There might, indeed, be a certain difficulty in finding a treasurer, because I presume there must be a penalty if the tax is not obeyed. I think the Report of the Committee recommends a penalty of £5 to be exacted in a magistrates court, but if you are going to exact from people that they shall register in some central official authority the audited accounts of their religious effort, you will gravely prejudice the ordinary working, and, I think, the quite honest working, of these people in their particular enterprise Those are two points which, it seems to me, are serious points in the Report and which I would ask should be recon- sidered. I have the greatest admiration for the hard work which has been put into this Report, but in those two matters. I must say that I think that the recommendations should receive some criticism.

There is a third point about which I do not speak with so much confidence, and on which the most reverend Primate may hold another view. It is proposed also that there should be a listing, a recording, of all charitable trusts—I think there are said to be 110,000 of them—and the trustees are to be required, under penalties, to give the Charity Commissioners details of their foundation deeds, of any changes that have occurred since, and of other things. Well, my Lords, an attempt has been made already to keep a record of trusts. I think the Act was that of 1810, but it became a dead letter. It could not be enforced, and I cannot help thinking that there is something to be said for the view that it is a pity to demand from every sort of trustee of a charitable trust a return on this subject. It seems to me to make the State too closely concerned in the management of things which are not really matters for the State at all. One might just as well say that every golf club should report itself to some body. That procedure does not appear to me to apply very readily to this kind of case.

It is insisted in this Report, and I think justly, that the same essential desire to improve the human lot is to be found both in the efforts of the Welfare State and in voluntary action. That is true. It is characteristic of British life that it should be true, but we should be very careful that we do not set these two things against one another. If the Welfare State developed in a way in which it says, "Now, you must give me an account of the way in which you are discharging your trusts; you must produce your audited accounts, and you must transfer your property to a State official, "we reach a point where there is at least the risk of a different approach to these things. The essence of the matter is that there is nothing finer in English life, in British life, than this impulse to voluntary benevolence. It is best if it is done in a man's lifetime, but if he does not do it during his life it is better done by will than not at all. We must beware that we do not crush what is a delicate plant by pulling it up by the roots to see how it is growing. To my mind, it would be a very great pity if what is a distinguishing feature of the British way of life should get involved too much with official control and survey, which seems to run through some paragraphs of this Report.

Nobody wants to encourage mere officiousness, and I can imagine a critic saying that there is a danger that you are approaching the apotheosis of officiousness. It is not denied that these trustees are discharging their duties properly. It is not really, I think, a reason for asking for these regulations, that anyone suspects them. I cannot help thinking that our British way of life encourages people to undertake these duties themselves for their comrades and fellows, without undue supervision from what must, in any case, be State action. That is particularly so if you take religious trusts, because there you have a trust that is clearly defined, which has a continuing objective, and which is subject to the continual oversight of people who are concerned to maintain it.

My submission is that, while there is much in this Report which one accepts with gratitude and of which one recognises the value, it is a mistake to attempt so to develop the control of what is, after all, the State over enterprises such as we are dealing with here that it is likely to diminish the urge to benevolence. I cannot help seeing that, whatever its merits, the development of the Welfare State has, in fact, resulted in people not subscribing to hospitals. There are many forms of benevolence which they are not going to undertake because, they say, the State will do it. That may be inevitable, but let us at least not go too far. The Report in general is an admirable document, but a debate of this sort is of value only if concrete criticisms of great proposals are firmly, though temperately, made.

4.37 p.m.


My Lords, you will, I am sure, allow me to begin by expressing my appreciation of the generous and friendly terms in which those who have already spoken have referred to the Report and to the Committee responsible for the Report. Those words, I need scarcely say, fell very agreeably upon my ears, and I am sure will be learned with great satisfaction by Sir John Maude and my other colleagues of the Committee, and by our Secretary, Miss Jane Lidderdale, of the Lord President's Office, whose services to the Committee have been remarkable.

The noble Viscount, Lord Samuel, as he reminded your Lordships, opened a debate in June, 1949, which in our Report we characterised as historic. This debate also might well be historic if it were to bring from Her Majesty's Government a statement that in broad principle they accepted the general conclusions of the Report, which, as I and my colleagues believe, would be much for the advantage of the voluntary movement in this country. I must confess at once that I recognise that it is unlikely, as the noble and learned Lord on the Woolsack has indicated, that legislation can be immediately promised. There are, however, advantages that our debate to-day should be considered to some extent of an exploratory nature, in order that there may be a gathering of views upon the suggestions which the Report contains. If we go no further than that, it will be useful if it is the prelude to legislation. Then this debate may itself be historic.

I subscribe to everything that has been said by previous speakers, both in this debate and in that of 1949, as to the value of voluntary service. Indeed, the attitude of mind of my Committee, in addressing itself to its task, is indicated by the very first chapter of the Report, which shows beyond peradventure the importance of the place of voluntary service in the modern social structure. We bore in mind also what I regard as the noble affirmation of the noble Lord, Lord Pakenham, who spoke for the Government of that day, when he said that democracy without voluntary idealism and voluntary exertion would lose its soul. We accept that view. We based ourselves upon it, and I should like to think that our Report is founded upon that assumption and that attitude of mind.

In the course of his speech the noble Viscount, Lord Samuel, stressed the need for common good funds—what, as he reminded us, the Americans have developed as community trusts. But there is often confusion between the common good of Scotland and these community trusts in America. They are technically very different. So far as common good funds along the lines of the American community trusts are concerned—which clearly are what the noble Viscount has in mind, and not the very different common good of the Royal Burghs of Scotland—these trusts, as the noble Viscount pointed out, have certain special characteristics which are attractive; they have widely expressed purposes, and they have large beneficial areas. In many ways they are the ideal form of trust; and my Committee would like to see them founded.

But let there be no misunderstanding of what our position really is, because there is always the danger, as I think the noble and learned Viscount, Lord Simon, mentioned, of a sort of counterpoise between community trusts and the small individual trust. There is a fear, a real apprehension, lest the small local trust may get absorbed into the community trust. I think it was the most reverend Primate who had that very much in mind. That was a compelling reason why, when considering this matter, we did not suggest that there should be a statutory or obligatory local community trust but that it must be spontaneous, arising from the people themselves. Indeed, we have to recognise that the community trust—and this is in line with what the most reverend Primate said—is not in the tradition of charitable giving in this country. The tradition is all the other way. So far as we were concerned, we were confronted with an unknown number of trusts—certainly over 110,000—mostly with very small beneficial areas, mostly tied to extremely limited objectives, and the majority founded before the great economic advances and legislative and social changes of this present century. With the notable exception of a few big trusts, to some of which Lord Samuel referred, there is no sign that this tradition is on the wane. Indeed, we indicated in an Appendix to the Report that new trusts are at this moment being formed to the extent of about ten a week. Most of them are of very small amount, very limited in objective and along much the same lines as the traditional ones. I think that that is a most interesting social fact in relation to the changed circumstances in which we live.

These scores of thousands of trusts can be looked at from two distinct points of view. They can be considered on the one hand as assets worth some £200 million, together with unknown but vast amounts of land, to be disposed, reformed and diverted like so many military formations in the battle against want and wretchedness. Alternatively, they can be considered, as they have for centuries past been considered, as so many benefactions, each of whose peculiar characteristics must as far as possible be reverently protected against the ravages of time and the buffetings of economic change. The first argument is an argument for efficiency—efficiency for the sake of the beneficiaries. The second is an argument for piety, for respect for the wishes of the founders of these charitable trusts. Which is the more important? That was one of the fundamental questions which we had to consider; and I believe that our recommendations resolve the issue by the achievement of an appropriate balance between the two conceptions. It is the eternal compromise.

The great reforms initiated by the Charitable Trusts Acts of just 100 years ago ushered in a completely new era. Under these Acts, trustees were for the first time subjected to wide powers of inquiry into the administration of their trusts. They were required to send in annual accounts to a public body, the Charity Commissioners, which was set up by the first of these Acts. The dealings of trustees in land and their legal proceedings were to be controlled. Their endowments, both monetary and land, could be vested in official trustees. Vacancies in the numbers of the trustees could be made good. Above all, their trusts could, withinlimits—my Committee suggests that the limits have proved too narrow—be altered by the newly appointed Charity Commissioners at no cost to the trust or to themselves. That is all 100 years old. There is nothing fresh in that. It is from that basis that my Committee started. Taken together, those reforms constitute a vindication of the argument that the public has the right to expect certain minimum standards of administration; some guarantee that trusts will not disappear, perhaps by passing out of memory; some assurance that the changes of the purposes of trusts that have failed shall not be frustrated by the poverty of the trust or the long processes of the law.

My Committee, indeed, were fully conscious of the foresight and the wisdom that underlie those great reforms initialed 100 years ago. But we have to ask ourselves whether, taken together with related Acts such as the Trustee Act, they provide all the powers and facilities that are needed if charitable endowments are to put their full weight into the whole drive of voluntary action for social progress. The answer—I doubt whether there is any disagreement about this—is that in two respects, both fundamental, the existing provisions of the law fall short. We recommend reforms, of varying but lesser importance, some merely of procedure, which might be introduced with advantage. But I am not going into them to-day. What I am going to concentrate on are the two matters of outstanding importance, as we see them, in which the present law and practice fall short of providing the minimum requirements. When I say "minimum requirements" I mean minimum requirements of responsible and lively trustees and of a public eager to see charitable trusts put to the best use.

Now I would ask your Lordships to put yourselves in a position of a would-be founder of a charitable trust. What is the first thing that a responsibly-minded person, who has the idea of providing, say, an endowment of £5,000 in the City of Westminster, would want to know? Surely he would want to know what purposes were well or ill served in this area, what gap there was that needed to be filled, and what services are already available. Can he find out? Not without infinite research, probably beyond both his capacity and his patience. Again, put yourselves in the position of someone with a financial or personal problem—perhaps the need to educate an orphaned relative, say a spastic child, a problem which he is unable to meet from his own resources, and he does not know where to look to find out where this child can be sent. Is there a trust that might help? Possibly; but where is it to be found? Nowhere is the information in any classified form available. Again, put yourselves in the position of a beneficiary. Let me ask one of your Lordships to assume that he is a governess, too old any longer to work. Most of your Lordships may know, as I know, that there is an organisation for dealing with governesses who are too old to work; but can the governess who is looking for something to help her in her old age easily find the information? No, the information is not available. Put yourselves in the position of a trustee whose trust purposes have failed or become obsolescent. Where is he to find information about other trusts which he needs to guide him towards a wise choice in the changing of those purposes of the trust that he has? To all intents and purposes, this information does not exist. It does not exist in any classified or available form.


I follow the argument of the noble Lord, but would he explain what is the step that is going to be taken to make the information available? Is something going to be published?


I was, of course, coming to that point; what I have been saying is only an explanation of a recommendation made in the Report itself. We feel that adequate and readily accessible information about trusts is essential to beneficiaries, to would-be founders and to trustees, and also to enable the cy-près doctrine in its relaxed form to be operated. The minimum requirements which we contemplate are records, such as are supported by the most reverend Primate, classified by type of object and by area of operation, readily accessible, both in London and in the main centre of population, in the public libraries of county towns and county boroughs. The law, in omitting to make provision for these minimum requirements, is gravely deficient, and that is why we recommend that there should be compulsory recording.

When I say "compulsory recording, "what is it that these trustees are actually to be asked to do? Bear in mind that they are public trusts of which they are trustees, not private trusts. Every one of them by definition is a public trust and, unlike beneficiaries under private trusts, the beneficiaries are unable to exercise any close supervision over the conduct of the trust. They are asked to provide this information—it is to be found in paragraph 158 of our Report:

  1. (1) Name of the charitable trust.
  2. (2) Date of foundation and whether by deed, will or otherwise.
  3. (3) Certified extracts from the trust instruments including particulars of the monetary 780 or other endowments and of the objects of the trust with the beneficial area, if prescribed.
  4. (4) Name and address of the chairman and secretary.
  5. (5) Place of deposit of deeds, securities, etc."
That is not very formidable; it is no more than a company registered under the Companies Act, or a friendly society or an industrial and provident society automatically has to provide. It is much less than the trusts can be called upon to provide under the law as it stands and as it has stood for the last hundred years. The difference is that, under the law as it stands, the initiative rests upon the Commissioners to ask for information vastly in excess of that contemplated here, whereas under these proposals the trustees will be required to bring forward the information.

As regards penalties, at present the penalty is prison for contempt of court, that is, commitment for failure to comply with the requirements of the Commissioners as regards accounts, information and the like. We suggest that it should be limited to £5 on summary conviction. To that extent, therefore, the position of trustees would be largely eased. We feel that the absence of information must be made good, not only for the reasons I have given, which are of long standing. but also to provide the basic information about charitable trusts without which, as I have said, full advantage could not be taken of the second great reform we recommend—the relaxation of the cy-près doctrine.

The effect of relaxing that doctrine on the lines we propose, would be, for the first time, to enable trustees and the scheme-making authorities to consider trusts in relation to one another and, subject to certain safeguards which I will mention in a moment, to change the purposes of trusts in the light of the work being done by other trusts; and to merge or divide trusts according to the needs of the day. At present, of course, trusts, except educational trusts, to which wider scheme-making powers have long applied, can be altered only unit by unit, in isolation and within the narrow bounds of the present limited cy-près doctrine. With the enlarged scheme-making powers we propose, immense possibilities of realignment are opened up, possibilities which must warm the heart of anyone concerned with the future of the voluntary movement. But these possibilities can never become actualities without classified records of existing trusts. To attempt to use the new powers without these records would be as foolish as to try to rearrange a library without first making a catalogue of the books.

As I have said, the second respect in which the law falls short is the cy-près doctrine. That doctrine goes back long into the past, to the ecclesiastical courts of pre-Reformation days. In those days, almsgiving was regarded primarily as a means of the salvation of the soul of the benefactor; the needs of the beneficiary took only a secondary place. In those days, also, most gifts to charity were gifts to the Church, either as such, as the most reverend Primate has reminded us, or as the provider of what to-day we should call the public social and educational services. It is not surprising, therefore, that from the outset the courts should give to charitable—that is to say, public—trusts privileges not permitted to other—that is to say, private—trusts. Those privileges were, and still are, exemptions from the old rule of law against perpetuities, and the provision by the courts of new purposes as near as possible (cy près) to the original, if the latter prove incapable of execution. These privileges flow, of course, from the conception that the donor's object was to benefit his own soul, and that it would be morally wrong to allow this object to be frustrated.

In seeking means to relax the cy-près doctrine we were at pains to consider with respect, and to give full weight to, these principles which underlie it. I should perhaps remind your Lordships that the doctrine was relaxed for educational trusts as long ago as 1869. What I have to say, therefore, relates to trusts for other purposes, of which there are about 80,000. In a static society, benefactions would, by and large, automatically keep abreast of the times. In a society such as ours the opposite is the case. The last 100 years have seen a revolution in the social, economic and educational habit of mind, action and thought. Also, of course, vast public social services, both central and local, have grown up alongside voluntary societies. We have now reached the stage at which there is virtually nothing that public authorities may not do for the advancement of social welfare.

All these changes, social, economic and legislative, affect charitable trusts, and call for the reorientation of many of them. Yet as the law now stands, it is permissible to change the purposes of a trust only if they are or become incapable of execution, and then only to purposes as near as possible to those of the founder. We regard that as a drag on the progress of the voluntary movement. Therefore, we were unanimous in recommending that the present doctrine should be relaxed to the extent of substituting for the pre-condition of impracticability, and the requirement that the new purposes should be as near as possible to the old, certain flexible principles to govern changes in trust purposes. The most important of those were that, in certain prescribed sets of circumstances, trust purposes may be changed, even though not impracticable of execution, but only on condition that special regard be had to "the spirit of the intention of the founders," and "to the interests of the locality to which the endowment belongs."

I ought to tell your Lordships that our recommendations are based upon the Education (Scotland) Act, which your Lordships passed in 1946, and to which in this connection the late Lord Macmillan, who gave both valuable and helpful evidence to us, drew our attention. The suggestions we make are taken from legislation in the realm of education which Parliament has already adopted. I do not think there can be any doubt that the reforms which we propose would involve some remodelling of the Charity Commission, and some changes in their attitude towards their scheme-making powers. But special safeguards require to be found for certain charities, and for others even total exemption from the jurisdiction may be called for. For those our recommendations provide.

The most reverend Primate laid emphasis, naturally and rightly, on a subject which has much exercised our minds—namely, the question of religious charities. Religious charities may, I think, be divided into two classes, those to which he referred as Church charities and those which might perhaps more easily be described as denominational charities—not always the same thing. I would for this purpose include most of the charities to which the noble and learned Viscount, Lord Simon, referred as coming not within the denominational but within the Church charities—in this sense, those which are concerned with the practice and organisation of religious functions of the community, and those which are charitable in the ordinary sense of the term, like a home for the aged of a particular denomination. Those also require special attention.

In our proposals, however, I cannot recall (though I should not like to pledge myself without precise reference) any extension of authority over religious charities which does not exist under the law as it is to-day. Indeed, in some degree we extend the present exemption on Church charities, because we clear up the doubtful position of the Church Commissioners: we give them total exemption, which it is doubtful whether they enjoy at present, from the Charitable Trusts Acts; but we give them power to come in and seek a scheme if they wish to do so. Therefore, I think the position of the Church charities is ameliorated rather than otherwise. But if there is more that requires to be done, as regards either Church charities or denominational charities, then clearly it ought to be done, in order to relieve any anxieties in that very special field of public endeavour.

Most trusts that we have to consider are not, of course, religious trusts. They are, broadly speaking, welfare trusts of one kind or another. Who is to have the power to initiate new schemes for changes of purpose? Is it to be the Commissioners alone? Is it to be the trustees alone? Or is there to be some compromise between the two? We came to the conclusion that the main responsibility rests upon the trustees at all times, but that there should be certain reserve powers in the Commissioners to enable them to take the initiative, were the trustees slack, were they unwilling in what seemed to be a proper case to take any action. But even so, according to our proposals, no action can be taken contrary to the will of the trustees, or without the consent of the founder, if living, for any trust founded within thirty-five years. The noble Viscount, Lord Samuel, suggested that that period might well be somewhat extended. If he will forgive me for saying so, I regard that as being a relatively minor point, so long as we adhere to the principle that after a period of time, if new circumstances demand it, there can be a change. If anyone were to say that the period should be fifty years instead of thirty-five years I, for one, should not spend a moment in questioning that. I ought to have mentioned that the most reverend Primate felt some anxiety as to the position of local authorities in reference to the initiation of new purposes. I believe that he is not alone in feeling that anxiety. Clearly, the trustees must have an initiative; clearly, were they in default, the Commissioners must act. We thought that it would be a process of decentralisation to give to the local authorities also the possibility of initiative. But if there were found to be a general feeling that that was undesirable, I, for my part, should not press it. I do not regard it as a question of principle.

Now, my Lords, I hope that I have indicated that the two reforms, recording and the relaxation of the cy-près doctrine, which in our view, to some extent, run inextricably together, are reforms which should, or might well, receive the support of your Lordships. I believe that if they were put into use they would have immense potentialities for good. I have been surprised sometimes to hear the suggestion that the reforms we recommend—I think all the previous speakers have referred to this—might dry up the fount of charity. I do not believe it. What is this fount that it should so easily cease to flow? Is it a miserable trickle, a sort of metropolitan drinking fountain which can be stopped by an urchin's thumb? Surely not. It is a vigorous and lively stream, flowing from the unending desire of men and women of good will to better the lot of their fellows; and if anyone thinks that these men and women would be put off by wider scheme-making powers he would be misleading himself, as experience has shown. Powers as wide as we propose for the generality of trust purposes have been exercised by the Minister of Education in respect of educational trusts for the last eighty years or so. Have people ceased to found or administer trusts for education? Certainly not. Since the turn of the century something, like 20,000 such trusts have been founded, and there is no dearth of people to come forward to administer them.

I hope that the time is not far distant when Her Majesty's Government will announce their acceptance of our proposals as a whole, though not necessarily in every detail. Above all, I hope they will accept our proposals for applying to trusts for other objects powers similar to those which have so long been applied so successfully to so many educational trusts. I sincerely believe that my Committee's proposals on these two vital matters, to which I have mainly referred, reinforced by the many ancillary proposals we make, will ensure for charitable trusts a future as honourable and as useful to the public interest as their past.

5.13 p.m.


My Lords, anyone who occupies my present position in our "batting list" of twenty-one has a clear duty to be as short as possible and to concentrate as much as possible on one or two points, otherwise noble Lords who are down to speak later in this debate will have no chance of being heard. I propose to say in only one sentence what others have already said at greater length, how much the House owes to the admirable work of Lord Nathan and his Committee. I find myself in general agreement with all his main propositions, though not with all the details. I do not propose to say a word about the details but only to refer to the main propositions, and in the light of those propositions I would make a further plea to Her Majesty's Government to take the earliest possible opportunity of bringing about changes in the law and the administrative machinery relating to charitable trusts.

In asking for those changes I hope I need not say that I am not against charitable trusts at all. I wish to encourage them in every possible way as a means of social advancement. Charitable trusts are private enterprise in the use of money for social purposes. They should be used according to the individual views and not under public control. May I say, with regard to some of the things said by the most reverend Primate, that in seeking to change the law and practice of charitable trusts I have no desire to see them subjected to perpetual inquiry by busybodies or to see them forced unwillingly into pools. They should remain individual for public purposes. Nevertheless, having said that, I do believe that an overwhelming case is made out for three particular reforms. The first of these is that all charitable trusts should be registered. After all that has been said by other speakers I need not say much on that point. They should be registered so that those who wish to use them in meeting human needs may be enabled to find out what money is available for meeting those needs. There are at present literally no means of making that discovery.

It has been said that there are 100,000 trusts in existence. I have in my hand a Select Guide to Trusts and Foundations which has been prepared with a great deal of labour and is a very fine piece of work. But it deals with exactly 1,000 of them—that is to say, only 1 per cent. of the total number. It is a very interesting book indeed. It contains, of course, particulars of all the bigger trusts and also of some very interesting smaller trusts. I hope that noble Lords will take an opportunity of reading it. It begins with a reference to a certain trust which was founded to make good to the lessees of the Brighton Racecourse some losses they had suffered, but has now been deflected to give 10s. each to the poor of Brighton at Christmas. How that was done do not know. But it is a most interesting book, and yet it is only a specimen of what is needed to be done.

Something has been said to-day to the effect that there is no abuse of trusts. But how does anybody know whether these 100,000 trusts are being abused or well used? There are no means of knowing. I could develop this argument. I should have liked to go into the most reverend Primate's argument as to whether the exemption from income tax for trusts is giving me back my own money or somebody else's money. I can only say that I should be happy to be exempt from income tax at the price of having to record myself, and I think most of us would. I want to make only one point more about recording. Recording does not mean control. It means substituting light for darkness in the use of funds given for charitable purposes.

The second change for which I plead is that all charitable trusts over a period of, say, fifty years—the noble Lord, Lord Nathan, said thirty-live years—should be changeable by the making of a new scheme more free than under cy près—which means keeping as closely as possible to the testator's words, or to the words of the maker of the trust. If I wanted to make a case—and I think it can be made a good deal more strongly than it has been made by anyone in this debate yet—for a greater power for changing trusts, I need refer only to a book which I wrote upon voluntary action, and in which I included an appendix entitled A Charity's Chamber of Horrors. It was made up of descriptions of a number of charities. It came largely from a book written in 1880 by Hobhouse, the material being brought up to date by my later information. It gave a series of examples of charitable trusts which had gone wrong. Some of them, in fact, had started wrong; they had started not with benevolence, but with malevolence or folly. When I heard the once or twice repeated observations of the noble and learned Viscount, Lord Simon, on the nobility of the motives leading to charitable trusts, I was tempted to ask him to look at that appendix to my book and study the cases of the Jarvis Foundation for doles in Herefordshire, and the Tancred Gift for hospitals for decayed gentlemen, and see how those charities came to be.

Much commoner, of course, than malevolence and folly is benevolence becoming out of date by change. There was another example—I am citing this for a good purpose which will become apparent in a moment—of a seventeenth-century charity, for a sermon in low Dutch to be given in Norwich, which was finally put right in 1921, after three hundred years of being all but useless, idle and foolish. Then there was the very famous charity of 1723 for the redemption of British slaves in Turkey and Barbary. In 117 years—I should say, possibly, 100 years after there were any slaves to be helped by it—that also was put right by a remarkable exercise by the law courts of the doctrine of cy près. They decided that the money given for the redemption of British slaves in Turkey and Barbary should be devoted to the provision of Church of England schools throughout Britain. They were finally helped to do that because something else had shown that the testator liked schools, though he had not mentioned them in this gift. All those absurdities that are quoted in that book of mine have been cured. The point is: How long did it take to cure them? In the case of the provision for a sermon in low Dutch in Norwich it took three hundred years. There were many cases of these absurdities going on for hundreds of years. The greatest and the worst of them had to be cured by Act of Parliament. But how much time have we for Acts of Parliament to cure foolish charitable trusts to-day?

My third point is that the law which permitted the making of these trusts and took all this time to cure them is, except for educational establishments, exactly the law which is in force to-day. The old follies have been cured, but all human beings possessing money have not been made sensible and benevolent. Foolish trusts can be made to-day. There is nothing to prevent fresh absurdities from being created to-day, and no power to bring them to an end greater than the power we had in the past. In order to increase the power of getting rid of absurdities and putting to good use money given for charitable purposes we have, of course—and I am sure we all agree on this—to get some power-making scheme, free of the existing shackles of the cy-près doctrine. The enlargement of cy près—which has been accepted by most speakers in this debate so far—means authorising someone to frame schemes not strictly upon legal principles. That brings me to my next point: that the body for revising trusts by making new schemes should be administrative rather than legal. In the presence of the noble and learned Lord, the Lord Chancellor, I feel somewhat timid in suggesting this. I need hardly say that I do so with no disrespect to the great legal profession; indeed, I do so because I think that the great legal profession has something better and more important to do. The judges, above all, are where they are to interpret the law as it stands, and not to amend the law according to their views of social justice or social progress. And in order that they may in perfect confidence interpret the law, their function ought not to be mixed up with that of amending the law. That is an administrative and, in the last resort, a political task.

For that reason I suggest that the scheme-making body, the body for making schemes with greater freedom from the existing shackles of the cy-près doctrine, will, and obviously must, as the Report has suggested, be a reconsti- tuted Charity Commission. And the Charity Commissioners do need reconstituting. May I say that I read with very general assent the description given in the Report of the kind of body contemplated—a body of from five to nine people, appointed by some Minister, people of knowledge and of public standing and public experience. The body is referred to, I think, in paragraph 709 of the Report. I would suggest that that body ought to be able to initiate new schemes either on the motion of the trustees or on their own motion if they feel it necessary. I would agree with many of those who have criticised the suggestion that the local authorities should have a special say in initiating changes. I think, on the whole, one should make it clear that this is private money, not under public control. I do not want to give local authorities any particular say in it. Of course, there is nothing to prevent them from writing to the Charity Commissioners—everyone will be able to write to the Charity Commissioners—but I would name as the people to take the initiative only the trustees or the Commissioners themselves.

I would add just one thing to what is in paragraph 709. The body contemplated has some curious similarity to a body with which I was once connected called the Unemployment Insurance Statutory Committee. That consisted of from five to nine people of public experience. But we were required whenever we were going to make a report on regulations, or whatever it might be, to give public notice of what we were doing and to give special notice to anyone likely to be concerned. I regard the work of this body not only as a means of making up its own mind but also of obtaining the opinions of people outside as to how money can best be given, and I would put in something of that sort. When a scheme is made, the question will then arise of how it will be put into force. My own feeling is that since a Minister will appoint this new Charity Commission, the natural thing would be for that Minister to lay the schemes made before Parliament to be approved or disapproved. I think that nearly all the schemes will go through automatically—but I need not go into these details.

I will return to my three points. We should get a recording of all charitable trusts, so that those who wish to use them or start fresh trusts can act in the light and not in the dark. My second point is that, realising that the law under which we work to-day is exactly the law which led our ancestors to the policies which are described in my volume on voluntary action, we should amend that law by giving greater scheme-making powers than those given by cy près. Thirdly, the scheme-making powers should rest with an administrative body ultimately putting its proposals before Parliament, rather than with the Churches, who have more important tasks even than this to do.

5.32 p.m.


My Lords, my only reason for intervening briefly in this debate is because I should like to say a word or two in support of one proposal that the noble Viscount, Lord Samuel, put forward in 1949 and again to-day—that is, the proposal for a local common good fund. I propose to say a word or two about it from an angle that has not yet been touched upon by any noble Lord in this debate. I have tried to find out, but I have not succeeded, and I hope someone can tell me, if not to-day then perhaps some time in the near future, whether it is possible for a local authority in England to establish a common good fund, or whether it needs legislation. I gather from the noble Viscount that he thought that legislation would be necessary even for a local common good fund. I have tried to get some information about this but have not been able to get any definite or clear statement. If legislation is required, I should urge, as I think would most noble Lords, that it should be introduced soon. If it can be done under any existing powers, I hope that the noble and learned Lord, the Lord Chancellor, if he is going to reply, will give some information, because it ought to be made public as soon as possible.


I am sorry I did not get the question: will the noble Lord repeat it?


I said I have made some inquiries about whether it would be possible for a local authority, a town council or county council, to form a common good fund without having to come to Parliament for legislation, but I have not been able to get any definite answer to that simple question. Therefore, I was about to give some reasons why I think it is a somewhat important question, which affects many local authorities.

As your Lordships know, I have had a fairly long experience of local government, and I can assure your Lordships that local common good funds would serve a most useful purpose. Without any hesitation, I should say that almost every local authority have funds contributed by public subscription or donated for some specific purpose which long ago has been served. May I give an example? In a local authority of which I have knowledge, the borough treasurer acts as honorary treasurer to at least eight funds, amounting to several thousands of pounds, half of which is entirely frozen, in the sense that the purpose for which it was provided no longer exists; and not only so, but there seems to be no way by which that money can be diverted to any other purpose. The funds can no longer be used nor can they be wound up. I am fairly certain that a similar state of affairs exists in the treasurer's department of the majority of local authorities in England—bits and pieces: the remains of all sorts of disaster funds; money left over from funds raised by successive Lord Mayors of London, given from the Lord Mayor's Fund as grants to the local authorities and unspent, because by the time it was received by the local authorities the distress had been met in some other way; bequests by kind-hearted people who lived in a bygone age and left money for purposes which, mainly through the lapse of time, have become, to use Lord Samuel's word, "derelict." My experience has been that when a disaster happens, it is the easiest thing in the world to start a fund to alleviate the distress, and the most difficult to wind it up.

The question I ask for guidance upon, therefore, is: Can the local authorities establish local common good funds or is legislation required? I hope that the noble and learned Lord, the Lord Chancellor, will look into this matter and let me have a reply—if he cannot do so to-day, perhaps at some other time. If he finds there are ways and means by which local authorities can consolidate these "bits and pieces," as I have described them, into local common good funds, I hope the Lord Chancellor or some other responsible Minister will make it public without delay. If, on the other hand, the noble and learned Lord finds that legislation is necessary, I hope the Government will take action. Alternatively, a few members from all Parties might combine together to draft and introduce a Private Member's non-Party Bill in your Lordships' House.

Finally, I do not for one moment suggest that the vast problem, or perhaps I should be more correct in saying the vast series of problems, opened up by Lord Samuel's original speech can be dealt with quickly; but I do say two things. It seems to me to be both foolish and stupid that local authorities should go on year after year, and in some cases generation after generation, hoarding up money for no foreseeable purpose. Secondly, the establishment of common good funds by local authorities could provide a much-needed incentive to voluntary effort and an excellent beginning towards tackling the main problem which the noble Viscount, Lord Samuel, has brought before us.

5.40 p.m.


My Lords, we have not yet arrived at the halfway mark in the list of speakers, so I propose to be as brief as I can, to allow speakers coming after me a fair chance. If the noble Lord, Lord Nathan, were to do me the honour, which he has no possible reason fordoing, of asking my opinion upon this very remarkable and impressive Report, I should be inclined, in no sense of disrespect, to use the classic retort of the curate, when asked by his Bishop his opinion on the breakfast egg: that parts of it are excellent. But if the noble Lord were to embarrass me by inquiring which parts I thought to be excellent, and which were doubtful to the taste, I should find it difficult to answer, because I am no lawyer, as my speech will no doubt demonstrate to your Lordships.

This Report, as I read it—and I have tried to read it—is largely a matter not only perhaps for lawyers but, anyhow, for those well versed in the history and practice of charitable trusts. I am speaking rather from a general point of view, though I have particularly in mind one large mixed charity of which I have special knowledge. On February 16 of this year a meeting was held at which the National Council of Social Service invited the views of voluntary societies and bodies upon the proposals of this Report. This meeting resulted in a subsequent submission to the National Council of opinions from forty-nine different societies, covering a wide variety of experience in the management of charitable trusts. Naturally, opinions differed—that was only to be expected—but in general, although I myself was not present, I understand that considerable anxiety was expressed that the recommendations in the Report, taken as a whole, would lead to a loss of freedom and initiative on the part of trustees and might lead to undue interference by central and local authorities. The fear has also been expressed that a hard and clear-cut efficiency which did not take the fullest account of the human element would not be, as the Report says, of the maximum benefit to the community. I realise from what the noble Lord, Lord Nathan, said in reply to observations made by one of the representatives present—at a subsequent meeting, I think it was, on the 19th—that he himself is quite alive to the importance of the human element. It seems to me that this same vital human element is apt to be submerged in what the noble Lord termed—I think on that same occasion—"the cold, calm precision necessary in considering proposals for an Act of Parliament."

That brings me to a further consideration which makes it difficult for those operating trusts to make up their minds about these recommendations; if the Government are going to act on the Report, which parts of the egg do they intend to consume, and which parts, with all the protestations suitable to a delicate situation, do they intend to leave untouched on their plate? Some of the proposals are, no doubt, desirable. There is no doubt that in many cases a considerable tightening up is required. Nevertheless, some of them, we think, are undesirable while many are interdependent. Until it is seen what legislation, if any, results from the Report, it is difficult to decide what attitude must be adopted. It was said of the Report, in a letter to The Times on May 30: This applies, however, only to the larger and more extensive charities. It is still not known what may be the views of those who are administering all the thousands of small charities, particularly those of a local character; and it is impossible at the moment to form any idea of the feelings of those who are the present beneficiaries, or of those persons who may still he willing to make gifts fur charitable purposes, so long as they can feel that their gifts will continue to be applied faithfully to the purposes, and in the manner, which they have legally selected. The Committee have been trying, in this Report, to do an extremely difficult thing—and probably the noble Lord, Lord Nathan, will be the first to admit that it was a difficult task. They have tried to deal with a vast number of different organisations, of all sorts and kinds, and to deal with them in one large and comprehensive scheme. These bodies range from those with an income of 2s. 6d. a year up to those big, living organisations, such as those represented at the conference to which I have referred, held by the Royal Society of Arts on May 19. But is it wise to over-rule and complicate the small, and often very ancient, local trusts which operate simply and effectively all over the country?

I should like to quote a case in point from my own personal experience. For some years I was one of the trustees of a small trust founded by an ancestress in the late sixteenth century. This trust was founded for two purposes: first, for providing homes for poor women; and secondly, for apprenticing boys in the neighbourhood to various local trades. In the course of years the facilities for using the money in apprenticeships gradually dried up, until on one memorable occasion the clerk to the trustees received a naïve letter from a local farmer suggesting that the trustees should pay the fees far apprenticing his own son to himself to learn farming. Clearly, something had to be done. We applied to the Charity Commissioners for permission to widen the scope on this side of the trust, and within a short time, we got permission to help boys to a suitable career in any way likely to achieve that object. Thus we were enabled to fit out one or two budding carpenters with a set of tools, and even to help boys who wished to emigrate to Australia and Canada.

Under the present proposals, as I read the Report (I have already informed your Lordships, and no doubt you have discovered it for yourselves, that I am no lawyer) the matter would be far more complicated. It might entail interference by the county council, a local public inquiry, possibly an appeal to the courts, and a danger that the trust's affairs might be brought within the sphere of local politics. In any case, what started as a simple and sensible solution of a small local problem might, under these provisions, entail quite unnecessary delay and expenditure and, presumably, the necessity of providing greatly increased staffs to deal with trust matters. That would apply all over the country.

One large charity of which I have some special knowledge—the Boy Scouts' Association—for instance, is incorporated by Royal Charter, and for many years has operated a Trust Corporation of which its various units may make use if they so desire; but they are not bound to do so if they prefer to have local trustees to act. It makes regulations that all its local units shall have their accounts audited, and that their affairs shall be subject to control and inspection; and it requires that the public locally shall be represented on the governing bodies of each of these units. It seems to me, my Lords, that if regulations are made that all such local units, which are running well and efficiently, so far as we know, shall be subject to all sorts of new control and inspections, and if it is also laid down that their affairs shall be subject to debate by local authorities, it is bound to lead to bureaucratic control—and that we want, at all costs, to avoid. It will also lay heavy burdens on all those thousands of persons who are voluntarily giving their time and energy to such work.

All this may tend, I fear, in spite of what the noble Lord, Lord Nathan, said towards the end of his speech, to dry up the delicate plant of charitable bequests; and that again is a thing we cannot afford to do. Therefore, I hope that before anything definite is done, the fullest thought and consideration will be given to a Report all the implications of which ordinary laymen find it very difficult to understand and some of which may have evaded the Committee who gave it birth. I do not want it to be thought from what I have said that I do not realise the great skill and the wonderful determination with which the noble Lord, Lord Nathan, and his colleagues tackled an immense problem. Their Report is indeed a remarkable document, but one which, at any rate in the lay mind, is bound to give rise to anxiety and doubt. To remove these anxieties in any contemplated legislation will be a difficulty task. Whether it will be an insuperable one only time and Her Majesty's Government can show.

5.52 p.m.


My Lords, before I set about it, I should like to add my thanks to the noble Lord, Lord Nathan, and his Committee for a most interesting, thought-provoking, efficient Report, which I read with a great deal of pleasure and from which I have derived a large amount of useful information. I should like to say to the noble Lord, Lord Nathan, that if I criticise that Report it is the purpose of a Report of that kind to provoke criticism, and I hope, therefore, that he will not take it amiss.

I should like first of all, before coming to the Report, to refer in a few sentences to the first part of the Motion of the noble Viscount, Lord Samuel. I have taken some pains to ascertain the opinions of some great charities on this subject, and I think most of them would agree on this: that social progress, practical or legislative, has in the vast majority of instances emanated from the activities of voluntary bodies, and it is difficult to see how Her Majesty's Government can encourage further progress except by ensuring to the voluntary organisations and others full and unrestricted freedom to pursue their various aims and purposes, and by continuing to afford such reliefs as are within its power, such as taxation. The suggestion that the State should take responsibility for established social work, leaving charitable trusts to fill in the gaps, is not supported by experience. Almost all pioneer and experimental social work has stemmed from existing work, and it is not practical to attempt to draw a clear-cut line of demarcation between what might be called established social work and experimental and pioneer service, because they are interrelated.

Another point was referred to by the noble Viscount in his opening speech, and that is common good funds. I should like to say a few words about that matter—I think I should do so because I am, and have been for a long time, a trustee of a common good fund; in fact a trustee in a double capacity. The first thing I would say is that I cannot conceive a national common good fund fulfilling; any really useful purpose. If people feel they want to contribute to the nation, they nearly always send money to the Chancellor of the Exchequer. In my experience, nearly all such funds are local: they are very much tied to localities. With regard to local common good funds, the history of the common good funds of many of the royal burghs of Scotland can be pleasantly read in John Galt's book The Provost. The common good funds which have survived best in Scotland are those in what are called regality burghs, where they have been very jealously preserved. They have been preserved by reason of certain factors into which I do not wish to go into this afternoon, but which I think the Government should consider carefully before actively trying to establish common good funds, in order that they be successful.

The noble Lord, Lord Nathan, himself said that when the Committee started their work it was thought that there were many dormant trusts to be found lying about, like so many sleeping princesses. I think that was his charming phrase.


Merely on a point of correction, I did not actually say that. I think someone else did. I did not say it myself because the question of dormant funds was outside our terms of reference; it did not come within our purview at all. I have heard the statement made, but in attributing it to me the noble Lord is mistaken. I might have agreed with it, but I did not make it.


The noble Lord will know where I obtained it—from the Report of the Royal Society of Arts meeting.


Did I say it?


Yes. In any case they are great words put into the mouth of a great man, and I do not think he should take them out. Anyway, the noble Lord, or somebody on his behalf, said that very few of these funds were dormant. From some parts of the Report I think that as the work proceeded the Committee found that the idea that many dormant trusts were to be found lying about was an illusion, and it was replaced by the idea that there were a good many trusts which could be devoted to better purposes. That idea look the place of the original search for dormant trusts. I have not the smallest doubt that there are many ardent social workers to-day, people who, desperately in need of funds for good purposes, share this belief.

Now if I may turn to the Report, it seems to me that at the beginning of the Report the purposes of the truster were treated with great respect, but that as the Report proceeded—to quote paragraph 637—the argument gave way to the duty of trustees to put the resources at their disposal to the best possible use in the service of the community at any given time. That is a high-sounding principle but one which takes little account, I am afraid, of the original purposes of the trust. It seems to me to be a dangerous doctrine, for reasons I am about to give to your Lordships; and, therefore, while I support the Report in its argument for some relaxation of the cy-près doctrine, I do it under very strong reservations. The Report draws some support for this recommendation from the effects of the 1928 Act in Scotland. I am bound to say that the Committee were apparently not fully informed upon that matter, because I think it will be found that, before the coming into force of that Act, Scotland had been known as the land of the mortification—"mortification"being our charming term for a charitable trust. Almost every Scotsman who succeeded—and there were many who did succeed—mortified a certain sum for his native place. After the passage of the 1928 Act it is my opinion that those mortifications fell off very greatly. But it is within my knowledge that the contributions from Scotland to great public charities increased very much after the passage of the 1928 Act, and, indeed, when they were making their subscriptions many subscribers said that they did so because they wanted to subscribe to some charity which was unlikely to be interfered with by the Government. So far as I understand the experience of the 1928 Act, I do not think it supports the Report quite so much as the Committee thought.

This is a very important point, and I want to hammer it home, so I will give an illustration. In the year 1878 a man mortified a sum of £5,000 to build a free hospital for his native place and the adjoining parishes. Of course, even in those days £5,000 did not go all the way to do that, but the hospital was built and worked. Some sixty years later the trustees found themselves in possession of a good hospital and a sum of some £22,000. They were almost within sight of their goal, and your Lordships will remember what happened. First there was the Taylor Report and the Rushcliffe Report; and then came the war. Then came the National Health Service Act and the £20,000 disappeared.

Now, my Lords, I am not going to suggest for a moment that the new service in that hospital is not just as good as the old, and I say most emphatically that the relations of that hospital with the authorities are of the happiest. Everything is going well. But in paragraph 632 of his Report, in discussing this point, the noble Lord, Lord Nathan, points out that the Minister's obligation is only to provide accommodation and services to such an extent as is necessary to meet all reasonable requirements. And he asks, "Who can say that this obligation extends to providing everything which might conceivably make for the cure, comfort and happiness of the patient, and that there is not ample room for voluntary funds? "Once more, I completely agree. But does my noble friend think that all his eloquence, all the persuasive charm of his voice, can induce a burgh which has subscribed £20,000 once, and has seen it swept away, to put it up again? That shows how very careful we must be with the plant for which we are to-day prescribing.

People to-day consciously consider whether or not the State is likely to interfere with their benevolence, and for that reason, whilst I should be willing to see an extension of the cy-près doctrine to enable trustees of their own volition to frame schemes, I am strongly opposed to enabling other people to force schemes upon them. The view of the Committee seems to have been expressed by one of them when he said: We suggest that trustees are primarily responsible for deciding whether the charity is not serving the best purpose"— your Lordships will notice how we are drifting away from the purpose of the truster by the use of the words "the best purpose"— and for putting their proposals before the scheme-making authority. But he goes on to say that if they do not do so, if they persist in thinking that they are serving a useful purpose, the scheme-making authority should have power to initiate proposals, which of course puts the trustees in a quandary. It really almost amounts to saying, "We have found no sleeping princesses, but we can make the trustees consent to our schemes, and there is £200 million which can be usefully employed for our purposes. "While it is possible that the larger trusts will be able to resist this pressure, I fear that it would kill the smaller charity. Since every little trust has a voice as loud as a big trust, and it can scream, I think the effect upon charitable people will be very great. I suggest to the Government that they should consider that trustees do not live for ever, and if they have power, by some relaxation of cy près, of framing schemes for themselves, as time goes on, schemes in accordance with public feeling will be made without the necessity of enabling an outside body to force schemes upon them.

It would perhaps not be out of place to remind your Lordships that almost immediately upon the disappearance of hospital endowments, a new form of trust was invented simultaneously in different parts of the country, which was especially designed to avoid a similar conveyance in future. I do not know, but there may be many forms of that kind of trust. What we are discussing this afternoon is the old contest between charity and philanthropy. I think it was fought out long ago between Fanny Burney and Dr. Johnson, when she objected that his shilling would be spent on gin, and he replied, "Madam, if gin be his comfort, let him have gin." I shall not be, I hope, thought to be wishing to pour gin gratuitously down people's throats, but I should be reluctant to find myself in the opposite camp to Dr. Johnson in a matter of this kind. Another part of the recommendation which makes it worse, is the suggestion that local authorities should have the power to appoint trustees.


Not to appoint trustees; it was suggested that the local authority might have power to initiate schemes. But as I have said earlier, I would not attach too much importance to that, in the sense that I should be willing that that representation should be withdrawn.


I have read the noble Lord's Report very well. I thought he suggested that local authorities should have power to nominate trustees.


There may be a misunderstanding. The recommendation in the Report is a limitation upon the existing power of local authorities by suggesting that in no circumstances should they have more than one-third of the trustees. At present, local authorities can have any number, perhaps the majority. We thought that wrong. Our proposals are a limitation.


Has the local authority power to force trustees into a trust?


When a scheme is made by the Charity Commissioners, they often provide for a local authority to be represented. Similarly, when local authorities are providing large funds towards a charity, they often insist upon a large representation upon it. It was thought, and so represented in the Report, that that power ought to be limited to having no more than one-third of the trustees.


The only point I wish to make on that is this. I do not want these trusts to become a matter of local politics. We are all agreed upon that, and so I will not develop it further. Everything I have said applies equally to the proposals to compel trustees to transfer their assets to official custodians.

I now wish to turn to another point which I think is of vital importance, and which must be considered by the Government before it is possible to formulate legislation. The Report analyses charities in two ways. The principal analysis proceeds according to the derivation of their funds, and is divided into charitable trusts, mixed charities and open charities. The other analysis is according to their origin: by Act of Parliament, deed or will. I do not think this analysis is complete: there are trusts falling outside this analysis which should be brought in. My point is that neither touches the vital consideration, which is, in my opinion, so serious as absolutely to vitiate the Report as a basis of legislation unless it can be separately considered. I have looked in vain in the Report for any consideration of the various methods of working of important charities. Personally, I divide charities into operative and administrative—I am grateful to the noble Lord, Lord Hampton, for introducing that word.

Administrative charities administer funds or supply either money or goods for certain purposes, but operative charities carry on business—often a business of great complexity—through highly skilled technical officers, while the trustees themselves are selected for ancillary skills: organisations like the Salvation Army, Dr. Barnardo's Homes, the Shaftesbury Homes and the "Arethusa," various schools for the blind, the Royal National Lifeboat Institution and others. It gave me a shock to realise that all these were included in the recommendations, and I can only suppose that the framework of the investigation had been fixed while the scope was still restricted to charitable trusts, and that the importance of the operative side was not sufficiently realised when it was decided to extend the scope of the inquiry.

It certainly is a very drastic proposal to suggest that these bodies should be asked to put their real property into the hands of official custodians, and not to deal with them without official consent, and to put their investments also into the name of a custodian. I am told that some members of the finance committee of Dr. Barnardo's Homes are in attendance almost every weekday to take decisions. Other great charities whose business does not require the same financial activity are none the less regularly making or realising investments at a moment's notice, upon art expert calculation of their future commitments. I do not think any reason could be given for such a proposal. I should very much like to know the evidence that was given on this subject. There were very few operative charities that submitted evidence. Dr. Barnardo's Homes, I think, was one, and I believe the Salvation Army sent written evidence; but I do not think any other operative charities gave evidence before the Committee. Their evidence is very important on this point. I should like to know what Dr. Barnardo's Homes said on this subject. I am certain that if gifts of lands and securities have to be registered in the names of official custodians, very large numbers of them will not be made. I could, I think, produce evidence on that point.

To illustrate the effect of the special custody of lands, let me say that I know of an institution—an institution of national scope—which after the war required a more suitable location, and required it urgently. It was a project that required the consent and assistance of the Ministry concerned—which it received amply. Under the rules the properties could be bought only at prices sanctioned by the district valuer, and the result was that in case after case the trustees received consent to purchase at quite unreal prices, and saw every suitable property taken by other institutions which had a freer hand. Your Lordships can easily realise the sense of frustration which overtook the unfortunate trustees and you will know from practical experience the importance of being able to deal as you please with your own at a moment's notice when you are running a business. I look with dismay, confirmed by experience, at this part of the Report.

Then as to accounts. All these charities have audited accounts. The form may be a little out of date, but I know charities that have a special form of accounts drawn up in consultation with the auditor for particular reasons. If these people have to present accounts to a central institution and answer questions on them, they will have to create an entirely separate accounting department and find office room for it. That will be a completely unnecessary burden on funds contributed for quite a different purpose. I know from experience that the public scrutinise very carefully the accounts of charities and the proportion of office expenses and overheads to the amount subscribed. The result of that, therefore, might be a considerable diminution in the funds.

On the question of the power to formulate schemes, the Report says that anyone is entitled to formulate schemes. Would any Government really wish to subject, say, the Salvation Army to these provisions—a body which owns property and operates throughout the Empire, throughout the United States, and throughout the whole civilised world, and which operated unmolested even in Hitler's Berlin? I do not think I should care to be a member of any Government which subjected the Salvation Army to the formulation of a scheme. Or take the Lifeboat Institution, which maintains a fleet of the most up-to-date lifeboats, manned principally by volunteers, upon the coasts of Great Britain and the Republic of Ireland. It would be very awkward for them if their careful plans to cover the whole coast were distorted by schemes to establish boats at different points. Even if these suggested schemes were defeated at a public inquiry, the proceedings would be costly: and they would be bad publicity, and might impair public confidence in the institution.

No one who has any experience at all will need further examples. The Report suggests, as the noble Lord, Lord Nathan has said, that Parliament has legislated for companies, and that it may therefore well legislate for charities. I agree. But the first Companies Act which was introduced into Parliament was drafted out of a far deeper and more intimate knowledge of the business of companies than this Report has of the business of charities. I look on the Report in many ways as a very valuable Part I of any inquiry. But I feel that if there is to be any further legislation on the matter far more inquiry is required. If the Government doubt that, I suggest that they make private unofficial inquiries of the great charities which have been mentioned to-day, and they will then find that what I have said is borne out by experts who are better able to give an opinion than I am.

6.17 p.m.


My Lords, my principal purpose in rising is to give the fullest possible support to and to express my complete agreement with the most reverend Primate, and I include, of course, that part of the most reverend Primate's speech in which he paid a well-deserved compliment to the authors of this Report. They have indeed performed a great public service. But the unestablished churches of this country have even better reasons than the Established Church to fear and distrust the recommendations of the Report under consideration. There exist a number of exceptions—exemptions, I personally would call them—from the jurisdiction of the Charity Commissioners. It is proposed in the Report that those exceptions should be maintained and even, as the noble Lord, Lord Nathan, has said, slightly increased. These exceptions are nearly all beneficial to the Established Church and not to other religious bodies.

The most reverend Primate was speaking for us all and, I think, from a wider point of view than that of the Christian religious bodies in this country. As I heard him speak I was in the fortunate and happy position of being able to cross out note after note of the speech which I was proposing to make. There are several points in the recommendations which the most reverend Primate welcomed. So do I. I am delighted to hear that legislation to deal with imperfect trusts is contemplated. I am all in favour of that very good friend of all charitable trusts, the present Charity Commission, being given the extra staff which no doubt is required. But one can often deplore the spectacle of good friendships being ruined by the promotion of one of the parties to undue wealth and power, and I am dubious whether those very friendly relationships which at present exist with that quite admirable body the Charity Commission will maintain their full sweetness if, in accordance with the recommendations of the Report, the Commissioners are to be increased in status. I am also exceedingly dubious whether they will survive the placing of the Charity Commissioners under a Minister. But as for any reasonable request for more staff, it surely goes without saying that every sensible man is in favour of it.

I welcome, too, the proposal that investment in equities should be permitted to charitable trusts under such safeguards as may seem proper and advisable. I am going shortly to say one word about cy près and the relaxation of that doctrine. Before I do so, I must mention one point on which I think I shall express a lonely point of view. It is mentioned in paragraph 129 of the Report that the religious body to which I have the privilege to belong regrets the decision in the case of Gilmour v. Coats to the effect that a contemplative community is not to be classed as a charity. That decision by your Lordships' House seems to us to be wrong. I am not going to argue the point here. I will content myself by saying that, in our opinion, it is contrary to an older and still more authoritative decision, given in the leading case of Martha v. Mary.

As regards cy près, there seems to be a strong case for a reasonable and cautious relaxation of the doctrine. The noble Lord, Lord Nathan, in his Report gives, I think, two grounds for advocating the relaxation. In the first place, he deals with the undue restriction of certain charitable trusts to localities. I am sure that he has a good case. I would only plead that the very strong feelings of local patriotism should be carefully regarded—and here I speak in my official capacity, for I have been getting on in the world. I am a person of consequence. I am chairman of the parish council of a small Devonshire village; and if I had to go to my fellow councillors to tell them that one of our parochial charities was to be extended to cover the benighted individuals who have the misfortune to live in the neighbouring village, I should certainly have a very difficult meeting on my hands. Nevertheless, let there be some relaxation on that point if it is essential.

The other ground for relaxation which is made in the Report your Lordships will find at paragraph 327 and in many other places throughout the Report it is also mentioned. It says: In particular the growth of new public services may, almost at a stroke, make redundant some endowments of very recent origin. Obvious examples are the nationalisation of the hospital service.… Other examples are given later. Theoretically, it is quite arguable; practically, I can assure your Lordships it is true only to a very limited extent. I happen to be the trustee of one of the few hospitals which, with the Manor House Hospital in which many of the noble Lords opposite are interested, have been left independent and exempted from the National Health Service. When we were granted that exemption, I was full of doubts and fears. I feared that our wards, competing with the National Health Service in London itself, would soon be empty or, at least, that they would be empty of the poor. I thought that our subscription list would dry up. Neither of those two fears has been realised. Our wards remain full and our subscription list—heaven forbid that any trustee of a charity should express satisfaction with his subscription list!—is not so very bad as I feared it would be.

There are other departments in which the State has entered into the sphere of private charity. I remember that when we passed the Children Act, a lady wrote to a newspaper and said that she presumed that all the voluntary homes would very soon disappear and that the State would make all the provision that was necessary for destitute children. No one supposes for a moment that that is going to happen; and our convent homes for destitute children seem to have as secure a future almost as that magnificent institution mentioned by my noble friend, Lord Saltoun, Doctor Barnardo's Home, an institution which we greatly admire and with which, I am glad to say, we are on the friendliest possible terms. I will not attempt to add to the powerful arguments brought forward by my noble friend, Lord Saltoun, on the subject of many charities that are doing great work to-day. I can only say that, in our more limited sphere, members of the Roman Catholic Church are endeavouring to emulate them. If, therefore, there is a case for the relaxation of cy près, there is a strong case for proceeding very cautiously and basing our relaxations on practical results and not on theory.

I would venture to say a word in favour of the Minority Report. I do so with a great sense of boldness. I am not a lawyer. I regard the Court of Chancery as the most awe-inspiring of mysteries. I must admit that I am handicapped by the fact that the Minority Report is written by no means so clearly or so beautifully as is the Majority Report. Nevertheless, since in spite of the closest consideration that I have given to the reassurances of the noble Lord, Lord Nathan, I feel that the liberties of the subject are menaced by the proposed reorganisation of charitable trusts, I cling to that historic defender of our liberties, the courts of justice. Mr. Salt, who presumably knows his business, maintained that the Court of Chancery can, with some few additions, be made capable of all the scheming work that may be necessary. I beg Her Majesty's Government to continue to extend to the charitable trusts that great protection. I see little value in the alternative proposal of the noble Lord, Lord Nathan, that there should be an appeal to the courts from the decisions of a scheme-making Charity Commission; I do not know on what grounds that appeal is to be brought. I believe that we shall be much wiser to continue the present jurisdiction of the Court of Chancery, which is a part of our history and which affords protection to our liberties.

Now let me say one word upon the proposal that the Charity Commissioners shall be made compulsorily the custodian trustees of all charitable trusts. The arguments on which that recommendation is based strike me as thoroughly paternal: "It is a good thing for the trusts to have a custodian trustee; therefore, let them be compelled to have one. "My Lords, that is paternalism. As regards the larger trusts, it has been pointed out that most of those that hold considerable property have been incorporated and are perfectly capable of dealing with their own securities. As for the smaller charitable trusts, I was surprised (and it was the only omission that occurred to me in the Report) that nothing was said of the great advantages to such a trust of employing a bank or an insurance company as a custodian trustee for its funds. In saying this, I must acknowledge an interest, since I draw fees from an insurance company; I hope your Lordships will not think that I am unduly swayed by that interest. One of the trusts of which I am trustee—it is quite a small one—decidedto employ as custodian one of these corporations. The annual fee which we pay for that service is minute—I think it is a good deal less than 1 per cent. of our income—and in addition to the ordinary advantages which we gain, which anybody gains from having a custodian trustee, we obtain what is invaluable to us and what will become absolutely essential to all trustees if investment in equities is to be made legal—namely, expert financial advice.

On several occasions, even within the limited scope of the Trustee Act, we have benefited by advice from our custodian trustee—advice to switch from one dated security to another, for example. So when we are holding equities, as I expect we shall, it will be essential for us to have a custodian trustee with a close eye to the market, and one who is prepared to offer us financial advice. That service is now performed by banks and insurance companies that accept charitable custodianships. It is the custom in America for banks and other corporations to give this service, and I believe it would be most valuable if that custom spread over here. I believe that great harm would be done if custodianships were taken away from those bodies which are able to give financial advice and given to the Charity Commissioners, who would be quite precluded from advising on securities—it would be an improper activity for any semi-Government body to perform.

I wish that I felt sufficient confidence to welcome these proposals entirely. It is no pleasure to me to have to stand out against what will certainly be represented as progress; but I am genuinely alarmed at the power which, under this Report, is to be placed in a State body, subject to a Minister but not the responsibility of the Minister before Parliament. Parliament does not like the Commissioners. Four hundred years ago a King of England decided that the charities of his day needed investigation. In his time the bulk of charitable work was done by the religious houses. Accordingly, he appointed a Commission. The Commissioners investigated first of all the smaller religious houses, and they found that they were inefficient and uneconomical, and that the best use was not being made of the funds at their disposal. I dare say that that was very true. I am sure that many of them were very badly managed. "Rationalisation" took place and their estates were sequestrated to the Crown. Then, after a few years, came the turn of the larger charities, the greater abbeys. Here the King's Commissioners offered to the ecclesiastical authorities exactly what the noble Lord, Lord Nathan, offers to them—"full consultation. "The Commissioners went down to the abbeys. They investigated; they made lists of all the property; they consulted the abbots, and after the consultations nearly all of the abbots, in return for pensions, handed their goods over to the Crown. I think there were only two who remained obstinate.

My Lords, that was one way of dealing with charities. I do not suppose that anything of the kind will happen in the foreseeable future. Nevertheless, if we are to defend liberty, we must guard not against what is likely but against what is possible. I beg your Lordships and Her Majesty's Government to consider the real apprehensions that many of us feel at the steps that are proposed

6.39 p.m.


My Lords, as I have sat here I have marked off paragraph after paragraph of what I intended to say, and therefore I will not detain your Lordships very long. I want to congratulate my noble friend Lord Nathan on this Report—a Report that the ordinary man can read and understand, even if some of the proposals are a little difficult. There are at least three points which are very valuable indeed. One is the suggested alteration in the law of mortmain as it affects charitable trusts. Another is the extension of the range of investments allowed under the Trustee Act, 1925. One of the most valuable things is the suggestion of a common good fund. That can be of very great and far-reaching importance.

I should like to say a word following what the most reverend Primate said with regard to Church funds. Much that he said applies to other denominations. I have had handed to me a note of a conference of delegates under the auspices of the Churches Main Committee. The conference consisted of delegates of various religious denominations—the Church of England, the Roman Catholic Church, the Methodist Church, the Salvation Army, the Church in Wales, the Jewish Community, and others. All these have come to a common agreement with regard to their point of view. I will refer only to one point, which has been hammered at again and again. The Report of the Committee suggests that local authorities should have power to initiate a scheme. This may be desirable with regard to common good trusts, but it would be most undesirable for the local authority to intervene in respect of religious trusts. The Church itself should suggest a scheme. A number of small trusts might be associated together and held by the official trustee, but this again ought not to apply to the churches. This applies not only to the Church of England in particular, but to other churches as well.

I have only one other main point to make, and I am not quite sure whether it is germane to the subject. I have searched in vain in the Report of the Committee to find out something concerning those large sums of money which have been raised for specific purposes—as, for example, the lands raised by Lord Mayors. If my information is correct, there are moneys left behind, dormant, perhaps, or idle, not used, often from funds as far back as the "Titanic" disaster, the Gresford Colliery disaster, or the Mumbles lifeboat disaster. These and others should be the foundation for what the noble Viscount, Lord Samuel, called a national Common Good Trust. There are here sums of money which could be put to the best purpose. I have also come across another charity called Smith's Charity, dating back for a couple of hundred years. It was founded for the relief of victims of Turkish pirates, and endeavours have been made by various associations and organisations which feel that they could, in modern parlance, fill the requirement for which the money was originally raised; but nothing has been achieved in that direction. This is a subject which is well worth looking into, and something could be done to divert that money into a common good fund.


With regard to the account of Smith's Charity to which the noble Lord has alluded, it is stated that a considerable part of the income has been used to give children country holidays. It is still used for that purpose.


I am delighted to hear that.


Smith's Charity is administered under the cy-près rule.


I think there are other funds which might be employed in the way I have described. That is all I wish to say. It would be simply a waste of time to repeat all over again what has been said by noble Lords. I am in agreement with the most reverend Primate and, in large measure, with the noble Earl, Lord Iddesleigh.

6.47 p.m.


My Lords, in the bad old days of three, four or five years ago, control and restriction were very much advocated by the then Government, and the Report of the Committee is really a report on control and restriction to be placed, by Government supervision, on the charities of the country. This approach arises from the terms of reference of the Committee, who were told to look into the question of charity from the point of view of making such charities the greatest possible benefit to the community.

To the best of my knowledge, endowed charities are endowed for a special purpose, and it is only when such a special purpose fails that the doctrine so frequently set out in this debate comes into effect. Charities which fail in their primary purpose are to be diverted to the greatest possible benefit of the community at large. But surely if the primary object of the charity fails, then it would be logical, in equity and in common sense, to apply the charity to the next nearest possible object. If the charity is to be applied to common good purposes, it means that it is applied to quite different objects. In that way very great damage will be done to charity as a whole; benefactors will not continue to subscribe to charitable objects or endowed charities if they feel that in the background there is an all-powerful Charity Commission which will intervene at some stage. It has been argued by some in this debate that the period should be thirty-five years or, at most, fifty years after the bequest. But there is to be in the background a Government Commission, composed of nine Commissioners, designated as men of public merit, and responsible, perhaps, to a Minister. If it is felt that those nine just men, with all the powers that they will have, can take these charities at some subsequent stage and divert them to other objects, that will diminish the flow of donations, bequests, and subscriptions.

I should like to say one further word about the cy-près doctrine, and that is that in my personal experience as a trustee—and I am a trustee of a number of charities, some old and one new—it is quite erroneous to think that either the Charity Commissioners or the Court of Chancery will not give to an applicant an amended scheme. Many noble Lords have spoken as though you cannot get an amended scheme. That is not so. An originating summons provides the quickest, and also the cheapest, method of acquiring a new scheme in a very short time. Only recently I spent—a great deal to my advantage—a day in the Chancery court acquiring a new scheme. The process was simple, cheap and greatly to the benefit of the public.

If these provisions already exist, surely we need not erect this enormous and quite expensive reorganisation of the Charity Commission, of the law and of many other matters dealt with in Lord Nathan's Committee's Report. Not only the Chancery Court, but the Charity Commissioners themselves can give approval for amended schemes. It seems to me extraordinary that we should have all these proposals of more cast-iron and rigid organisation when, to the best of my knowledge, so much flexibility is at the present time available to all endowed charities. Lord Nathan, I know, has withdrawn his own support of the proposal that local authorities should be more intimately connected with the affairs of local charities. I hope that he also withdraws it on behalf of the whole of his Committee, because that proposal has had the blessing of no speaker in your Lordships' House this afternoon. Local government members have many virtues, but they are not elected for the purpose of being trustees of charities; and the less the administration of the charities is in the hands of local government authorities the more, I think, it will be to the benefit of the charities themselves. Local government members are elected for other purposes, and I do not believe that a charity will benefit from being more intimately connected with any local government authority.

Finally, I wish to say one thing about the proposal that charities should be allowed to hold ordinary shares. Personally—and I speak as chairman of the finance committee of a charity to which Lord Ammon has referred, Smith's Charity—I should be placed in a position of great difficulty if charities were allowed to hold even up to 50 per cent. of their invested funds in ordinary shares. The reason—and of course it is plain to any trustee who has had any experience of this matter—is that to hold a large quantity of ordinary shares demands the most skilled and expert management. The trustees, or whoever manages their investments for them, would have to be in daily touch with the City of London. How is it suggested that the hundreds of thousands of small trusts scattered over the countryside, many of them in the most remote places, if they are to be allowed to hold ordinary shares can keep in touch with the daily market? Are they to employ firms of stockbrokers? Is an agent in the City to ring up the chairman, shall we say, of a Church charity in Cornwall in the morning and say that the equities of a certain share have reached top and that he wants to sell them that day? In such a case, how would that chairman get authority? How would he collect his fellow trustees within a matter of a few hours, in order to give authority?

This difficulty, of course, does not apply so much to large charities, which have skilled financial management at the present time, but it is a matter of the greatest importance for small charities. The Stock Exchange to-day does not remain on an even keel, in the same way as it did in former years. The policy of the Government affects the Stock Exchange, and I do not see how a body of small trustees could face the loss of, perhaps, a large portion of their assets owing to some change in Government policy, when next they met to discuss the affairs of their charity. It may be said that the trustees would gain from capital appreciation; that they would sell at the top of the market. But surely, according to what we have heard so often front the other side of the House, the view held there is that such capital gains are immoral, and that a Government drawn from the Party to which noble Lords on the other side belong would follow a policy of imposing severe taxation on capital gains. If that is so, and if that should come about, what would be the object of trustees of charities holding ordinary shares, if their capital gains were going to be taken by some new and increased form of taxation? Lord Nathan's Committee recommends this holding of ordinary shares. I hope he will not recommend at the same time that there should be a tax on capital gains on ordinary shares held by trustees. Perhaps they will be tax-free. I have detained your Lordships rather long, but I wished to make the point that there already exist powers, both in the Court of Chancery and in the Charity Commissioners, to modernise schemes where necessary. Surely these powers should be used fully before the elaborate machinery proposed by the Committee is brought into effect.

7.0 p.m.


My Lords, like most of the noble Lords who have spoken, I should like to give this Report a warm welcome and to pay my tribute not only to the immense work but also to the valuable things contained in it, and incidentally to pay tribute to the noble Lord, Lord Nathan, for the work that he and his colleagues have done. May I also say that we are glad to see the noble Lord back here to present his Report, as it were, fully recovered from his accident? I welcome the stressing in the Report of voluntary services as a whole and of voluntary contributions towards the needs of the community. All that is said on the place of voluntary effort in conjunction with and in addition to State services is to the good. I hope that all that part will receive general agreement.

I suggest that any proposed legislation by Her Majesty's Government must deal delicately and tactfully with the subject. Nothing must be done to jeopardise or alienate that voluntary spirit to which we have all paid tribute this afternoon. In his speech, the noble Lord, Lord Nathan, asked if the voluntary spirit was just a trickle. There are many elements in the giving of voluntary contributions. May I remind your Lordships that money given voluntarily, even with the most generous spirit, is usually looked at more carefully than money received. There is also the element of the generosity of donors; and there is the important element of the confidence donors have in the administration of the funds to which they have contributed and in the direction in which their gifts are going. I suggest that some of the anxiety that has been expressed not only to-day but since this Report was published, has been due to recent checks which voluntary contributors have received through legislation. The hospitals have already been mentioned. What was done on that occasion, I should have thought, was the reverse of encouragement to voluntary action. With the noble Earl, Lord Iddesleigh, I am glad to see that hospital amenity funds are growing up all over the country and voluntary money is still flowing back to the hospitals in connection with objects for which the State is not responsible.

There is still the danger of forcing trusts to do things. I suggest that there should be as much guidance and advice to them as possible and as much permissive legislation as possible, though it cannot be all permissive legislation, otherwise there would be no point in bringing in a Bill at all. I have failed to find in the Report, on looking a second time, what I am now going to stress, but the noble Lord will correct me if I am wrong. In one place emphasis is laid on public relations, and I hope that public relations will be used to explain the advantages of any changes to trustees, where it is thought that their trusts ought to be changed. This ought to be done especially where mergers are proposed. I do not think that any noble Lord has so far mentioned mergers. In this connection, I should like to mention rather a personal matter. In the days when the London hospitals all had their own flag days, my father was responsible for merging the seventy-seven hospital flag days in London into one flag day a year. It is interesting to know that whereas the seventy-seven separate flag days raised about £25,000 a year, when they were all amalgamated the highest total for any one year was £84,000 and the average was good. I think that shows what can be done when various charities are brought together. I suggest that a good deal more thought should be given to seeing whether charities which provide the same sort of services cannot be amalgamated. I have thought before now that those funds which raise money for athletics should try to merge.

The noble and learned Earl, Lord Jowitt, said he did not think it was necessary to have an interpretation of charities, but I think that we should have a definition. Recently an organisation with which I am connected found there was a ruling which said they were not a charity, and it cost us a great deal of money to appeal against that decision in order to have it reversed. It is a pity that charities themselves have to spend money in appealing against judgments which would put them out of service altogether, and I think we should have an interpretation of what is a charity.

I hope that due thought will be given to the submissions that have been made by the larger trusts and organisations, because their great experience is of value, and where they have expressed doubts, due weight and consideration should be given to them. We have heard a good deal about the doubts connected with local authorities and I do not want to say much about that. The noble Lord, Lord Nathan, has dissociated himself from those, as it were. With regard to recording, the noble Lord said a good deal about the lack of information. That may be so, but I have found, at least judging by my postbag, that people always seem to know, or think they know, where money is to be found, and I suppose it is the same the other way round. However, there may be a great field where information is lacking. With regard to the rendering of accounts, if an extension is needed I should be in favour of it. Perhaps the machinery for ensuring the elimination of malpractices is adequate now do not know; but I am prepared to believe it is not and needs extending. At all events, we are all one in the wish that everything should be done to safeguard the money that is voluntarily subscribed. The noble Lord, Lord Nathan, said that trusts are public. I think that is true, but I think that respect should be given to the confidential nature of some trusts and the wishes of donors in that respect.


My Lords, would the noble Lord permit me to interrupt to say that what I said was that public trusts are trusts for public purposes in contradistinction to private trusts which are for other purposes? By that, I did not mean that every public trust must make every detail open to the public. I was referring to the nature of a public trust in contradistinction to a private trust.


I am grateful to the noble Lord. Then there is the question of local authorities. We have heard a good deal about those, and I hesitate to say more. However, as no other noble Lord seems to have said it, I might as well say that if it is felt necessary to have some sort of local body in a county or a borough, it should not be the local authority, simply because members of local authorities are constantly changing: indeed, if you put a term of five years on them, it does not quite work out with their elections, which are yearly or every three years. But more independent bodies might be set up in counties, perhaps under the Lord Lieutenant, on the same principle as that suggested for the reconstituted Charity Commission. There could also be on that body people of known standing who command great confidence.

I come now to cy près, scheme-making and the extended powers of alteration. I should like to give one quotation here which I hope will not be followed. It comes on page 74, where the Report is quoting what has been done under Educational Endowments (Scotland) Act, and subsequent Acts, and it says: In exercising these wide powers the Secretary of State is required by the Statute to have regard…to the following factors:

  1. (a) the public interest;
  2. (b) existing conditions, social and educational;
  3. (c) the spirit of the intention of the founders as embodied.…"
I am sorry to see it in that order. I think that (a) should be "the spirit of the intention of the founders," and that the other two should follow on.


I entirely agree.


I was glad to hear the noble Lord, Lord Nathan, explain the matter of initiative, but I do not think he went quite far enough. He explained that the initiative would not necessarily be with the local authorities, but that it would be with the trustees, in the first instance, and then with the local authorities if the trustees were not doing what they ought to be doing. But what happens if there is not really the necessity for changing the trust at all? Who decides that? You do not want to change a trust after thirty-five or fifty years just for the fun of it. I merely throw that out in the hope that it may receive some consideration. I should like to bring to the attention of your Lordships a further point on this question of initiative. It is one which has been mentioned to me by the King Edward's Hospital Fund for London. They say it is not difficult to imagine that, had the London County Council had the power to initiate alterations in the Fund's Act at the time of the passing of the National Health Act, they might well have suggested that there was no further need for the Fund to concern itself with hospitals, and that its energies should be transferred elsewhere. That is a hypothetical case, but I do see it. In point of fact, the King Edward's Hospital Fund sought out what was not being done under the National Health Act, and is now most successfully doing those very things. I feel that the King Edward's Hospital Fund, and many other large organisations and trusts which have already been mentioned, might well be exempted, with others mentioned in the Report for exemption, because they can surely look after their own affairs; and, with every respect, I believe that in some cases their trustees are possibly more able to run their affairs and may have sounder judgment than the new proposed advisers.

There is one point I should like to mention in connection with the merging of small trusts. I hope your Lordships will forgive me if I read out an extract from the summary on page 143 of the Report. It there says: While some reduction in the number of small trusts is most desirable, wholesale sweeping up of trusts into county or regional pools or common good trusts is not recommended. I am pleased to note that. Further down the page it says: The judicious merging of trusts either by areas or by function offers great advantages but must clearly be preceded by careful surveys in which the voluntary movement should take a leading part. I was most refreshed to read that.

I am sorry to have kept your Lordships so long but I should like to give one further quotation before I conclude. Under the summary on page 167 are what I would call four principles of great importance. They are: (1) it is the duty of trustees to put their resources to the best possible use in the service of the community; (2) it is for them to decide, in the light of this principle, what to do with these resources; (3) the resources should, as a general rule, remain at the disposal of the voluntary movement; (4) it is the peculiar function of voluntary agencies to pioneer. I like those four principles, and I hope that they will be the guiding principles of legislation. For let us remember always the nature of charity. Do not let us over-control it just because it may be not too tidy; but let us encourage it to flourish by doing just those things that will increase and not diminish confidence.

7.17 p.m.


My Lords, I had not the honour of serving in your Lordships' House when the noble Viscount, Lord Samuel, first drew attention to the need for the encouragement of voluntary action. By so doing the noble Viscount initiated consideration of matters which I regard as most valuable, and which may have far-reaching results. I should have liked to dilate on it at some length but, having regard to the time, I hope your Lordships will bear with me if I make a few general observations, and then deal shortly with one or two of the legal matters, which I do not think have been dealt with at all during this debate.

The fact which sticks out a mile (if I may use that expression), as I imagine all your Lordships will agree, is that since 1948 there has been a widespread feeling that, having regard to the mass of social legislation passed in the last few years, whereby the State has assumed many additional social responsibilities, there is less necessity for voluntary effort and for charitable—I use that word in the widest sense—provision. I think your Lordships will also agree that in actual practice there is at least as much, and possibly more, necessity, and certainly there is desirability, for voluntary effort and for voluntary dispositions of property than has hitherto been the case. It is therefore essential to "put it over," if I may use that expression, that the necessity for voluntary service, voluntary organisation and voluntary disposition still exists.

I know that this is particularly the case with those men and women who are in a position, or who wish by deed or will, to make some charitable disposition of money to be used to benefit some deserving cause which they have very much at heart, but who do not wish to do what the State already does or, indeed, do not wish the State to interfere. Whether one agrees with him or not, a man is perfectly entitled to hold that view. Therefore, I am somewhat concerned about the extensive new restrictions or controls which appear to be proposed by the Committee—as, for example, the extension of the Committee's control over land, or the power of the Minister of Education to make regulations, the inquiries, returns and even penalties, which are proposed. I am rather reminded (though perhaps it is an exaggeration) of the old days of the Volunteer Force, before the Territorial Force was formed, and of a discussion in which I took part as a youth. The question was how to improve recruiting for the Volunteers. I remember one bright individual in the audience who said, "Why not compel everyone to join the Volunteers?" Of course, a contradition in terms. I should be sorry if what started as a matter of voluntary effort was, by reason of undue control, restriction or regulation, made into something very different. It is essential, if voluntary benevolence is to be encouraged, that Government, local authority and, certainly, political interference should be minimised to the utmost extent. In my view—and this has been said already by more than one noble Lord—the intention of the founder of the trust and its application to a particular locality should be the primary considerations in any proposed changes. In any event the freedom of voluntary effort must be maintained

Now I turn for a moment or two to the Committee's Report, which is, of course, a most comprehensive and valuable document. One can only admire the industry of the Committee which has resulted in such a review of a most difficult question. I wish, in the capacity of one who has had some experience of trusts, and as a practising lawyer, to make a few comments on the suggestions made in the Report. I preface my remarks by submitting that any alteration in the law should be designed to secure the maximum benefit to the beneficiaries. Now the Committee recommend the adoption of the Lord Macnaghten definition of a "charity" which, in default of anything better—and I know that it is difficult to be more precise—one must accept. I would point out, however, that the adoption of that definition will not result in any greater degree of certainty. What is or is not to be included in the fourth class, "trusts beneficial to a community", will continue to be a fruitful subject of dispute and doubt, and possibly of litigation. The fact is that the field of charitable activities covered by this fourth class is so wide that it defies definition, so I am afraid that we mast accept it. But I do feel that the opportunity should be taken, notwithstanding the view of the Committee, to remove what seems to me to be a ridiculous anomaly. I refer to the principle set out in paragraph 135, that the element of public benefit, which is essential to a charity in law, cannot be present if the class to benefit is to be ascertained by the qualification of common employment. Why should a gift for the benefit of a small parish of 200 or 300 inhabitants be good, whilst a gift for the benefit of the employees, or ex-employees, of a company or a board, numbering, it may be, some hundreds or even thousands, be bad? I venture to suggest that there should be a proviso to the Macnaghten definition, to the effect that the element of public benefit is not to be deemed to be excluded by reason only of the nexus of common employment. I should like to elaborate on that, but I will spare your Lordships that elaboration.

With regard to the recording of charities, this is obviously desirable for one purpose only—for information. It is particularly valuable to lawyers and others with a view to avoiding misdescribing charities, as has happened more than once in the past. The result of misdescription is litigation, and sometimes the desired charity does not, in fact, receive the benefit of the trust, or it becomes void for uncertainty. As to Chapter 6, "Official Custodians," I think there is some misunderstanding about this, as indeed there seems to be on a number of points in connection with the Report. The Official Custodian would, of course, only hold the deeds and documents, so to speak, and would not be in the position of consulting stockbrokers all over the country, or anything of the sort. That could still be the function of the trustees, who would instruct the Custodian as to the steps which he should take in order to carry out the intention of the trust. But I do not see what advantage is to be gained by vesting land or securities in an Official Custodian when they are already vested in a company under the Companies Act, or where the trust has been incorporated. That would not help in simplifying the title, and it would save neither money nor time. Indeed, in some instances it would involve expense. I agree entirely, of course, with the suggested repeal of the Mortmain Acts. I would go further, however, and allow any corporation or charity to hold and sell land, if it is considered desirable, without having to obtain a licence for so doing. Mortmain is a conception which has no practical application to-day in our modern society.

In regard to the doctrine of cy près, I say merely that in my view the Chancery Court should have the widest powers. I notice that the Report restricts the Court to its existing powers. I should hope that they might be extended, and that the Chancery Court might have the widest jurisdiction. I would myself hope that the county court jurisdiction might be retained, because, as the Report says in paragraph 361, there may well be hundreds, if not thousands, of cases in which small alterations, not of the objects, but of the details of administration, should be made. I would increase the jurisdiction of the county court from the limit of an income of £50 to an income not exceeding £200. Whatever procedure is adopted, however, it must be expeditious; and I believe that at present approval of a scheme is obtained more speedily from the court than from the Commissioners or the Ministry of Education. That, no doubt, is due largely to the shortage of the Commissioners' staff, which has already been mentioned. Incidentally, what is the justification for splitting up the administration of charities between the Commissioners and the Ministry of Education? Why not include also the Ministry of Health or the Ministry of Agriculture? In my view there is a strong case for vesting the control in one single body, the Charity Commission—and, indeed, the Committee recommend that quasi-educational charities should be retained by the Commission.

One final point on the matter of imperfect trusts. If I may say so, with all deference to my noble friend Lord Nathan, I think the Committee have approached this subject with undue trepidation, and I agree with the comments of Mr. Brunyate in paragraph 527. It is surely quite absurd that a clear trust should be allowed to fail because, as in the Diplock case, the draftsman was careless and said "charitable or benevolent" instead of "charitable and benevolent," thereby creating doubt. The Committee, who make elaborate proposals to save the funds of existing charities, do not make any provision for the future. In my submission, the Australian or New Zealand Acts might well be followed, at any rate in part. It should be enacted that where some objects of a trust are valid and others are not—that is, in a trust created by will—then the trust should not entirely fail but should be followed as to that part directed to be applied to the charitable objects; and if no part is so allocated then a fair proportion, carrying out the intention of the testator, so far as possible, should be so applied to those objects. This would avoid the testator's wishes being wholly disregarded, as has happened in more than one case.

I should have wished to make some reference to the common good fund. It can, of course, be created by any body or any individual. The transfer to it of the various dormant legacies and investments, and so forth, to which reference has been made, would require, I imagine—this is subject, of course, to the opinion of the noble and learned Lord the Lord Chancellor—an Act of Parliament. That is the real difficulty. There is no difficulty in setting up a fund. I think mayors and lord mayors of cities have such funds, derived from gifts, though not, it may be, in the name of a "common good" fund. The term "common good"—an excellent one—is, I think, of purely Scottish origin. I hope the Government may speedily implement the main provisions in the Nathan Report.

7.32 p.m.


My Lords, I will refrain from drawing on a certain amount of experience in dealing with large and small charities, and instead discuss one or two points which have arisen out of the debate in your Lordships' House. May I preface my remarks by saying that, so far as I am personally concerned, I find myself in full agreement with what was said by the most reverend Primate and the four points he made, with one proviso on the subject of registration. I believe registration is desirable, but there is one aspect of registration which is important, and that is the preservation in registration of anonymity, especially of trusts and funds created by persons still alive. In a great many cases benefactors wish to remain anonymous, and I hope that if registration is either recommended or made compulsory it will take such a form as will preserve the anonymity of living benefactors.

One other point raised by the noble Viscount, Lord Simon, is, I think, of considerable importance, and that is the question of audit. Some noble Lords will remember that in the course of the discussion which took place on the Companies Bill, the original draft of the Bill was amended, in so far as private compaines were concerned, to eliminate the compulsory nature of audit by a chartered accountant. It was done at the instance of some of us, including myself, who felt that a number of private companies are far too small to be able to afford, and in far too difficult circum- stances to be able to get, the services of a chartered accountant. A particular case to which the noble and learned Viscount, Lord Simon, referred, was that of the funds of some of the non-established churches. Certain other small local funds are obviously too small ever to afford any form of audit by a chartered accountant or anybody else, and it is neither fair nor reasonable to require them to pay a fee which, to any professional person, cannot very well be less than £1 per year, out of an income which may be only a few pounds. I believe these small funds are best left alone. Local public opinion—I speak with considerable experience of small funds in a rather remote countryside area—is generally a sufficient check on carelessness and malpractice, without bringing in official machinery, which is obviously applicable to larger funds.

To go back to the question of registration: the noble Lord, Lord Milner, spoke of two purposes for which registration would be necessary or important. He did not, I think, allude to one which is, to my mind, still more important. If registration of charities does take place in, I hope, a central register) though local information could be made available) there should be a certificate that the charity is a charity recognised by, at any rate, the Commissioners of Income Tax. The difficulty of a number of small funds, and especially of mixed charities, has been, and still is, that of determining whether the funds, for instance, can enjoy the benefit of covenants as being wholly or partially free of tax. If a central register were kept, I hope that the act of registration would ipso facto clear either the funds or part of the funds from tax and save the trust from the necessity of having to fight the case against the Commissioners, sometimes up to your Lordships' House.

I share entirely the view expressed by most noble Lords that the cy-près doctrine really provides sufficient machinery, if the present rules are relaxed, for the modification of purposes where the purposes are out of date—not because somebody thinks the funds or income should be devoted to purposes more suitable than those which the donor had in mind, but that the purposes for which the donor gave the money are no longer applicable. That leads me to a feeling which I wish to express as strongly as I can. Third parties who are neither trustees nor in any way concerned, notably local authorities, should have no right whatsoever to apply to divert funds from the purposes for which the donor originally gave them. A great many purposes may seem to us foolish, but it was their money that the donors gave. In our country they are entitled to give the money for the purposes they choose, and it is not for us to say they are foolish. For a third party to intervene and make suggestions of that sort seems to me frankly monstrous.

I want to go on to one point which the noble Viscount, Lord Samuel, raised. I think it is of considerable importance but it is perhaps too late, to debate anything in detail to-night. He raised the question of common funds. I think he had in mind national common funds rather than local common funds.




In the context I have in mind I think the noble Viscount meant national funds. The resources from which funds can be derived are: (1) dormant accounts; (2) intestate estates, and (3) benefactions by living persons who might give or bequeath money, being known persons, to, say, King Edward's Hospital Fund or a central fund of that sort. Of the latter, I have nothing to say except to doubt, or to raise the difficulty of, how common fund money so given on a national basis is going to be allocated to purposes generally, and who is to do the allocation. The other two sources—namely, dormant accounts and intestate estates—present even greater difficulty. Apart from the legislation which would obviously be required on the subject, who is to allocate the funds of intestate estates out of the common fund, without any knowledge of the purposes or, perhaps, even the interests of the persons who enjoyed those funds before they died intestate? It seems to me to present a very great difficulty in administration—one which is likely to create a great deal of heartburning, especially when you get on to that very debatable point about the use of funds for particular sorts of people or particular sorts of benefactions, and, indeed, where there may be a religious element.

So far as dormant accounts are concerned, I think the difficulties are even greater than is popularly supposed, with the dormant funds running into many millions of pounds. Those who have tried to investigate the subject always come up against the difficulty of ascertaining whether the fund really is dormant or whether it is dead. I have had a certain amount of experience of that. I know one case in particular, which perhaps your Lordships will allow me to quote, of a current account of an old lady of very advanced years. The sum involved was very large—I think it was £20,000. No movement had taken place in it for twenty-five years. As the old lady answered no letters, no interest was paid; and there was, therefore, no recipient of anything. Eventually, it became so difficult to find out whether the person was alive, or whether it was an intestate or dormant or dead account, that someone was sent to see her. She was very angry and said she knew perfectly well where the money was and that she had kept it for a particular purpose. The account was promptly removed. It is not possible within a year, or perhaps a number of years, perhaps two generations, to find out whether a dormant account is a dead account, and whether it therefore comes into the category to which Lord Samuel referred, of being available by legislation for some beneficent purpose. It cannot be dealt with ordinarily through taxation and Budget allocation.

There is one last word that I should like to say on the proposals in the Report with regard to the organisation of the Charity Commission. My experience, I regret to say, has not been very happy in dealing with the Commission. It may be due to lack of staff—probably it is; but in dealing with the investment of large funds where the Charity Commission has had either control or a say, there have been delays in obtaining the transfers of securities held, in taking in stock, in delivery of stock, and generally in dealing with administrative affairs. Those delays were such as to make everyone who had anything to do with the Commissioners feel that if they could keep out of the Commissioners' hands the trust would be better administered. That, as I say, is probably due to lack of staff. We know the Commission do suffer from that, and I hope that that position will be remedied. What I have said is not intended in any way as a criticism of the very admirable gentlemen, many of whom I know, who are members of the Charity Commission. It is just an example of what sometimes happens when one has to change an investment. It seems that one has to go through rather bureaucratic channels, such as are generally associated with Whitehall, and that one is dealing with people who are perhaps not so used to dealing with business affairs or so expeditious in handling them as some of us have had to be.

7.44 p.m.


My Lords, this valuable Report of Lord Nathan's Committee has aroused a great deal of interest in the country, and I, for one, have been approached by many people and asked to speak in this debate. I must say straightaway that, by and large, I agree with every word that fell from the lips of the most reverend Primate. On reading the Report the first thought that occurs to one is that there is a sort of underlying motif that the charitable trusts of this country must be redeployed for the public benefit. I have often mentioned, in speaking on this subject of legislation, the use of the words "the national interest." That seems to me to be a very ambiguous phrase. It means precisely what the person who has ultimately to interpret it likes to make it mean. Local authorities have, in fact, had a say in these trusts; and only too often one finds that the interpreter of "public benefactor" is the politician; and once the politician comes in, we always find the vote motive coming uppermost. We must be extremely careful about any relaxation of this cy-près doctrine. There are scheme-making powers at the moment, and it may be that we should see that these can be slightly enlarged. But it seems to me, as a layman, likely to provide extreme difficulties for the lawyers to do so. At the same time, we should encourage trustees to act on the existing powers; a great many of them do not know at present what their duty in the matter is.

But, above all, let it be only trustees and the Charity Commissioners who have any power to initiate. Should they disagree, then I very much incline to the recommendations of the Minority Report: that the final arbiter should be the courts, acting as if the case were being heard completely anew. On the subject of the widening of the powers of trustees, at first glance I am in favour of wider powers in order to try to preserve the patrimony of these trusts from the perpetual inflationary propensities of the State. But when one gets down to practice one must realise the drawback; and that is the extreme difficulty of getting the trustees to act if, in matters of this sort, they are expected to take positions which will bring opprobrium on their heads if they appear to lose the money of the trust. Therefore, I find it extraordinarily difficult to decide what is the right thing to do in this matter. I feel that the power should be either completely wide, or closed, as it is at present. I believe that a compromise would be wrong.

When we come to the recording of trusts—this is where I do not quite agree with the most reverend Primate—at first sight it certainly is attractive to have a register. During the last few days I have seen somewhere in the public Press that an enterprising individual has produced a reference book containing 100,000 or some enormous number—


A thousand.


I thought it said 100,000. The price of that book, as far as I remember, was two guineas. It seems to me that two guineas is rather dear for 1,000—perhaps we are referring to different books. But if such a directory by a private individual did exist, that world satisfy me completely. This recording should be completely voluntary. I am utterly and completely against local authorities coming in, in any form whatsoever. To the typical benefactor, the local authority signifies someone who seizes his money for rates and squanders it on objects with which he has no sympathy whatsoever. I think nothing would do more to dry up charity than to make it possible for the local authority to divert these funds.

Another point not made by the Report, or by any noble Lords who have spoken to-day, is whether the enormous number of small trusts is recorded in any list, central or local. There will inevitably be a tendency for swarms of would-be applicants to write to the trustees of these trusts, in the hope of being able to benefit. There may well be many trusts where the income is perhaps £100 or £200 a year—perhaps to provide tools for the apprentice carpenter: that is the sort of example I have in mind. The wretched trustees might have to deal with hundreds of letters from would-be apprentice carpenters from all over the country. The result is. first, that no trustee would consent to act, and secondly, the income of the trust would be squandered on postage stamps and stationery. That, I think, is very important. If there is ever to be compulsory recording, we must exclude the host of small trusts.

Then the idea of vesting investments and lands in official custodians certainly has some advantages. If there are advantages, bring them home to the trustees and let them do so. I know that some trusts are anxious lest they would not quickly realise any property that was registered in the names of these official custodians. Finally, I should like to say that, to a layman, the idea of a local common good trust, if it is legally practicable, seems a good one, and it may well be a useful recipient of local moribund trusts. Before re-scheming them for that purpose, however, one would have to weigh up carefully whether, in the wishes of the benefactor, object or locality preponderated. Where it was locality, one might well put it into the local common good fund; but where it was object, obviously that would not be proper. I should like to conclude on that note, because I believe it is absolutely vital that in these matters the wishes, or what are believed to be the wishes, of the benefactors should be completely paramount. We do not know their motives in giving the money; and, indeed, we do not know if they are not still there watching it.

7.53 p.m.


My Lords, it is not my intention to-night to deal with broad general principles. I would confine what I have to say to as brief a discussion as I can of some specific matters, and I do that without apology, for this reason: it often happens that not only the determination of the rights of individual cases but also the success of the whole scheme depends on getting right what at first sight may seem to be matters of pure procedure or detail. To my mind, this is a subject where that applies with peculiar force, and I do not believe that we shall get this matter right unless we get what some would call "the details" right first. For that reason, I shall not be very surprised if the Lord Chancellor is unwilling to commit the Government to any general principles until he has worked out the details of the scheme.

I should first deal with one matter which I think is really of great importance. The Committee propose that there should be adopted, with comparatively little change, the scheme of the Educational Endowments (Scotland) Act, 1928. That Act not merely authorised the relaxation of the cy-près doctrine; it threw it overboard altogether. I think I may refer to the principal matters to which regard must be had under that Act. They are three, and they are set out on page 74 of the Report. The first is the spirit of the intention of the founders. The second is the interest of the locality and the third is the possibility of effecting economy in administration by grouping, amalgamating or combining two or more endowments. Those three are singled out as of equal importance, and are of greater importance than any other factor.

There was undoubtedly great dissatisfaction in certain quarters in Scotland about the results which this Act produced, at least in its early stages. I, unfortunately, am unable to speak with the same knowledge of what has been happening recently, because I find it impossible to go to Scotland often enough to keep in touch with what is happening there, much to my regret. I can say that, in the days when I was there regularly, there was in certain quarters, at least, and from people whose opinions I valued, great dissatisfaction with the way in which the Act worked out in practice. I do not think any of those people to whom I refer would have objected to a relaxation, or indeed a considerable relaxation, of the cy-près principle, but I think—one cannot say, because these things are not published—that what caused objection to a good many of the schemes was the very fact that the possibility of effecting economy was put on the same level as the observance of the spirit of the intention of the testator; and I believe that to be entirely wrong. After all, when we talk about the possibility of effecting an economy by amalgamation, everyone knows many cases where expectations of economy from amalgamation, whether in private or in public matters, were totally falsified by the event, and I think it is quite wrong to put that factor on a par with the others. I venture to think that, if that were avoided, a good deal of the trouble in Scotland would be avoided here.

Then I come to the intention, or the spirit of the intention, of the testator. It is perhaps a little difficult to say just what is meant by the expression "spirit of the intention," but let that be. I do not believe that this is merely a matter of balance of convenience between efficiency, on the one hand, and the possibility of drying up new benevolence, on the other. I think that the wishes of the original founder, who, after all, provided the money, are entitled to a special consideration. I think one is entitled to approach the matter from this angle. We must assume that the original founder was a reasonable man, and we must assume that, if he were confronted with a situation in which any reasonable man would see that the money was being not misapplied but applied in a way that really was not doing a great deal of good, he would, in spite of the fact that his heart was on the object which he originally selected, say: "Yes: events have proved that we must have a change."

Another thing I think he would say—because most founders of benevolent institutions have human failings; at least, I think a Scots benefactor would say it—is: "I want this to remain an individual benefaction. I want it still to bear my name and not to be merged with a lot of others. "I venture to think that if that principle is departed from unnecessarily it may have a considerable effect in drying up benefactions. If people know that after a period of individuality their trust or their mortification (to use the word which Lord Saltoun introduced into the debate) is going to be destroyed, although it may be a human failing to take that view, they would take the view that this is a matter that would influence them.

Therefore, I would approach the matter from this point of view: that there must be a considerable burden of proof to show that there should be a merger. I do not object in the least to alteration of purpose because, as time passes, that is very necessary. But a merger is a very different thing. Mergers are often essential. The Committee has singled out benefactions which to-day yield less than £25 of income per annum. At one time, £25 was quite a considerable sum, and in a limited area a great deal of good could be done with it; but, owing to the fall of the value of money, £25 even in a parish is not very much to-day. I would quite agree (as I think any reasonable benefactor would agree) that to merge such small trusts as that in many cases may be inevitable, although that is not always so. But if you find that there is a substantial, though small, income, and if you also find that the income is being employed usefully, although not perhaps in the way that everyone would regard as the best possible way, then there seems tome to be a strong case for maintaining the individuality of the trust. I would agree at once that, in general, borrowing anything from Scotland is both laudable and advantageous; but, in the present case, I think there is room for second thoughts in lieu of Scottish experience.

I would say, broadly, that it is possible to extend or possibly even remodel the cy-près doctrine without throwing it overboard—and that brings me to the second point which I should like to discuss for a moment. I should regret very much—and here perhaps I may speak without having any personal connection with the Court of Chancery—if the approach to the court were abolished or even seriously modified. I know it is thought, and it may be that at one time it was true, that the procedure in court is slow and expensive. But that is not the case today. I think that with any but the smallest trust, a summary application of some kind to the court would not cause expense at all out of proportion to the sum at stake. But if it is decided, as it may be, that there should be not an initial application to the court, but only an appeal, then I should like to explain for a moment the difference between the Committee's proposal and the law of Scotland, because it is plain that the adoption of the law in Scotland will not fulfil the desires of the Committee in this respect. The Committee say at page 88—and I thoroughly agree with them— it may be said that this limited right of appeal would not afford a sufficient check in the exercise of their powers by scheme-making authorities and that nothing short of a general right of appeal would satisfy public opinion. They agree to a general right of appeal, and they say: The important thing is, however, to provide an effective safeguard against ill-considered action by the scheme-making authority, and this a general right of appeal to the Chancery Division should secure. But, my Lords, I would point out that under the law as it is in Scotland, that is precisely what is not secured. Under the leading case of Levenhall Training Home, to which considerable reference is made in the Report, it is quite clear that the only point you can take to the court is whether the action of the Commissioners was or was not intra vires. Perhaps I may be allowed to read a couple of sentences from the judgment of Lord Normand in this case, which makes that perfectly plain. He says: The duty prescribed in Section 3"— that is, the duty to consider and weigh these various factors— is not a duty which can be enforced in any ordinary case by the courts. Theoretically a case might be imagined in which the Commissioners' disregard of their duty was admitted or proved, but it can scarcely be possible to infer such disregard from the terms of a scheme framed by them, So that the safeguard in Scotland is only against ultra vires action, and is not against ill-considered action. What the Committee wish in their Report is that if there has been insufficient consideration the matter can be taken to the court. There is a provision in the Scots Act applicable in special circumstances, whereby a court can come in at the initial stage; but that is not generally applicable, and I should hope that a corresponding but generally applicable provision could be found in England.

There is one other matter of a different character as to which I should like to say a word. Chapter 3 in the Report is headed "The Definition of Charity," and it recommends that the existing case law on the subject may be preserved as it stands. Your Lordships will be aware that the law of Scotland on charities is very different from the law of England, and for a very obvious reason: the Statute of Elizabeth, on which the English law depends, is not, and never was, the law of Scotland. But in matters of taxation the law of England has been made part of the law of Scotland in order to achieve uniformity between the two countries, and that has led to great embarrassment in Scottish courts, because they have to apply English law for this particular purpose.

At first sight, I thought that that was a good reason for urging that we should have a new definition of "charity" which would be independent of the somewhat elaborate English case law that has grown up. But, on second thoughts, I have come to be of another opinion. I think it would be unwise, for this reason: that if you re-define "charity" you will inevitably put out of the sphere of charity many or some bodies which at present qualify as charitable bodies, for that status has its attendant advantages. I know that other Scottish lawyers differ from me on this matter, but I think it right to say, having considered the matter at some length, that I would rather put up with the embarrassments which undoubtedly exist at present than run the risk of a new definition having even more embarrassing consequences. Those are the main points to which I should like to allude. I should not like it to be thought that I am against the Report as a whole. I would add my tribute of admiration to the work which has been done by the Committee, and, so far as I am qualified to express an opinion, I would agree with a very great deal of their Report. I am not mentioning the parts that I agree to, but I have mentioned one or two points on which I think a change is necessary.

8.9 p.m.


My Lords, it is my pleasant duty, since I am the first speaker on behalf of Her Majesty's Government in this debate, to thank the noble Lord, Lord Nathan, and his Committee, on behalf of the Government, for the admirable Report which they have presented. I have spent, or wasted, more time in the study of this very difficult and intricate subject, the law of charities, than most of your Lordships; and for that reason I can perhaps speak more sincerely than any of your Lordships of the painstaking character and the wealth of learning and information which is embodied in the Report of the Committee. In particular, I should like to comment on the excellent style of the Report and to congratulate the draftsman or drafting committee, whichever it may be.

I intervene in the course of the debate to say the only thing of real consequence that I have to say, which is this: that this debate was initiated, as the noble Lord, Viscount Samuel, knows, not in order that the opinion of Her Majesty's Government might be ascertained, nor in order that a forthright declaration of policy might be made to-day such as the noble Lord, Lord Pakenham, gave on the previous occasion, but so that Her Majesty's Government should have the benefit of the enlightened reaction of well-informed opinion to this Report. Nobody who has listened to this debate could say anything but this: that they have received that reaction of enlightened opinion in full measure. I have sat here listening to this debate—with the exception of an unfortunate ten minutes—for nearly six hours, and I can candidly say to your Lordships that I do not think there was any speech from which Her Majesty's Government will not have obtained some benefit. During the unfortunate ten minutes which I have mentioned I missed the speech of the noble Lord, Lord Beveridge, but I shall have the opportunity of reading what he said. It is clearly impossible, after such a comparatively short time since this elaborate Report was produced, for Her Majesty's Government to be in a position to make a forthright declaration. It would be wrong to do so in this democratic country, in which we rely upon obtaining the opinion of noble Lords, and the debate in this House to-day has come up in full measure to the standard of the reputation which the debates in this House enjoy.

There are certain matters on which I can make some observations, not in the sense of any declaration from the Government, but as matters requiring consideration. One of these concerns the definition of charity. It will be found impossible to give a new definition of charity which is at once sufficiently wide and flexible as to embrace every kind of institution or purpose which ought to get the benefit of charity and yet will not be so vague as at once to create a vast amount of legislation to take the place of the case law already in being. Equally it would be impossible to give a narrow and precise definition, because—I say this with confidence—if your Lordships were to sit down and try to say what cases should be included within charity and should get all the benefits of charity, including, specifically, exemption from income tax, I think your Lordships would find the task extremely difficult. The noble Earl, Lord Iddesleigh, challenged a decision of this House—not in law but in rightness—concerning the benefit of charity to an exempted community. Equally, the noble Lord, Lard Milner of Leeds, suggested that a trust for the benefit of the employees of a certain firm should have the benefit of exemption from tax although there was a nexus of common employment. I do not think most of your Lordships would agree. If it were agreed, at what point should it stop—at one hundred employees, or twenty, or three? Unless I can see a concrete definition which is satisfactory, I must abide personally by my view that we should not attempt a new definition of charity.


The case I instanced was one of a charity which has been recognised as such for twenty-five years or more, and suddenly the other day it was ruled that it was not a charity, and we had to go to law about it.


I was not referring to what the noble Lord, Lord Luke, said in his speech, but to what the noble Lord, Lord Milner, said. But the case was no doubt one in which the Inland Revenue authorities thought that exemption had been created when it should not have been. That, again, illustrates the difficulty of getting a scientific definition.

I want to say something about a matter which has been frequently mentioned in this House—namely, the cy-près doctrine. This is a doctrine under which it has been possible to modify the original charitable trust. I think there are two things here which have to be distinguished and borne in mind. The first is this. What are the conditions under which it is permissible to apply the cy-près doctrine? In other words, can one say of any particular charitable trust that its purposes are exhausted or have become so contrary, it may be, to the public interest or to public policy that they ought to be changed? That is one aspect of it. The other is this. Assuming that these con- ditions are satisfied, and you can apply them to trust funds cy près, how near or how far from the original purpose is it legitimate to go? Those are two quite separate things which have to be borne in mind. There again, I think I personally would agree that a case is made out for some relaxation of the cy-près doctrine, but bearing always in mind the point which so many speakers have made: that one may dry up the fount of charity if the founder must always feel thai—it may be ten or twenty years hence, or even later—his original purpose is to be altered by somebody else.

May I say how much I was impressed by the last speech we heard in this debate, that of the noble and learned Lord, Lord Reid. All who heard it must regret that we do not hear him more often in this House. But I personally have had confirmation from that speech that what is lost by his absence from our usual debates is gained by his appearance in a Judicial capacity. I do not think I can usefully say anything more upon the cy-près doctrine, except that I am generally infavour of some relaxation, subject to the two safeguards I have mentioned, and subject to finding a solution to the difficulty which the noble and learned Viscount, Lord Simon, described, the difficulty, namely, of the boundary of the doctrine. It is all very well to speak in generalisations, but when it comes to writing down on paper what exactly is meant to be done, and how it is intended to extend the doctrine, the difficulty arises.

The next matter upon which I might say a word, not to express any opinion of my own but, perhaps, to indicate different points of view, is this question of recording charities—of keeping a register of charities. If that is to be of any real use it must be—as I think several noble Lords have pointed out—arecord kept not only in London but, I suppose, in many provincial centres, too. It must be kept up to date, and it will demand, I think, not only a large original expenditure but substantial current expenditure, to keep it going. Then, one asks, for what purpose? For the purposes of the donor, the testator or some other person who wishes to be charitable? Does he really need a register? Or, if he does, is it a need that really justifies the sort of expense that must be incurred? I doubt it. But if it is not for the benefit of the donor, is it for the benefit of a possible beneficiary? I have great doubt about that, too. Is it really necessary, in the interests of someone who seeks a benefit for a particular purpose, that he should be able to go to the public library in his town, or something of that kind, and see whether there is such a charity? It may be so, but I think this is a matter which has got to be watched very carefully. To my mind, the points against it somewhat outweigh those in favour of it. But, as I say, that, clearly, is a matter to which great consideration must be given, because it involves very substantial expense and organisation.

Now I want, if I may, to say one word upon a topic which has loomed large in our discussions, and which was one of the two main subjects of the very interesting speech with which the noble Viscount, Lord Samuel, introduced this Motion—namely the possibility of establishing what has come to be known as "a common good fund" or "a common good trust." I think there is, perhaps, some confusion about this. There can be no difficulty at all about a common good trust being established in a particular locality by the citizens of that locality if they think fit. There could, I suppose, be no difficulty about the establishment of a common good fund on a national basis, if citizens so minded decided upon that course. And, indeed, there are numerous trusts which bear the character of a common good fund. One could instance the Pilgrim Trust and other trusts which have a very wide scope, both in regard to their objectives and in regard to the possible area of their operation. Therefore, there is no difficulty about a common good trust, local or national. But I think the particular point of the noble Viscount's suggestion was that a common good fund on a national or on a narrower basis should be established under Statute, subject to some control—but it was not quite clear to me what control—and that it should be fortified at its start by certain funds. As to that, I must say that, for my part, I feel very great difficulty—and I emphasise that I am voicing purely what is my own opinion on this matter.

As to the virtue of a common good fund, broadly, I think that we all listened with great respect to what the most reverend Primate the Lord Archbishop of Canterbury said, to the effect that that is a matter which should be approached with the greatest caution. Clearly, this is a matter which will have to be carefully considered. But what I am concerned with at the moment is the possibility of such a fund being set up and fed in the way in which the noble Viscount suggested—namely, by appropriation of what he called (and it is a common phrase for it) dormant funds. Lord Rennell has expressed his view upon that proposal, so far as it relates to bank balances.


The suggestion is that the bulk of the fund should be formed of bequests or by contributions.


Of course, if the main bulk of it is to be formed of bequests or by contributions, if only that were the subject of the fund, it would be unnecessary to have any legislation. It would be unnecessary to do anything more. That would be a matter of private enterprise. It is only when we come to the matter of feeding this fund by means of dormant funds that legislation becomes necessary. "Dormant fund" is, perhaps, not a scientific or exact phrase. I suppose it means a fund which over a certain number of years has not been operated, whether it be an account with a bank, whether it be a suitor's fund in court, or whether it be a Government stock which has not been claimed or in respect of which dividends have not been claimed.

I think it is important, before we make up our minds whether such a raid upon dormant funds should be made for the purpose of feeding a common good fund, to see what is the use which is now made of those funds. Accordingly, I have had supplied to me a statement of what happens to such funds. Leaving out, for a moment, the balances in the clearing banks, funds which can be described as dormant funds are accounts which have not been operated in the Post Office Savings Bank and the Trustee Savings Bank. These, after a certain time—I need not go into details—are transferred to the National Debt Commission. Similarly, funds in court are transferred after a certain time to the National Debt Commissioners. So also are unclaimed dividends on Government securities; so also is unclaimed redemption money on Government stock, and so also is unclaimed Government stock. One asks oneself to what better purpose could these funds be put, from the national point of view, than to be held by the National Debt Commissioners—held by them, and either retained in cash and re-loaned to the Exchequer, as Ways and Means, or re-invested in Government securities. It is surely a matter for serious consideration whether a better use could be made of these unclaimed moneys than that to which they are now put. Is it not more to the national advantage that they should be so used than that they should be handed over to a national good fund, and used in a way over which the Government have no control at all? It is so clearly a matter which demands much consideration, that I hesitate to express a final opinion to-day. I am merely pointing out the sort of difficulty that arises in this matter.


I wonder whether the noble and learned Lord the Lord Chancellor would feel at liberty to say what is the total amount of those funds to which he is referring in any particular year—I mean the funds which have been dealt with in the manner he mentioned.


Excluding clearing bank accounts. I should only be making a guess if I made an answer, but whether the amount is great or small, the principle is exactly the same. Intestate estates fall to the Crown, and are used not as personal property of the Crown but as part of the national revenue. I am bound to say that it seems to me to present a great deal of difficulty, and I should hesitate long before I preferred the view which the noble Viscount has expressed: that it would be proper to use these national moneys in a way over which the Government would have no control.

As to the funds in the hands of the clearing banks, there I must express my personal view. There is no justification for taking the balances from the banks to be used for different purposes altogether. Why should they be treated in a different way from unclaimed dividends in the hands of companies? A company is a debtor to its shareholders for any dividends unpaid. One never sees the balance sheet of a big company without seeing the item "unclaimed dividends." Up and down the country, apart from companies, there must be many debtors who owe debts to their creditors, but the creditors do not claim them. I confess that I can see no reason why the clearing banks should be treated in this way, but it is a matter which would have to be seriously considered. I think it might well be thought wholly inconsistent with the practice of this country to examine the state of accounts between the banks and their customers—for that is what it would involve. The tax collector has rights of that kind, but I think it would be a departure from our usual practice.

The second of the points which the noble Viscount, Lord Samuel, put in the forefront of his speech—that is, the way in which the common good trust is to be fed—is not a matter dealt with in the Nathan Report. On the contrary, this question was expressly excluded from their consideration. All I can say is that it is a matter upon which Her Majesty's Government have not formed any positive conclusion, and I am expressing in only a tentative way my own view upon the matter. Upon that suggestion, I may usefully refer to what was said by Lord Tomlin's Committee, which as far back as 1932 examined the possibility of the appropriation of dormant funds to the Exchequer. What the Report said was this. As to putting an end to the suitor's right to the funds, the matter is more difficult. We have been informed that, upon a detailed investigation, many cases have been found where funds have been dealt with after thirty years of dormancy, and also cases where funds have been dealt with up to sixty-six years of dormancy. There are many cases where, in pursuance of an order, a fund is to be kept until the happening of a contingency. The contingency does not happen for a great number of years and, in the meanwhile, the fund becomes dormant, and no one until the happening of the contingency is entitled to get it out of court. In fact, there are 1,200 accounts which have been dormant for over eighty years and the aggregate value is estimated at not less than £250,000. It would not, we think, be possible in these cases to adopt any proposal of the kind suggested unless a period of something like sixty to eighty years dormancy was adopted, and"— Your Lordships will observe this— a careful investigation was first made into the title of the fund. Just think of the burden which would be imposed if in every case a careful examination had to be made into the title of the fund. I suppose that would include the investigation of the position as it existed on the death of the original depositor.

I am very conscious that I have answered only a few of the many points that have been raised, but as I said at the opening of this short address—


If the noble and learned Lord would allow me; I did not want to interrupt his admirable account of the cy-près doctrine, but if I may I should like to ask one question about it. Are the Government prepared to consider relaxing it at all? Are they prepared to consider relaxing it more with the lapse of time? I feel that there is a case for allowing the testator to have all his own way during the first fifty years for allowing the trust fund to be used for some other purposes for the next fifty years; and for allowing a great deal of latitude for the next 100 years. It seems to me that such relaxation would get over the difficulty.


I am much obliged to the noble Lord, and I say at once that I think that is an element which would have to be taken into consideration when the court was exercising its discretion. I am grateful to the noble Lord for his interruption, because it leads me to say something which I had forgotten, and which arose out of the noble Lord's original speech. He was anxious that scheme-making powers should be vested in an administrative body and not in the court. At present, of course, there is a concurrent jurisdiction. I am told that roughly something like ten schemes are made by the administrative body against one made by the court. I will not go into the details of why the court is the appropriate forum in some cases and the Charity Commissioners in others, but I do not think there is any difference between them in the way their jurisdiction is administered. Speaking from a somewhat long personal experience of the Court of Chancery, which I am delighted to hear bears no resemblance to "Bleak House" nowadays, I believe that the discretion of the Court is exercised in precisely the same way as that of the Charity Commissioners.

My Lords, the hour is late, and I hope that I shall be acquitted of any discourtesy to noble Lords if I have not dealt with any of the points they raised. Before I close, I wish to deal with the point raised by the noble Lord, Lord Morrison, who asked whether a local authority could start a common good fund. A local authority is a creature of Statute. It has just the powers which Statute confers upon it, and no more. The noble Lord, Lord Calverley, told me that one local authority has a special power of starting such a fund, but, generally speaking, a local authority has no power whatever, out of the rates or whatever other funds it has, to start a charitable trust, a common good trust or any other trust. I will end, as I began, by saying that I am most grateful to the noble Lords who have taken part in this debate for the contributions they have made. All they have said will be most useful to Her Majesty's Government in considering this Report.

8.40 p.m.


My Lords, we have certainly had a discussion to-day which, so far as it went, has been extremely valuable for the future. It has centred mainly on the Report of what is generally known as the Nathan Committee and has consisted of well-informed (as one would expect in your Lordships' House) examination and criticism of that Report. No doubt this debate will be carefully studied by anyone who is charged with the preparation of a Bill on these matters if—I emphasise the word "if"—any Bill is to be introduced. Today the debate has been mainly a discussion of Committee points on an unborn Bill. It is really part of the prenatal history of a Bill which may never see the light. But in that capacity it is most useful. However, I was disappointed, I confess, that until the speech of the Lord Chancellor just now practically nothing had been said with regard to the proposal for a common good fund. It has been examined on its merits by hardly any speaker. Two or three noble Lords on the other side of this gangway, in particular, Lord Morrison, Lord Ammon and Lord Milner, have spoken on it, but the Lord Chancellor's speech was the only one in which it received serious consideration.


If the noble Viscount will read to-morrow what I said, he will see some more on the subject.


I heard almost all of the noble Lord's speech. Like the Lord Chancellor, I have been sitting here since half-past two, with the exception of a quarter of an hour, and that must have been part of the quarter of an hour.


I certainly said that my Committee would like to see these trusts formed; and, of course, the Report speaks for itself.


I was not including the noble Lord, Lord Nathan, because he stands in a class apart, and we know his views from the Report. There are two or three points which I may be allowed to mention in answer to the comments of the Lord Chancellor in this matter. He said: "Why should any legislation be needed at all on common good, unless it is to justify the taking of certain funds for the use of those common good funds? "The answer is that you must have a really authoritative body. You cannot have half a dozen people getting together in a public house and saying: "We are going to start a common good fund for Birmingham. "You must have assurances and regulations, as you have for trade unions, local savings banks or any other organisation of that kind, in order to ensure that there shall be proper audit and publication of accounts. These common good funds must, for prestige, be known to the whole nation. You can start a fund like the Pilgrim Trust, and other people may leave bequests to be added to the fund, to be administered in the same way. But that is not what is needed. We need a public institution like the Post Office Savings Bank, which will appeal to the whole nation. Anybody who has a fortune, but not big enough to create a fund of his own, might say, "Instead of leaving it to the Pilgrim Trust I will leave it to the Birmingham common good trust, or to the English, or the Welsh, common good trust."

It is necessary to see that there is a proper audit, and indeed that it is established by Statute, as the Public Trustee is established by Statute, and for the same reason. No public funds are needed for the Public Trustee; he merely receives funds that are given into his charge by testators. The same is necessary in the other case. I would ask the Lord Chancellor to consider this matter. If he sees difficulties in dealing with the dormant balances and the in- testate estates, will he set up, at all events, machinery as the first step for the national and local common good funds, and leave open the other—if the present Government are hostile to any action being taken, and set the machine going without what I regard as putting a little water in the pump to prime it. It would be a great advantage to those funds if they could be ensured of a revenue of say £100,000 from intestate estates, but if that is not to be done, then let them go on, as they do in some other countries, without that advantage.

With regard to the particular point he made in respect of these trusts, the claim for balances now unclaimed, I mentioned in my last speech—I am not sure whether I mentioned it again to-day—that provision must be made for any belated claim that may come forward at any time. A time limit of a century, or something of that kind, may be applied. There is no difficulty about that. When the scheme is first started, you put aside a sufficient percentage of the money to meet any claims which actuarially are considered probable. We have had experience over many years of what percentage is likely to be claimed. That money should be put aside, and any claim that is established should be met. In no circumstances must you do injustice to the individual. If he says: "I forgot this," or, "My grandfather forgot it, "you cannot say that it comes under statutory limitation and that you cannot pay the money. You must make provision to avoid injustice.

The Lord Chancellor says: "Here are these investments; there are already these dormant balances, and so forth. They are not gold in a till; they are invested as part of the funds of the bank, and are used for Government purposes like any other investments. "I said on a previous occasion—I am not sure whether it was in this House, but in discussing the matter—that that point can be met, if necessary, by the capital investment not being disturbed. Let the capital remain, but let the interest go to these funds. Why should the banks and other bodies—it is not their money, but the money of other people, and it is unclaimed—have any moral right to have it, against either the State (I do not think it should go to the State) or the great voluntary organisations, if in the public interest the community thinks the money should be mobilised in that way and devoted to that purpose?

With regard to the question raised by the noble Lord, Lord Rennell—this is my last point on this matter—he asked: What are these funds to be used for? If there is a donor, and he specifies what the funds should be used for, either locally or nationally, that is a purpose; and his purpose will be fulfilled. This is set out in the Report of the Nathan Committee at paragraph 613. But if there is no donor, if it is a matter of unclaimed balances or intestate estates, what then? How are we to know how it should be spent? Of course, it should be spent for public purposes, just as the Pilgrim Trust or any other trust of that kind, according to the terms of the trust, uses its moneys. It would be specified in the Statute, I hope in very broad terms, and then the money would be spent to the advantage of the public as a whole.

My regret with regard to this debate is that, except for the last speech, it has concentrated almost entirely on the somewhat technical, and often purely legal, points about the administration and control of existing charities. Out of the six hours that we have spent, I should think that nine-tenths have been on discussions of that kind—well informed, extremely valuable and also necessary. But I am disappointed, and I think the voluntary organisations as a whole will be disappointed, with this debate, because no one has made the kind of speech which the noble Lord, Lord Pakenham, made on behalf of the late Government, striking the note that, in view of the present financial circum- stances, there is urgent need to come to the rescue of and to fortify the great voluntary organisations of this country whose work is essential for the welfare of the nation. Not only ought they to be maintained, but their work ought to be doubled or trebled. Looking ahead to future years, now is the time to take steps to fortify them.

It is not only what is meant by cy près, what measure of control is necessary over present charities, and whether they should be registered or not registered. Those are details; they are Committee points. I am sorry that your Lordships' House should have lost itself, as I think, in these legal intricacies without facing—I will not say never facing, but practically none of the speeches faced—the great issue that I wished to lay before it, and which I feel has not been adequately discussed. At the same time, I have to thank noble Lords who have taken part, and especially the noble and learned Lord on the Woolsack for his informing speech. I regret the substance of it; I admire the manner. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.