HL Deb 22 April 1982 vol 429 cc675-93

6.36 p.m.

Lord Allen of Abbeydale rose to ask Her Majesty's Government whether they now contemplate introducing legislation to modernise and clarify the law relating to charities. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I should like to begin by saying what a pleasure it is that the noble Lord, Lord Elton, will be replying to the debate. I trust that he welcomes the prospect of speaking from time to time about the straightforward and uncontroversial matters with which his new department deals. He might perhaps think that charity is not an entirely inappropriate subject for what I think is his first Home Office debate. I should like to thank the right reverend Prelate and the other noble Lords who have put down their names to speak in a debate which, though brief, is concerned with what to my mind is a very important subject.

It is perhaps appropriate that we should go on to talk about charities immediately after the Local Government Finance Bill, when it is a feature of our society that the discharge of the social responsibilities of local government depends so much on the contribution of voluntary effort, financial and personal, through charitable organisations. We are very fortunate in this country to have such a wealth of charitable support, and it is a contribution that is recognised by the state in the various tax exemptions which have been conferred. I gladly recognise that though there has remained a certain difference of opinion about VAT, during the last two years certainly very worthwhile additional tax benefits have been given —or are being given—to charities.

All that means that a balance has to be struck between encouraging voluntary effort without stifling initiative and without undue interference from Government, and on the other hand ensuring that the money which the public, as either donors or taxpayers, contributes is not wasted through diversion to non-charitable purposes. But it also means the introduction of a new dimension in charity law. Its traditional purpose was to protect the property and resources devoted to charity, but it has come to take on the role of providing the yardstick against which claims to fiscal benefit are judged, and hence has become subject to new pressures, and has had to face new tests.

I am well aware that the present Government have so far taken the view that the basic principles of the existing law and the way in which they are administered remain broadly satisfactory. They have not been shaken in that view by some of the events which have caught the headlines in recent times; for example, the problems arising from disaster funds, the arguments about political activities on behalf of charities and the exchanges which are still going on about the Unification Church, or whatever title it is the "Moonies" use for their organisation.

The Government seem to have taken the view that issues of this kind are merely hiccups in a perfectly satisfactory system. Others have taken the view that they are symptoms of problems which are quite deep-seated. Certainly there is plenty of concern on the part of many charities on a scale considerable enough to lead the National Council for Voluntary Organisations to put in train in the next few weeks and the next few months a fresh series of consultations to assess the need for change. It is also a fact that a Select Committee in another place in 1975, and a committee under the noble Lord, Lord Goodman, in 1976, both thought that changes in the law were called for. Although the Government have made a general statement of policy, I am not aware that they have ever commented in detail on the proposals of these two bodies.

A short debate like this is not the occasion for going through all the issues where change might be considered, and I should like myself to concentrate on two main questions. The first arises from the fact that there is no statutory definition of a charity. Let me say straightaway that I doubt whether it will ever he possible to provide one, but I do not think that anyone would deny that the patchwork we have at present is not without its obscurities and anomalies—I hope all the negatives in that sentence come out in the right way.

One always starts with the preamble to the Statute of Charitable Uses 1601, which gave an indication of the matters then considered to fall within the ambit of charity and which continued to be a source of analogy and interpretation—a bit like the American Supreme Court trying to interpret their 18th century constitution in the light of modern problems. Then, going on from 1601 and pausing briefly with Sir Samuel Romilley in 1804, one goes to Lord Macnaghten in the Pemsel case in 1891. Basing himself on the 1601 preamble and various judicial decisions, he classified charities in four categories: trusts for the relief of poverty, for the advancement of education, for the advancement of religion and for other purposes beneficial to the community. So it seems to me we are in the position, which strikes me as being a little odd, that in order to decide what is a charity the Charity Commissioners and the courts, as I understand it, have regard to a preamble in a Tudor Act which has disappeared from the statute book and to the test of benefit to the community which is laid down in a judicial decision and not in any Act of Parliament.

The Goodman Committee, to which I referred, came down in favour of restating in modern language those categories of activity which are properly regarded as charitable and would be generally accepted as worthy of support; in other words, giving guidance, but without attempting a definition, much as the 1601 preamble tried to do. This approach has considerable attractions. I trust the Government have not closed their mind to tackling the problem on these lines; or, if they have, I hope the Minister will be able to tell us why.

I hope, too, that the Government will be prepared to contemplate some rather closer definition of the judicial phrase about "purposes beneficial to the community". There are various activities which have developed as social conditions have changed where there remain doubts and difficulties; for example, the giving of information and advice, counselling, environmental improvement, promotion of the arts, research, unemployment, religions of a kind which Lord MacNaghten cannot have dreamed about, unconventional medicine, race relations and so on. There are even those who have some slight difficulty in seeing how fee-charging public schools and expensive private hospitals meet the test of benefit to the community; and certainly some of the self-help organisations find themselves in difficulties.

The noble Lord, Lord Goodman, who unfortunately cannot be with us this evening, tells me that in his view the position of sport in relation to charity law is chaotic and that the Sports Council would greatly welcome clarification. He also tells me that the somewhat anaemic Act which was passed in 1958 to deal with recreation is not working well. The Charity Commission, for example, seem to have the idea that the provision of facilities for a single sport does not come within the Act, even if the facilities are open to everybody, because a lot of people may not be interested in that particular sport; and the suggestion is that if this is a correct interpretation of the law as it is then the law needs changing.

In this context the particular issue of disaster funds calls for special mention. I find it interesting that the Aberfan appeal was a charity, whereas Penlee was not. I cannot help wondering whether the Attorney-General's helpful guidelines after Penlee may not be filed away and overlooked by those concerned the next time we have a disaster which touches the nation's heart and the contributions start pouring in straightaway. If under the guidelines the fund becomes non-charitable questions of tax arise, and one wonders whether there is not a case for legislation authorising the Home Secretary to declare an occurrence to be a disaster and for a non-charitable fund in relation to that disaster then to be put in the same position as a charitable fund as regards tax in relation both to donors and to trustees.

My second main point I can deal with very much more briefly. It relates to political activities. It is an issue which affects only a minority of charities, but where it does arise it can be quite troublesome. Everyone would agree that an organisation which exists to serve only political purposes or to promote party interests should not qualify; but despite guidance from the Charity Commission I find that there is a good deal of doubt and uncertainty among certain charities as to how far political activity ancillary to a charitable purpose is acceptable, and just where the boundary lies between permissible education of the public and impermissible propaganda.

It so happens that this is not an area where there have been all that many decisions by the courts; and although there has quite recently been an important ruling in the case of the Amnesty International Trust, I am not sure whether even this ruling is going to resolve all the doubts. One organiser put it recently that it seemed to him that any organisation which aspired to alleviate the problems of its neighbourhood by any means more rational than a traditional social welfare approach was unlikely to be able to do so both effectively and legally as a charity. He may or may not be right, but I submit to the Government that it would be wrong to ignore the anxieties which a minority of charities have on this issue and the genuine doubts about what is permissible. I would remind the Minister that the Select Committee and the Goodman Committee both looked for some change in the law here.

I have already been speaking for long enough, but before I sit down I should like briefly to mention two other points. One is the quite simple one of the cost of going to the courts to challenge decisions by the Charity Commissioners, a cost which is of such a proportion as to make this remedy of rather limited use. I am aware of two charities which carry out not dissimilar services to the community and wish to merge but who, for some reason, have been refused permission to do so by the Charity Commissioners. They estimate that it will cost them at least £5,000 to go through the process of persuading the courts that the Charity Commissioners have been unduly rigid. I know the problems about legal aid but both the Select Committee and the Goodman Committee thought there was a case here for financial help. I could wish, too, that there was some provision in the statute which enabled the Charity Commissioners themselves to go to the courts for some kind of declaratory judgment on difficult and important legal issues.

My last point relates to parishes (which have been the subject of discussion in the debate preceding this one) in the rather special context of parochial charities for the poor. There are a great many of these and, contrary to popular belief, some of them have quite a lot of money. The Charities Act 1960 made provision for schemes for voluntary mergers but not all that much has been achieved. The noble Lord, Lord Renton, who piloted the 1960 Bill through another place tells me that his view is that this provision has not fulfilled the hopes that were placed upon it. I am, I confess, a little unhappy that if there is a parochial charity with more money than it needs to meet its traditional obligations of helping the poor within the parish, the tendency is to allow it to use the surplus for any other purpose in the parish rather than that it should be merged with charities in other parishes so that the funds can be used for the original purpose of helping the poor but over a wider area. I think there is an argument here for legislation imposing an element of compulsion, but I shall not pursue that point any further this evening. However, I hope that the noble Baroness, Lady Faithfull, will be touching on this topic when she speaks a little later.

I am sorry to have been so long, but, as I said at the beginning, it is an important topic and it is important that there should be confidence in the law and in its administration. I think that Parliament perhaps has concerned itself too little in the past with some of these issues. I think I am right in believing that there has never been a debate on any of the annual reports of the Charity Commissioners. I shall listen with interest to what the noble Lord the Minister and the other speakers have to say. Perhaps I could end with the warning (if that is the appropriate word) that, in the case of this debate, the Government cannot count on having heard the last of these issues.

6.54 p.m.

Lord Mishcon

My Lords, the House, as always, will be grateful to the noble Lord, Lord Allen of Abbeydale, not only for raising this important matter but for the manner, clarity and eloquence with which he has done so. I would like to share his joy that the noble Lord, Lord Elton, will be replying to this debate. We have heard that sport is in a doubtful state in regard to charity. But I trust, especially in view of the glorious past in the game of cricket of the right reverend Prelate, that when he follows me in this debate the noble Lord, Lord Elton, will at least take the message back with him tonight—if I may quote the finishing words of the noble Lord, Lord Allen—and not merely present a straight bat in knocking the ball back to the bowler, but rather, either now or in the future, show us a few glorious strokes, preferably on the offside, and that we may have some boundaries to register in future, so that the law, in the language of this Motion, will be both modernised and clarified.

It is right, as the noble Lord, Lord Allen of Abbey-dale, has said, that this is an important subject. I was interested to note from the 1980 Report of the Charity Commissioners for England and Wales that they now have 136, 048 registered charities. So that your Lordships are at least reminded of your Lordships' part in dealing with the question of voluntary organisations and charities, may I say that a debate in this House which took place on 22nd June 1949 receives a preeminent place in the report in December 1952 of the Committee on the Law and Practice relating to Charitable Trusts. That committee was known as the Nathan Committee in view of the fact that the late Lord Nathan presided over it.

I am proud to read, if your Lordships will bear with me, the remarks made from the same position that I occupy at this moment—but it was a question of a far more eminent person making the remarks, I hasten to add. They were remarks by Lord Pakenham (as he then was) in that debate which was on a Motion introduced by the late Lord Samuel. The Motion was: To call attention to the need for the encouragement of voluntary action to promote social progress". In the Nathan Report the debate was described as "historic"; it provided an opportunity for discussing the place of charity and voluntary action in the Welfare State; there was unanimity expressed on the value as a national asset of voluntary action and the charitable role of our citizens; and this was in spite of the extension of public services.

The noble Lord, Lord Pakenham (the noble Earl, Lord Longford, as we know him now) in winding up for the then Government said: We have moved far from the era of laissez-faire. We have entered what Lord Lindsay and others have called 'the era of the positive state'. But even at the risk of repetition, I want to make it plain beyond any shadow of misunderstanding that, in the view of the Government, democracy without voluntary exertion and voluntary idealism loses its soul". That is the end of what seems to me to be a worthy quotation in the context of the Motion introduced by the noble Lord, Lord Allen of Abbeydale.

The noble Lord, Lord Allen of Abbeydale, dealt with various aspects of the present law relating to charity and drew rather graphically on its history and its ancient origins. Those origins date back to an Act of Parliament of 1601. The noble Lord referred to the definitions in the last part of the 19th century, or, rather the four categories which were given by Lord MacNaghten and which survive to this day. On the definition question which he raised I think it is important (I believe that he would want to emphasise this) that when this matter was reviewed both by the Nathan Committee and by the Goodman Committee, to which he referred, the wealth of legal decisions which had been made over the centuries was referred to with great respect. It was hoped that if indeed there would be a statutory definition, it should be one in simple language which would deal with the categories in the same way that the noble Lord, Lord Allen, suggested, and that definition would allow that great body of case law and precedent to remain, which I think has added so valuably to our legal history and to what can be deemed to be a charity.

There is not the slightest doubt—this Motion refers to modernisation—that that definition, in rather simpler language than has been employed in the 1601 Act at all events, should bring up to date the modern concept of charity; and, as the noble Lord, Lord Allen, said, quite obviously over the century those boundaries have been extended.

The noble Lord referred to one of the charitable categories referred to in the four categories of MacNaghten. He referred to the advancement of religion. It is absolutely right that that is a category—and I should be so interested if the right reverend Prelate the Bishop of Liverpool cared to comment on this, but that must be a matter for him to decide—in which some reform, some clarification, is without any doubt necessary. We have had examples recently. The noble Lord, Lord Allen, mentioned the difficulties in which the Charity Commissioners have been placed regarding knowing what religion is supposed to mean in this context.

I advocate very definitely a respectful attention to the wording of the Goodman Report. I certainly could not better it and I therefore propose, with your Lordships' leave, to quote it. This is what the Committee said on that subject: We consider that those seeking charitable status for the promotion of movements, whether religious or not, should be required to satisfy the Charity Commissioners or the court that their advancement is for the benefit of the community according to certain basic concepts which should be established. We would not regard the number of adherents as a principal test of acceptability". I do not think I could improve upon that wording. I therefore refer the Minister to it, although I am sure he has read that recommendation in the Goodman Report. I hope very much that in his reply he will be able to say something of a constructive nature in regard to that aspect.

There was one matter that the noble Lord, Lord Allen—he could not get everything into his very concise speech—did not mention. That is that although the advancement of education is one of the four categories, the advancement of the arts is not. There is no doubt at all that the Charity Commissioners in many respects find themselves in difficulty when there is an application made to them for the registration of a charity where the advancement of some arts is being put forward as the object of the charity. There are many arts that are obviously of general acceptability. But then there is the fringe of certain of the arts, and I personally have experience of one of them where there was a genuine attempt to preserve the art of the circus in this country. An educational establishment was hoped for in order to handle this on a completely non-profitmaking basis, to educate youngsters in the art of circus, and so on.

The Charity Commissioners told me that they found the greatest difficulty, in view of their limitations, in saying that this was an art for the benefit of a section of the community, and they even had doubt whether it was an art at all. There are so many things on the fringe of this subject which obviously ought to be looked into if we are trying to modernise and clarify the law of charity.

I do not intend to add anything to what the noble Lord, Lord Allen, said about political activities. It is a very delicate subject—and the noble Lord, Lord Allen, made this clear in his speech—and nobody is looking for charitable status for those who quite openly—and that is their right—wish to issue political propaganda. When one gets to the type of political activity which is required in order to fight for a definite aspect of social welfare, when one gets political activity which aims to relieve poverty or to advance the arts, then one walks into the very grey area that the noble Lord, Lord Allen, referred to.

Here again, there were some very sensible guidelines, if I may respectfully say so, which were set out in the Goodman Report and which were referred to. This time I promise the House that I shall not endeavour to quote them, because they are exactly the lines to which the noble Lord, Lord Allen, referred. On the question of disaster funds—a matter which again was raised by the noble Lord—I remember that, when the Aberfan disaster befell us, there was a question regarding that disaster fund, not as to whether it was a charity but whether it remained a charity—and this was exactly the point in the Penlee case—when one satisfied the needs of those who were in pecuniary need as a result of the disaster.

Therefore, if one had an over-subscription of funds, could one pass it over to those who had suffered so much in the disaster, the families of those who had died, and so on? Was one doing this within a charitable object covered by charitable status if indeed one went beyond their immediate needs? That is, whether it was £5, 000—which was a figure we have heard of recently in regard to another disaster—or whatever it may be. There is not the slightest doubt that here again, having had two experiences, at both Aberfan and Penlee, when obviously we must go beyond the question of the Attorney General's guidelines, there must be an enactment so that in future the position of a disaster fund is made absolutely clear in law and it has a proper charitable status.

There are two other matters to which I shortly refer. The first one is the question of the Charity Commissioners which as a result of the Nathan Committee and the White Paper of 1955 found themselves with powers and duties under the Charities Act 1960. I want to pay my tribute, as one who has had quite a bit to do with the Charity Commissioners, to the courtesy that one always finds when one applies to the staff of the Charity Commissioners for assistance.

I know that those who practise my profession get a little disappointed—and this is serious when there are matters of great need that a proposed charity has to deal with—the time that is taken for the approval of the draft documents of the charity, which have to go to the Inland Revenue, quite apart from the Charity Commissioners. One is very lucky if one gets the registration of a charity through in something under six months. That procedure ought to be hastened. I know that they had difficulties with staff at a time when there were many applications being made for registration, but that situation still obtains. I feel that a little more administrative skill would enable those applications to be handled with more expedition.

Having said that, I suppose it is a little inconsistent if I try to add to their duties; but I hope that, if there were any statute to cover the modern conditions of a charity, the Charity Commissioners would be empowered to make far more inquiries of some of the small charities—but it could apply to some larger ones—to make sure that they are being properly administered. The fact of registration and of having to submit accounts and so on does not mean—unless those are perused and there are powers and duties imposed upon the Charity Commissioners to go a little further—that the charities in this country are being looked at as they should be in order to see that they are properly and sensibly run. That does not mean, of course, that I am advocating interference with the proper discretion of the trustees of a charity to administer that charity.

Lastly, I know that the noble Lord, Lord Allen, was short of time and most likely he would have liked to give very much more attention to the question of what used to be called, I think, "common good funds", national and local. I find myself in precisely the same position, looking at the clock, as I am anxious not to test the patience of the House, since your Lordships would obviously like to hear speakers other than myself. Therefore I am hoping that as a consequence of this debate the whole question of national and local "common good funds" —they have other names given to them—may be advanced by other speakers and, if not by other speakers, then possibly the noble Lord the Minister may refer to the Government's thinking in regard to that important matter later.

I should like to express again my great gratitude to the noble Lord, Lord Allen of Abbeydale, for having raised an important matter. I share his hope that it will not be a question of another Motion moved but that in fact some action will be taken as a result of his contribution to the House tonight.

7.12 p.m.

The Lord Bishop of Liverpool

My Lords, I, too, am grateful to the noble Lord, Lord Allen of Abbeydale, for putting down this Question. I, too, believe it to be extremely timely and I hope that Her Majesty's Government will now consider introducing legislation to modernise and clarify the law relating to charities. Those of us who are concerned with the charitable work of the Churches do not agree that the law is tidy or as good as it could be at the moment, and there is a strong feeling that there is a need for a look at the law.

I will concentrate on the experience of the Churches rather than on sport, although I thank the noble Lord, Lord Mishcon, for a nice reminder of the beginning of the cricket season on a pleasant day. Although I have had enough experience of a variety of inner city charities and have found those raising similar questions, I shall concentrate on the charitable work of the Churches and particularly on the great charities concerned with overseas aid. In July 1980, a former Member of your Lordships' House, Bishop Gerald Ellison, led a deputation to the Home Office representing the major Church charities and the National Council for Voluntary Organisations. Bishop Ellison said then that, so far from being happy about the status quo, the leading charities found themselves increasingly hampered in some of their activities, especially overseas, by an over-rigid interpretation of the law of charity. That deputation pressed for greater flexibility in the administration of the law and in the implementation of the reforms recommended by both the Goodman Committee and the Select Committee of another place, which have been referred to previously.

In 1981, the British Council of Churches held a consultation on the Churches and charity law, which was attended by representatives from 22 organisations. Thinking simply of some of the best known and largest charities concerned, it was agreed at that consultation that the activities of bodies such as Christian Aid, Oxfam, War on Want and CAFOD were being seriously hampered by the way in which the law is administered. The Charity Commissioners exercise what have become in effect quasi-judicial powers because of the prohibitive expense of taking their rulings to the courts. I know that staff members of these charities have to spend great amounts of time producing detailed answers to repeated questioning about the causes they support. An organisation like Christian Aid is particularly vulnerable because it operates so openly and publishes quarterly all the grants that it makes. They will tell you that there is an urgent need for a change in the law. Smaller charities simply do not have the staff to persist in such arguments.

It seems to me there will always be many borderline cases in charity law but the borderlines ought to be located in places rather different from where they are today, and that some matters should be made much plainer and more unquestioned than they are today. I am conscious of intricacies of the law, but we need to stand back from those intricacies and look boldly at what should and what should not be regarded as charitable. It should not be a matter of argument that ways and means should be found to make charitable status available to help the poor and disadvantaged. Further, charitable status should be available not only for the relief of poverty but for its prevention. In a common-sense discussion those sorts of statements seem very obvious: yet it is precisely around here that some of the borderline issues are to be located. Charities are told that they must beware of campaigning for political action or of blurring the line between religious purposes on the one hand and changing attitudes or providing for social needs on the other.

Let me give your Lordships two examples. The first is one I was myself involved in. Some of us were exploring the possibility that the Church of England might itself promote a special fund to support self-help groups in the black and Asian communities in this country and to provide an educational programme among Church members to change attitudes there towards the black and brown people. We made preliminary inquiries of the Charity Commissioners and were told—I think this may have been a world record—by return of post that the courts have repeatedly held that to seek to change attitudes is not a charitable purpose.

The Chairman of the Central Board of Finance of the Church of England at the time was Sir Arnold France and he was extremely nervous when in discussion with me that the Church of England might lose its charitable status. I think he recognised the brief glint in my eye when it crossed my mind that an educational programme might indeed be furthered by the Church of England losing its charitable status because it was determined to do something to help the disadvantaged.

My second example occurs quite frequently. The Church desires to use the proceeds of the sale of a redundant church building and it thinks that the best community use for that would be to support a housing association or to make church land available to a housing association at less than the best price possible. We in the Churches are frequently put under intense pressure that the moral and right thing is to do just that. The response of the Charity Commissioners has been that Churches hold their land and property in trust strictly for the purposes for which money was originally given—namely, the advancement of the Christian religion.

At that point we come back again to some definitions. They will say it is by virtue of that sole purpose that charitable status is given to the Churches; but the Charity Commissioners have drawn those definitions very rigidly. Only those activities directly associated with the worship of God, such as praise, prayer, preaching and evangelism are deemed to contribute to the advancement of religion. I hope your Lordships might agree that the Churches should have some say in what contributes to the advance of religion, and sometimes we wish to deploy our resources in ways which seem to us to be a natural expression of our religious faith. Yes, my Lords, I believe that we ought to make the attempt to say something about the nature of a particular religion, when charitable status is asked for.

It seems to me that a prime reason for charitable status should be to prevent poverty, as well as to relieve it, and that will mean things like changing attitudes. Repeatedly this issue is raised in connection with charities which seek to help the most disadvantaged groups in our society. It is a proper question, I believe, to ask why the borderline is located there and not, for example, near the promotion of education in private schools.

I am one of those to whom the noble Lord, Lord Allen, alluded, who question that charitable status is appropriate to private schools. They are concerned with changing attitudes. But to many people, the maintenance of private education is a highly political act, with large consequences upon separate development in the life of the community and upon the schools which poor and disadvantaged children attend.

An old distinction seems to be being repeated. To change the social order is regarded as political. To maintain it is not. We need to be honest with ourselves, rather than label action which we do not agree with, in moments like these, as political. Of course, political activity must have limits set to it in charity law, with more careful definitions than exist at present. But it seems to many of us that the Goodman Report has made helpful proposals in this area.

Perhaps another distinction survives, too. Old and traditional religious charities are acceptable if they try to change attitudes; newer ones are out. I will give your Lordships some examples. The Lord's Day Observance Society has for 100 years been a religious and campaigning body. The Quakers have maintained their peace testimony for 300 years. The Church Missionary Society campaigned vigorously for changes in legislation on the issue of slavery during the 1800s. The administration of the law today has made such proper campaigning more difficult for a charity than it was.

I hope that your Lordships will take seriously how unhelpful the repeated questioning by the Charity Commissioners, with their very large powers, is to the honoured charities that I have mentioned—Christian Aid, Oxfam, War on Want and CAFOD. The case of Amnesty International has added to the difficulties and the nervousness. There is, I believe, an urgent need for consideration of a change in the law, and I hope that the Government will proceed towards preparing such legislation.

7.24 p.m.

Baroness Faithfull

My Lords, not only are Members in your Lordships' House grateful to the noble Lord, Lord Allen of Abbeydale, for setting down this Unstarred Question, but so are many people throughout the length and breadth of the land who are pressing for the modernisation and clarification of the law relating to charity. I would ask my noble friend the Minister, who is to reply, two questions and make one comment.

The first question concerns the structure and accountability of the Charity Commission. Before the Charities Act 1960, the Charity Commission was made up of a parliamentary commissioner who was a MP but not a member of the Government. It was his role to answer questions on the Floor of the House of Commons. In addition, there were not more than three paid commissioners, of whom two were barristers. In 1951, as has been said, the Nathan Committee made a recommendation in its report, concerning the cy près doctrine. As is well known in your Lordships' House, the cy près doctrine is derived from the Norman French, meaning as near as possible. Thus, if the terms of the original bequest became obsolete, an application by the trustees to the commission could be made and the terms of reference changed as near as possible to the original.

The Nathan Committee recommended a change in the doctrine of cy près; namely, that where the original purpose of the charity had ceased to exist, the terms of reference could be extended to provide an effective method of using the bequest available by virtue of the gift, regard being had to the spirit of the original gift. The Nathan Committee took the view that the widening of the cy près principle would mean that the commission would, in effect, become more of a policy-making body, able to respond to the needs of the times, rather than a quasi-legal body interpreting the law in each case. This was mentioned by the right reverend Prelate.

To carry out the recommended change, the Nathan Committee sought to alter the structure of the commission so that there should be not less than five, and not more than nine, men and women of standing in public affairs to comprise the commission. The commission would be served by an administrative staff and advised by a committee of experts, only some of whom would be members of the legal profession. I mean no disrespect to the noble Lord, Lord Mishcon. Thus, the commission would be brought nearer to those in the community whom all charities seek to serve.

Four years later, in 1955, a White Paper was issued accepting the wider interpretation of cy près, but rejecting the restructuring of the commission and adhering to the legal flavour of the commission. The effect, unfortunately, was to abolish the MP commissioner and to make the Home Secretary answerable to Parliament. But, as I understand it, the Home Secretary was not to interfere with the policy of the commission. Therefore, the commission was to be isolated from outside scrutiny, as is the Board of Inland Revenue and the Land Registry. The Charities Act 1960 was passed.

In 1975 a Select Committee of the House of Commons expressed concern that the commission was an isolated body, apparently accountable to no one, out of touch with social conditions and a quasi-legal body. To counter this, the Select Committee recommended that a charity tribunal be set up and a standing panel to be drawn from members of local authority social services, voluntary agencies and, I myself would add, the church.

In 1976, as has been stated earlier, the Goodman Report drew attention to the absence of the lay element of the commission and, among many other things, recommended the publication of an annual report. As has been said, it was recommended that appeal from the Charity Commissioners decision on a point of law should go to the High Court but be legally aided. Could my noble friend the Minister indicate whether Her Majesty's Government are likely to structure the commission so as to meet the needs of the community, and further to provide for an element of accountability and initiative?

My second question concerns the accounts of charities. I wonder whether it is realised that the accounts of personal charities need not by law be audited. In principle, the commission scrutinises the accounts of each charity, but we have worked it out that they can really scrutinise those accounts only once every 16 years. I think that the noble Lord, Lord Mishcon, referred to this. I heard yesterday of a local charity yielding £60 per annum, £50 of which was given to the secretary, leaving £10 to spend during any one year. Is my noble friend the Minister at ease over this state of affairs?

Finally, I am grateful to the noble Lord, Lord Allen of Abbeydale, for mentioning parochial charities. I shall seek in the next Session to introduce a Private Member's Bill called the Parochial Charities (Neighbourhood) Trusts Bill. Throughout the country money is locked up in parochial charities which is not always used to meet the needs that the original bequest intended—and in some cases is not used at all. For instance, money was left in a number of small charities to provide gruel for the poor of the village. In one place I know there is no village now, and I do not quite know who drinks gruel. There are many people in need in the areas of health, education or poverty whose wants are not met by the statutory services.

However, I would lay a wager that, despite the needs of many in our society, despite the money which is available, the commission, as at present constituted, will not accept the Bill. The hands of the present commissioners are tied. They are asked to operate a hopeless structure which is outdated, isolationist, not accountable to Parliament and, as a quasi-legal body, in no position to initiate policy. Indeed, it could be said that with social conditions as they are today, the present structure—and I underline the word "structure" —of the commission is as dead as the dodo. The structure is extinct. I pay tribute to the individual commissioners and I congratulate Mr. Dennis Peach on his appointment. I sympathise with them over their restricted and outdated role, and hope that Her Majesty's Government will initiate reform and change.

7.32 p.m.

Lord Elton

My Lords, I have listened with very great interest and very great profit to this debate. I am, as are the rest of your Lordships, most grateful to the noble Lord, Lord Allen of Abbeydale, for giving the House an opportunity to discuss a subject which is not often aired in such a considered and rational a manner. The noble Lord, I may say, who made some kind introductory remarks, has always appeared most distinguished to me and he appears to be increasingly distinguished with every move of ministerial post I make as I grow closer to his roots.

We are all agreed upon certain fundamental principles concerning charity law. First, the scope of charity which it embodies must command general agreement and understanding. Charities enjoy considerable privileges. The most notable are relief from most forms of direct taxation and exemption from the rule against perpetuities. Unless they are considered to be morally worthy by the community in general, there is little reason for them to do so. Secondly, charity law must be flexible enough to be able to adapt to the needs of society (that is a continuing theme in what every noble Lord has said so far), to embrace new forms of charitable activity and to discard outdated ones. Thirdly, it must ensure that the wishes of donors are respected so that people who make charitable donations or bequests from purely altruistic motives may do so in the knowledge that their wishes will be respected. Lastly, there must be provisions to ensure that the trustees of charitable funds can be supervised and the funds safeguarded.

I was interested in the conflict of opinions between, on the one hand, the noble Lord, Lord Mishcon, and my noble friend Lady Faithfull and, on the other hand, the right reverend Prelate, because the first two whom I mentioned said that there must be closer investigation while the other speaker said, "Let us be less trammelled by supervision". We are all at one in believing—indeed, the noble Lord, Lord Mishcon, waxed eloquent (he waxed, perhaps it might be said, eloquent at second hand, but nevertheless he waxed eloquent) on the matter of voluntary effort being so close to the soul of the nation.

From time to time there is concern about one or other of these aspects of charity law and, at less frequent intervals, that law itself is reviewed. As noble Lords have remarked, there have been three such reviews since the last war. The Nathan Report of 1952 led to the Charities Act 1960. I think the time lapse between the report and the legislation is indicative of the difficulties of legislating in this field. The Act confirmed the Charity Commission's position as a quasi-judicial body, independent of Government, whose decisions are subject to appeal only in the High Court. It also codified and extended its powers. It is by virtue of this Act that my right honourable friend the Home Secretary appoints the Charity Commissioners and presents their annual report to Parliament.

There have also been, as your Lordships know and have mentioned, two further inquiries into charity law since 1960. In 1974–75 the Expenditure Committee reported to Parliament on the Charity Commissioners and their accountability. This was closely followed by the report of the Committee on Charity Law and Voluntary Organisations—the committee so very ably chaired by the noble Lord, Lord Goodman, whom the noble Lord, Lord Allen of Abbeydale, so properly regretted not being able to have in his aid today. The Government considered both of these reports in detail, but concluded that they saw no reason for change in charity law. That conclusion was announced in this House two years ago and it still holds good. Let me briefly explain why that should be. In doing so, I shall refer particularly to the four areas I have just outlined. The first three, as by now I am sure your Lordships will agree, are closely inter-linked.

First, the Government are satisfied that the present legal scope of charity is broadly understood and accepted by the community in general. The fact that it is not embodied in a statute does not, in my view, make any difference. The present law is based on a preamble to the Statute of Charitable Uses of 1601 which set out a list of things which might be deemed to be charitable. What we are looking at, as the noble Lord, Lord Mishcon, in particular, emphasised, is something which is rather vague in outline. He quoted the example of a circus, or the perpetuation of the art (or perhaps it is the skill) of the circus performer being perpetuated by educational means. I rather think that he has put his finger on something which weakens rather than strengthens his case. Where you have an absolutely diamond hard definition there is no flexibility. The inevitable result is that you have people beyond the border which the right reverend Prelate wished so often to push outwards and you are not able administratively or judicially to extend that border if it is fixed with diamond sharpness on the statute book. I see that the noble Lord wants to put me right. He is well entitled to do so, since his knowledge of these matters is so formidable.

Lord Mishcon

My Lords, met with those very courteous words, I almost wish that I was not intervening because I may be showing my ignorance instead of the knowledge which I am supposed to have. The point I was making, and which I believe other speakers were making, on this matter was not that there should be an inflexible definition but that categories bringing the matter up to date should be clearly stated in simple language in an Act of Parliament with the same flexibility as the four categories are now supposed to have and with all the wealth of legal precedents upon which future decisions could be made.

Lord Elton

My Lords, I am much obliged to the noble Lord. What I shall be doing very shortly is reading the record of this debate, and when I do so I shall take that point very much on board.

The list of categories was not intended to be exhaustive and it has never been so treated. Over the years there has been a huge body of case law that has developed which has extended the scope of charity by analogy to suit changing times. In 1891, in the Pemsel case which has already been quoted this evening, Lord MacNaghten classified charitable objects into the four main groups which have been mentioned: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community—a term, I would think, of considerable elasticity. This is the basic framework used by the Charity Commission and the courts today.

Of course, there are those who disagree with the decisions that have been taken within that framework, but that will happen whatever framework we use and whether or not there is a statutory definition of charity. I would discuss some of the points of contention in a moment, but first I must say why the Government disagree with the Goodman Committee's recommendations, not that there should be a new statutory definition of charity—for the disadvantage of losing the accumulated wisdom of case law and perhaps saddling ourselves with an inadequate and inflexible definition are obvious—but that there should be a re-statement of the old preamble in a new list of charitable purposes I believe this is closer to what the noble Lord, Lord Mishcon, was asking for.

We accept that this might have presentational advantages for the layman, although I would not for a moment suggest that the noble Lord is a layman in this; but we do not think that it is worthwhile. It would not affect the application of the law in any way and in fact might serve to complicate it by introducing new elements of uncertainty and insecurity. Indeed, the historical periods in which the first codification was written, and the date when the noble Lord, Lord Goodman, proposed that it should be put into new language, make me think really that the original codification was, as it were, the Authorised Version of charity law and that what is now proposed is the New English Bible. What I mean is that the contents will be much the same but the expression might perhaps be less elegant and rather longer. I hope I am not offending any theological sensitivities of the right reverend Prelate, because I have no intention of doing that.

May I at this point refer to a matter which has been raised by three noble Lords; the question of a disaster fund and recent experience in this field. Following the "Penlee" lifeboat disaster last year, there was considerable discussion, both in Parliament and in the media, about the adequacy of charity law in relation to disaster funds. I dare say that imparted a little impetus to the noble Lord, Lord Allen of Abbeydale, towards the Chamber this evening. The noble Baroness, Lady Ewart-Biggs, among others, has proposed a national disaster fund, but most of the controversy stems from an ignorance of charity law and not from defects in that law. It stems from people's fear that money which they have donated specifically to help the dependants of the victims would be withheld.

The problem was that the trustees wished to obtain charitable status, for understandable if mercenary reasons, to seek exemption from direct taxation for the funds concerned, although not for the income received by the dependants. However, charitable status brings with it the restriction that the beneficiaries may not be made better off than they would otherwise have been. In the "Penlee" case, where eight families stood to share over £2 million, charitable status would have deprived them of a very great deal of money. In the event the question did not arise because the trusts were made out in favour of a smal number of clearly identifiable beneficiaries and therefore did not fulfil the requirement of public benefit. However, there have been in the past disaster funds; notably, the one established after the Aberfan tragedy, where most of the victims were children, which had been granted charitable status but where the money has only been put to limited use, such as improving community facilities; that is, the test of generality is applied. The result of the "Penlee" case has been the issue by the Attorney General of guidance to banks, solicitors and others who may be involved in disaster appeals about the financial implications of charitable status and suggested forms of trust deeds which can be adopted according to the status desired. I do not think that these will be abandoned and forgotten. The principle of the law remains unchanged. While on the subject of disaster funds, I will also answer another question in this context. I understand that the charitable status of the Aberfan disaster fund continues because the remaining funds continue to be applied for charitable purposes within the terms of the trust deed.

As we are now discussing individual cases, perhaps I may turn to the question of sports, where the courts have long held that the promotion of sport in itself is not charitable. It is, perhaps, something that is naturally pursued by the human beings but the promotion of sport may be charitable if it forms part of the curriculum or extra-curricula activities of students at schools and universities. In this context, the noble Lord, Lord Mishcon, asked for glorious boundaries from the right reverend Prelate. Your Lordships may forgive me, and indeed congratulate me, if I manage merely to turn that away into the slips because I was and always have been only a "wet bob".

Perhaps I may now return to public concern about the charitable status of certain religious sects, upon which attention has been focussed for the past year in respect of two organisations associated with the Unification Church. As their status is currently being considered and may eventually be the subject of an appeal in the High Court, it would clearly be inappropriate for me to comment on that case. More generally, it has been suggested that religious sects should prove that they are of moral benefit to the community before they are registered as charities and that it is wrong to distinguish between religious sects and organisations which are devoted to moral or ethical advancement without belief in a deity. On the first point, there is considerable misunderstanding. In the wording of the Pemsel classification, there is a clear inference that all four heads of charity require an organisation to be a benefit to the community; in the case of religion, education and the relief of poverty, there is a presumption of public benefit—but it is no more than that. A trust for the relief of a small number of identifiable poor people, for example, would almost certainly not be charitable because it did not extend to a sufficiently large section of the community.

On the second point, there is a difficulty in amending the law to give charitable status by a widening of the religious head of charity—specifially to those aiming at the advancement of ethical or philosophic movements which are not founded on belief in a deity. The difficulty is that it would encourage claims to charitable status from bodies whose ideas of moral or social improvement have a philosophic basis that finds expression in activities which are outside the scope of charity as hitherto accepted.

I believe, my Lords, that I have put that rather mildly. For example, bodies which are essentially political factions or pressure groups must not be allowed to assume the guise of charities. Here again, we come against the boundary definitions which worry the right reverend Prelate, and I must say that I shall be reading his remarks with the greatest of interest in that context as well as in the context of the other matters to which he addressed himself. Although the Government sympathise with the desire of some ethical societies to obtain charitable status, they do not consider that it would be possible to devise an amendment of this nature without creating the loophole which we fear.

Your Lordships have expressed concern about the cost of challenging definitions, and of course challenges will always arise where there is a lack of certainty. The Charity Commissioners do a great deal to avoid the need for litigation by giving free advice and trying hard to get agreement with charity trustees, always subject to complying with the law as the commission finds it.

Turning specifically to political activities, the present limitations seem satisfactory. Obviously, it would be wrong for political organisations to achieve charitable status simply as such. The question is, how far can a charity become involved in politics in furtherance of its ends? The Charity Commissioners produced guidance in their annual reports for 1969 and 1973, saying in effect that a charity may give expert advice on request to the Govermnent, civil servants, inquiries and investigatory bodies, and may promote its own private legislation or support legislation which will be of benefit to it. What a charity may not do is to adopt or support political means of remedying the ills it seeks to relieve. The right reverend Prelate takes exception to this. He sees difficulties with the border placed where it is—keeping politics out and trying to distinguish between political and religious objectives.

I think nobody who is within his Church can fail to recognise that there is a political implication for every religious belief and very often a religious implication for every political belief. The danger we seek to avoid is using the national fiscal resources to support overtly political objectives of which the large part of the society from which the fiscal support derives may not approve. So there is a difficulty at least equal to that which he finds, a difficulty for the secular authority equal to that of the religious authority which he represents.

It has been suggested that the commission's guidelines should be more liberally drawn, but we do feel for those reasons that they are liberal enough. The second general principle we can all agree upon is that charity law should be flexible enough to respond to new forms of charity and to discard outdated ones. I think this is best ensured by the case law approach which I have already outlined.

On the question which so closely occupied my noble friend Lady Faithful], she has referred to the cy près process, and it is obviously understood by your Lordships and I will not spend time elaborating on what it is. I think it may come as a surprise to her and to some of your Lordships to know that the Charity Commission at present using this, and with no such compulsion as my noble friend would have, already amalgamates some 1,000 trusts each year. Without additional staff it could not cope with the extra work which compulsion would create. Compulsion would result in money being diverted from the purposes for which it was intended. Voluntary amalgamation is available and arrangements can almost always be found for amalgamation if trustees are prepared to consider the suggestions of the commissioners.

I come finally to the statutory provisions to prevent abuse of charitable status. When the financial benefits are so great, there is an obvious risk that some organisations will want to obtain it for the wrong reasons. Given the care with which the Charity Commission examines application for registration and the criterion of benefit to the community which must be satisfied, I do not think there is a great risk that inherently unworthy organisations will be registered to start with. But, if it appears that they are, I do ask the noble Lord, Lord Mishcon, in particular to reflect on the difference of role between the Charity Commissioners and the High Court. The Charity Commissioners decide whether in fact the objects of the charity are indeed charitable. If they are, it becomes a charity. If it is then not conducted in pursuit of the aims for which charitable status was accorded, it is not the charity which is at fault but it is the fault of the people who run it. The recourse of the commissioners is to remove them and substitute others. If what they have done is criminal, it is not a matter for the commissioners but a matter for the courts. They are not, as it were, a police of charity. If it is thought that there is too little supervision, I merely quote the right reverend Prelate in my defence.

I think I must draw to a conclusion. There is much more that I should like to say. What I have said would not, I think, be complete if I did not say that in this country we have a splendid tradition of public giving to good causes of great variety and in some cases of no little eccentricity. They do an immense amount of good, and this House can applaud them wholeheartedly. In particular, I think your Lordships should know that successive Home Secretaries have had every reason to be grateful to Mr. Terence FitzGerald, who was Chief Charity Commissioner from 1975 until March of this year and who made a very distinguished contribution as leader of this important branch of the public service. I should also like on this occasion to welcome the new Chief Charity Commissioner, Mr. Dennis Peach, on behalf of my right honourable friend, and, if I may, on your Lordships' behalf as well, because all your Lordships who are present are clearly dedicated to the cause which he now comes to support.

I shall read with great interest and with an open mind what has been said today. I make no commitment; my position is as it was when I came in, that the Charity Commission rests securely upon a satisfactory foundation. But my mind will not be closed when I read what your Lordships have had to say, because I always find after your Lordships have spoken that I have a very great deal to learn. I am grateful to the noble Lord for his Question.