Charities Bill

HL Deb 11 May 1983 vol 442 cc531-45

7.42 p.m.

Lord Renton

My Lords, I beg to move that this Bill be now read a second time. The Bill started as a Private Member's Bill in another place, where it was piloted by my right honourable friend Sir Angus Maude, who for 28 years has been a much respected Member of another place. Except when he was in the Government, he always entered the ballot for Private Members' Bills, as most of us did. Although he balloted no less than 26 times it was only in this last Session of his last Parliament that he both won a place in the ballot and got his Bill through all its stages in another place. The Bill got a Second Reading on the nod but it was fully discussed in Committee and on Third Reading—and especially on Third Reading. Throughout its passage in another place, not a single Member of any party either voted or spoke against it. Indeed, there was one honourable Member who suggested that it did not go far enough and that the £1,000 limit that it contained should be perhaps £1,500 or £2,000.

As stated in the Long Title, the Bill's purpose is to enable property of certain small charities to be expended without regard to restrictions contained in their trust instruments distinguishing between capital and income. The Bill in another place had the support of the Government and, I assume, will have it here. The Bill amends and slightly enlarges the powers contained in the Charities Act 1960; and does so not by making any drastic changes in the powers and duties contained in that Act but by adding a modest, new section to it with some minor consequentials. I should disclose that I helped with the preparation of the Charities Act 1960 and was responsible for piloting it through its Committee and Report stages—and, looking back, a very strenuous exercise it was! I had the valuable help in another place at that time of the noble and learned Lord, Lord Simon of Glaisdale, who was then Solicitor-General.

Last Friday, in the debate on the Second Reading of the Parochial Charities Neighbourhood Trust Bill introduced by my noble friend Lady Faithfull, the noble Lord, Lord Prys-Davies, on the Opposition Benches, was good enough to say that the passing of the Charities Act 1960 was a monumental achievement. Indeed, at the time it was regarded as the most far-reaching measure on the subject of charities since the Act of Queen Elizabeth I. Although it contained wide powers to vary, amalgamate and transfer charitable trusts, I never thought, speaking for myself, that 22 years would pass before any serious attempt was made to improve or strengthen it or to widen the powers that it gave. However, in this Session we have had two such attempts. One, by my noble friend, we discussed last Friday, and now we have this Bill.

Before I describe the Bill's effects in law, perhaps I may briefly describe the situation with which it is designed to deal. Of the 140,000 or so charities registered with the Charities Commission, more than half have an annual income of less than £100 and the Chief Custodian of Charities estimates that, in 1980, a dividend of less than £1 was paid out on at least 7,000 holdings of land held by charitable trusts.

As your Lordships will know, most small charities are parochial ones with limited objects. The cost of administering them often exceeds their annual income. Many examples could be given of the frustration experienced by their trustees, but let me give your Lordships one example which, I suggest, fairly illustrates the problem with which trustees are faced. This example which I am going to give could be multiplied with variations many times. There is a 19th-century village clock tower and charity trustees are required to maintain it by using an income of £ 18 a year, being the rent from a small piece of land worth about £400. The tower needs urgent repair which would cost at least £400. What are they to do? Are they to let the clock tower fall to pieces because they say that, in accordance with the trust deed, they must not spend more than £18 a year on it? Surely, it is obviously right that they should apply—as they can already do—to the Charity Commissioners for permission to sell the land and it is also right to use the proceeds of the sale—and they are capital—for repairing the clock tower. But, under the law as it now stands, they cannot use the proceeds of the sale if it is capital. So this Bill would enable them to use the proceeds for that purpose. That is but one example.

The Bill does not oblige trustees—there is nothing compulsory about it—to use capital to fulfil the objects of the trust. The Bill leaves it to the discretion of the trustees except that, as I say, they must get the consent of the Charity Commissioners if they need to sell land, and they need to do that already.

My Lords, the point I want to stress, which is at the heart of the Bill and which has been the subject of so much misunderstanding, is that they can use the proceeds of sale only for fulfilling the objects of the trust. Inevitably, that may mean bringing the trust to an end. In the case that I gave of the clock tower, it would bring the trust to an end. But surely it is better to use the capital and bring the trust to an end than to defeat the objects of the trust altogether by merely relying upon a minimal useless income which may not even be enough to pay the costs of administration.

I suggest that it is not an entirely new thing to bring a trust to an end. For centuries the courts have had power to sanction the winding up of charitable trusts whose objects have failed or which could not fulfil their function, or which could not be performed. But that power on the part of the courts has always been subject to the application of the cy-prés doctrine which requires the trustees, on the direction of the court, to apply the trust property if there is any left, but the cy-prés doctrine applies only when there is a genuine charitable intent. I have also fairly to concede that a genuine charitable intent can very often be inferred, but I make the point about the powers that already exist merely to reassure those who think it is wrong ever to bring a charitable trust to an end. I suggest that, in the circumstances which the Bill envisages, it may be the only sensible thing to do. It may be inevitable.

That is the broad purpose of the Bill. It applies only to trusts which are 40 years old. The reason why 40 years was chosen by my right honourable friend Sir Angus Maude and approved in the other place, was that they are the ones which have been affected by inflation in the post-war years. The maximum sum specified in the Bill is not more than £1,000 of capital, but under the Bill the Home Secretary has power to increase that amount and might in future, in view of inflation, have to do so. But before he can do that, he has to lay an order before both Houses and the consent of both Houses would be required.

My Lords, the Bill applies only to England and Wales because, as my noble friend Lord Drumalbyn knows—and I am pleased to see him in his place—the law of Scotland is slightly different with regard to charities. The Bill follows the recommendations made by both the Expenditure Committee in another place which considered the matter in 1975, and the Committee of the noble Lord, Lord Goodman, on the Law of Charity in 1976. To me it is most surprising that this Bill should have been criticised in the way it has been. I can only assume that those noble Lords who did criticise it could not have understood how necessary are its modest purpose and scope.

In the nature of things at this late stage of this Parliament, neither this Bill nor that of my noble friend Lady Faithfull can reach the Statute Book, but I hope our short debate tonight might lead to a better understanding of this important and sometimes difficult subject. Your Lordships will have noticed that on the Order Paper today we find that: In the event of the Bill being read a Second time, the Baroness Faithfull to move, That the Bill be committed to the Select Committee to which the Parochial Charities (Neighbourhood Trusts) Bill [H.L.] has been committed. My Lords, I have discussed this matter with my noble friend Lady Faithfull. I have an open mind as to the best way to handle this, but it is her wish and that of others that I should at the end of my reply to this debate withdraw my Motion for Second Reading, and then there will be no question of her Motion having to be put. Therefore, my Lords, that is all I have to say for the moment, and I beg to move.

Moved, That the Bill be now read a second time.—(Lord Renton.)

7.56 p.m.

Baroness Faithfull

My Lords, may I thank my noble friend Lord Renton for explaining the Charities Bill which had its Third Reading in the other place last Friday. May I also join with my noble friend in paying tribute to his noble friend Sir Angus Maude for his 28 years' service in the other place.

Several noble Lords

Hear, hear!

Baroness Faithfull

My Lords. I think we all know of the great service he has given, and it is a little sad that in 28 years it is possible only to draw in the ballot twice. Therefore, it gives me particular sorrow in feeling and thinking that I cannot support the Charities Bill. I would say to my noble friend Lord Renton that I do understand it, but I still do not agree with it.

My Lords, I will not detain your Lordships long, but I think I should say that I cannot agree that charities with a capital of £1,000 or less should be dissipated. Each of these brings in a small amount, but if amalgamated into neighbourhood trusts as recommended in the Parochial Charities (Neighbourhood Trusts) Bill which we debated last week in your Lordships' House, then a greater contribution in the way of income could be made along the lines of the original bequest.

My Lords, may I say to my noble friend Lord Renton, that it is astonishing how near and yet how far are the two Bills, because if the neighbourhood trusts were to amalgamate the income of the trusts in one area, then his clock would still be repaired under the neighbourhood trusts. If trustees are willing to give away capital, then surely they would not object to the capital and income being given to a neighbourhood trust. My Lords, I repeat—is there such a wide gap?

Secondly, as I understand the recommendations of the Nathan Committee, the Select Committee and the Goodman Committee, allowance was made as stated by my noble friend for the destruction of small charities, but all three committees made further recommendations that it was infinitely preferable for them to be amalgamated into neighbourhood trusts. Indeed, this policy was agreed by the Charity Commission itself long ago.

Thirdly, for many of us the Charities Bill offends the basic principle of charity law on which donors have relied; namely, that a charitable trust cannot be allowed to fail unless it is absolutely necessary. The Bill does not define what is meant by "a value not exceeding £1,000". Does it mean the nominal value of investments or the market value? The difference between the nominal and market values obviously has important effects both on the number of charities which can be destroyed and the amount of income which would be lost.

The noble Lord, Lord Renton, has said that he will withdraw his Motion and, as he has stated, he and I have agreed on this. Naturally, therefore, I shall not move my motion on the Order Paper. Suffice it to say that in the future a common-sense approach must surely be taken. I believe that a common-sense approach dictates that we should have not two charity Bills but one, and that the Charities Bill and Parochial Charities and Neighbourhood Trusts Bill should together be referred to a Select Committee of your Lordships' House.

8.1 p.m.

Lord Mishcon

My Lords, I am sure the House will be indebted to both the noble Lord, Lord Renton, and the noble Baroness, Lady Faithfull, for their contributions in regard to this Bill which has come to us from the other place. When we were discussing the Bill brought forward with such eloquence by the noble Baroness, Lady Faithfull, I think the House felt that we were dealing with a very complex issue in regard to parochial trusts and the whole question of their being converted into neighbourhood trusts.

Some of us felt that there was something very sound in the principle of the noble Baroness's Bill but, again, some of us were a little reluctant to agree to the terms as they stood—although obviously we wanted to give it a Second Reading—without having the data before us which apparently the Charity Commissioners could not supply, and without seeing really what was involved regarding the administration of the Bill when certain burdens were cast upon local authorities and also indeed upon the Charity Commissioners. Therefore we were very happy with the idea of the matter being referred to a Select Committee of your Lordships' House which would look into the whole question of parochial trusts. We all came to that conclusion in good faith and we felt that we were doing something which was very valuable for charity law and administration in the future. We felt we were possibly getting rid of all the waste and the difficult duties of trustees in regard to small trusts, which were mentioned by the noble Lord, Lord Renton, in his speech.

What we also wanted to do—this was, I know, very much in the mind of the noble Baroness, Lady Faithfull—was to see that we made no decisions which were likely to be nullified by what might happen to another Bill which was also dealing with small charities. Therefore, we thought we were entitled to ask the noble Lord, Lord Elton, who, with his usual ability, was dealing with the Neighbourhood Trusts Bill, what the Government's attitude was to another Bill about which some of us had doubts. That was indeed the Charities Bill, to which the noble Lord, Lord Renton, drew our attention. As he very movingly said, that Bill had been sponsored in another place by a right honourable gentleman who has the admiration of everybody engaged in public life, on whichever Benches they might sit. Therefore, it was felt to be only right that the Minister of State in the Home Office in another place should pay him a warm tribute when this matter came before that House. Of course, that happened on the very day that we were debating the Bill brought forward by the noble Baroness, Lady Faithfull.

I do not think any of us would concede that the fact that you succeed in a ballot on only two occasions and that you have led such a meritorious life in Parliament, necessarily means that a Bill you might sponsor has to be passed. If I may say so, it is adapting charity in the wrong way, although of course one would always want to be gracious in dealing with a Bill which came from another place and from such a source.

We were anxious because, as your Lordships will realise, this Bill deals with small charities and if it were to come into effect and be put on the statute book, and if the Bill of the noble Baroness, Lady Faithfull, were to be delayed by reference to the deliberations of a Select Committee, many small charities might go by the board before they had any chance, if the noble Baroness's Bill were passed, of coming within the purview of neighbourhood trusts. The noble Lord, Lord Renton, quite correctly, said that many of these small charities did indeed come within parochial trusts; and so obviously it would be a great disadvantage if that Bill became law while the other Bill was being delayed.

Some of us also had doubts about the so-called voluntary nature of the Bill now before the House, as against the compulsory nature, as it was described, of the Bill brought forward by the noble Baroness, Lady Faithfull. It did not seem to some of us that it was entirely a voluntary measure with the full acquiescence of the settlor, when this was a power given to his trustees and when the settlor might himself have had very different views. And, after all, it might be that the remaining trustees, after 40 years, who succeeded upon other trustees, would feel that once this Bill was passed they could ask: "Why not get rid of our obligations, because they are an awful nuisance?" So we were extremely keen to see that the two Bills ran together, if I might put it in that way, so that they could be considered by a Select Committee and then in due course your Lordships would be able to see what the recommendations of the Select Committee might be.

In the course of the questions we put to the noble Lord, Lord Elton, on that occasion, I find that we came across an amazing constitutional point—or it may be a traditional point—of procedure. Presumably, the noble Lord the Minister was adhering faithfully to that constitutional point and that procedure in the answers that he gave to the House. But I think he would be the first person to say that if you follow that constitutional procedure you are not giving the House an opportunity—I understand that he could not help himself—of knowing what the true position really was.

I am going to tell your Lordships what the true position is and, if I may say so, I am not now speaking on behalf of my Front Bench but merely talking individually as someone dealing with this Bill and with this problem. In fact, by 12.30 last Friday afternoon in another place, the Bill which is now before your Lordships had received a Third Reading and had been passed. The right honourable gentleman the Minister of State at the Home Office in another place—I am reminded by the noble Lord, Lord Renton, that it was the Under-Secretary of State, and I am grateful to him—announced very definitely that the Bill now before your Lordships had full Government support and approval. It would have been of great assistance to you Lordships in knowing what to do in regard to the Select Committee, and the way in which it was dealing with the Bill of the noble Baroness, Lady Faithfull, if you had known that that was the position; that the other Bill had already been passed and had Government support.

If the questions put in your Lordships' House by the noble Lord, Lord Campbell of Alloway, the noble Lord, Lord Allen, and myself, had been answered on the basis that this Bill in another place had Government support and had been passed, we would then have known where we stood and I think we would have said various things in regard to the Select Committee, and so on. As I said, those questions were put an hour and a half after the Bill was passed in another place on 6th May, but the Bill now before your Lordships reached this House, as a matter of technicality, only on 9th May.

Therefore, presumably, if I have correctly understood the tradition of both Houses and the constitutional position, it was not open to the noble Lord the Minister to tell us that that had happened. If that be so, I merely say, as a humble Member of your Lordships' House, that that appears to be a very undesirable position, because your Lordships were taking decisions without knowing what had happened an hour and a half earlier in regard to this very Bill. But, as I said, the position has been frankly discussed with me and the noble Lord the Minister had no alternative but to do what he did and say what he said. In those—

Lord Denham

My Lords, I am most grateful to the noble Lord, Lord Mishcon, for giving way. But I am amazed by the noble Lord's amazement at this. We have this position where, by a strange coincidence, there were two separate Bills, each of them suggesting a diametrically opposed alternative to solve the same problem, coming up in the two Houses of Parliament on the same day. My honourable friend in another place, having heard the arguments in another place, gave his support and the support of the Government to that Bill. My noble friend Lord Elton, who was listening to our consideration of the Bill of my noble friend Lady Faithfull in this House, having heard the arguments in this House agreed that that Bill should be sent to a Select Committee. These were the two positions in the two Houses on the same day.

Government's have often been accused of not listening, and on this occasion in another place they listened to the arguments on the Bill that my noble friend is presenting today, and they decided that that Bill should have their support. In your Lordships' House, on the same day, they listened to the arguments on the Bill of my noble friend Lady Faithfull and they decided on the Select Committee issue. Having looked at the two positions together, it became apparent that the two things were incompatible. Therefore, Her Majesty's Government have obviously changed their minds on my noble friend's Bill, because of the arguments that were put in both places on the same day. If there is anything reprehensible in that, I hope that any Government that I have anything to do with will be reprehensible in this way.

Lord Renton

My Lords, before the noble Lord, Lord Mishcon, resumes, I think that he would wish to be corrected on the timing. He rose at 11.47 a.m. in your Lordships' House and, I would estimate, started to put his questions at about 12 noon. The Third Reading in another place was not completed until 12.30 p.m., and my noble friend Lord Elton rose to make his contribution to the debate at 13 minutes past one. So there was not an interval of an hour and a half, or anything like it.

Lord Mishcon

My Lords, before the noble Lord, Lord Denham, acclaims the contribution that has just been made by the noble Lord, Lord Renton, I had better refer the noble Lord, Lord Renton, to a debate which took place in your Lordships' House on the question of opticians and their monopoly, and the examination of eyes, because I have before me in the Official Report exactly when it was that I put my questions to the noble Lord, Lord Elton. I put them in the course of his speech, which started at 1.13 p.m.—and I refer him to column 300—and certainly not at 11 o'clock. The debate—and I think that is what the noble Lord is possibly referring to—commenced earlier, but I am talking about the questions that were put and the time when I, the noble Lord, Lord Campbell of Alloway, and others, put them.

Lord Renton

My Lords, I was naturally drawing attention to the very short time between the conclusion of the proceedings in another place, and the moment when my noble friend Lord Elton rose to make his contribution to our debate—a time of only 43 minutes.

Lord Mishcon

My Lords, if the noble Lord reads the Official Report tomorrow, he will find that he was making the point against me that there was every good reason why what occurred should have occurred, because I made my contribution and asked these questions at 11.30 a.m., which was something like an hour before the Bill was passed in another place. However, may I just deal with the point which the noble Lord, Lord Denham, made? As I said, I am in no position to make any representations on behalf of the Opposition Front Bench or anything of that kind in regard to procedure. I was merely making a personal point, But, with great respect, his point is not very well taken, if he will allow me to say so.

I say that for this reason. Quite obviously, there was a position where the Government had taken a definite stand, not after the long debate on the other Bill; it was taken immediately. There was not a long debate and there were only four contributions. There was no Second Reading discussion at all in another place on the Bill. The point that was made, which is contrary to the one that the noble Lord, Lord Denham, was making, was that there was nothing inconsistent between the two Bills. The noble Baroness is nodding her head in agreement. That was the great point. There was nothing inconsistent between them. Therefore, while it was perfectly consistent for one Bill to go to a Select Committee, it was perfectly in order for the other Bill, which was not inconsistent with the Bill of the noble Baroness, to be passed through all its stages in another place.

If the Government have had second thoughts and realise, as the noble Lord, Lord Denham, said, that the two Bills are inconsistent in the way that they are trying to deal with the same problem, then one would expect that in another Parliament, when this matter comes again before the House, the Government will agree that both Bills will go to a Select Committee or that we shall have the benefit of a Select Committee before we make a decision.

Lord Denham

My Lords, I think this is true. But, if I may say so, I think that the noble Lord, Lord Mishcon, is less than gracious in not accepting the fact that Her Majesty's Government, have, in these two Houses of Parliament, heard the debates on these two separate Bills, have listened to the arguments, and have come to what I think is a fairly fair decision in regard to both of them.

Lord Mishcon

My Lords, I hope that I am always gracious and I should have thought that the noble Lord, Lord Denham, in the circumstances of this case, would have paid tribute to the gracious way in which I tried to deal with a certain situation. I am equally surprised that he did not, in fact, pay that tribute in view of what has transpired. Having said that, I hope that the discussion upon procedure and tradition, and what happened in another place, can be terminated and I turn—I promise very briefly—to the provisions of this Bill.

The Bill must be looked at very carefully. It is not so simple as the noble Lord, Lord Renton, made it out to be. He has the great art of making complicated matters sound simple to himself and to others. But he was not quite right; for example, the Goodman Committee approved the principle of the Bill which is before the House without imposing conditions. I quote from col. 573 of the proceedings of 6th May in another place. The Minister, Mr. David Mellor, said: The Goodman committee endorsed this view"— that is, the principle of the Bill— and recommended that power to expend capital should be given, subject to appropriate consent by the local committee. It had in mind a permanent local committee to be established under the chairmanship of a representative of the Charity Commissioners to look after the continuing process of co-ordination between endowed charities and welfare services". No such condition is imposed by the Bill. No such procedure is suggested in it.

The second point which one has to consider is the failure of charities. Failure is completely inconsistent with the charity law as we know it, one of its distinctive features being that a charity is not allowed to fail. Third, it appears that one has to consider the idea of small charities being wound up. May I use an argument which was employed by the Government against the Bill of the noble Baroness, Lady Faithfull. One has to allow for the situation that settlors may decide that they are not going to create fresh charitable trusts if there is the possibility of those trusts being wound up. If that is an argument which can be used against the Bill of the noble Baroness, Lady Faithfull, it is an argument which can also be used against this Bill.

These matters have very rightly been brought before Parliament. Much work has to be done on the charity law, charity administration and parochial trusts. If we are spared to sit in this Chamber after the eventful days ahead of us—though sitting, I hope, precisely opposite to where we are sitting now—I trust that we shall agree to deal with the charity law and parochial trusts by means of a Bill similar to the meritorious Bill of the noble Baroness, Lady Faithfull, and the equally meritorious Bill of Sir Angus Maude, having the benefit of the deliberations of a Select Committee which ought to be appointed. I am sure that your Lordships will ensure that it is appointed.

8.23 p.m.

Lord Campbell of Alloway

My Lords, I thank my noble friend Lord Renton for his explanation of the Bill. May I also be allowed to pay my tribute to my right honourable friend Sir Angus Maude who, just over four months ago, presented this Bill in another place, Although there are areas of controversy which could inhibit its Second Reading, its humanitarian basic purpose affords a most cogent testament to the long and distinguished dedication of my right honourable friend to the cause of whatever is good.

It was common ground last Friday that we must unlock these dead funds so that they may be put to a useful charitable purpose. The only controversy is how best this may be done. The substance of this controversy relates to the method by which we prise open these locks to release the funds. Here, as some of us believe, the means proposed by the Parochial Charities Bill and this Bill lie in irreconcilable conflict or, to use the more colourful expression of my noble friend Lord Denham, they are diametrically opposed alternatives, or are incompatible.

During the Second Reading of the Parochial Charities Bill it became all too apparent that on this issue of conflict there were two irreconcilable views: the view of noble Lords who favour the neighbourhood trust method and the lone ministerial view, voiced by my noble friend the Minister, who favours the method proposed by the Charities Bill. This is not the time when anybody would wish to hear detailed argument. I agree with my noble friend Lady Faithfull that the clock illustration takes the matter no further. The Charities Bill was passed by another place with the support of the Government. So be it. However, it became clear last Friday in your Lordships' House that there is a genuine and serious area of controversy.

As that Bill is to a certain extent being discussed today, perhaps I may be permitted to seek to lay two ghosts in the argument. The first is that this Bill is to be preferred to the Parochial Charities Bill because it favours the voluntary principle. That view was expressed on Friday at col. 305 by my noble friend the Minister. The right reverend Prelate the Bishop of London reflected the views of other noble Lords who took part in the debate when he opined that the policy of this Bill was based upon the destruction not only of parochial charities but also of the important voluntary interest—contrary, I have to confess, to the views expressed today by my noble friend Lord Renton.

The second argument is that whatever may be the constitutional position—such matters are beyond me; I would not seek to venture upon that kind of ground—it is inconceivable that after the committal of the Parochial Charities Bill to a Select Committee it could ever be consistent with such a decision to allow the Charities Bill to proceed further in your Lordships' House for any other purpose than committal to a Select Committee, having regard to the irreconcilable conflict or the diametrically opposed alternatives to which reference has been made.

Lord Mishcon

My Lords, if I may be allowed to interrupt the noble Lord, perhaps I should warn him that if he continues on that course he may be accused of being ungracious to the Government. I was so accused, although I was speaking just as courteously as the noble Lord, Lord Campbell of Alloway.

Lord Denham

My Lords, on this point my noble friend has been totally gracious to the Government.

Lord Campbell of Alloway

My Lords, I am obliged to the noble Lord, Lord Mishcon, and I am even more obliged to my noble friend Lord Denham for what he has just said. I am not trying to be controversial—I am trying to avoid being controversial and I hope that I am succeeding. I am dealing with a point that was touched upon by the noble Lord, Lord Mishcon, but I am not putting it forward in quite the same way.

Of course there is general consensus among all your Lordships and in another place that something must be done about the situation described by my noble friend Lord Renton. The problem is that there is no unanimity as to what should be done, and there is no unanimity in your Lordships' House, as to the method by which these funds should be released for a charitable purpose. Hence, as was recognised on Friday, the inestimable value of the report of a Select Committee which may in due course be constituted. If I may be allowed to express a purely personal opinion, I hope that it will be—and perhaps the sooner the better.

In conclusion, as the Motion to set up the Select Committee has not been implemented—because if it had been implemented that Select Committee would have been all but stillborn—there appears to be no good purpose in any Second Reading. I am most grateful, as always, to my noble friend Lord Renton for his intimations in this regard.

8.32 p.m.

The Parliamentary Under-Secretary of State, Home Office (Lord Elton)

My Lords, as a preliminary to welcoming my noble friend's Bill into this House, I should like to endorse his decision not to take it beyond Second Reading today. It would not be right to put the Bill of my noble friend Lady Faithfull into a Select Committee as though it were a sort of siding and then to signal the Bill of my noble friend Lord Renton past it on the fast track at high speed.

The noble Lord, Lord Mishcon, was kind enough and gracious enough to telephone me earlier today to warn me that he would be raising this matter. I received that warning with all the anxious attention and gratitude which one gives to a dentist when he says, "This may hurt a little". If I have a cavity, I apologise for it. But I should like to say one further word to set the record straight: then I shall be done, because your Lordships have spent some entertaining time on it already.

Your Lordships made it very clear last week that you view my noble friend's proposed measure with a great deal of sympathetic interest and I blessed its remission to a Select Committee. I was prevented by the conventions of this House from predicting how we would favour the Bill when it came here. The fine points about timing need not concern us too much because, as I understand the convention, it is not until the Bill reaches this House that one records one's attitude to it. That may be irksome to your Lordships, but it was at least as irksome to me last week. It then became clear to us that in those circumstances, if we were to assist the Bill of my noble friend Lord Renton through all its stages in one day, your Lordships could properly claim that we had sought to go behind your backs. That was in no way our intention and we therefore thought it right not to pursue that aim.

None the less, having expressed last week the considerable doubts and reservations which the Government feel about parts of the Bill of my noble friend Lady Faithfull—and in particular about the vigorous strain of compulsion which runs through it—I must also make clear the reasons we have for regarding the Bill of my noble friend Lord Renton as a welcome measure.

The trustees of small charities face very real problems. All of us recognise that. All of us wish to help them to resolve them and to do so in a way consistent both with the wishes of the trustees in so far as they can be met and with the more effective use of such money as is at their disposal. Two Bills have been brought before this House. One is very much more far-reaching than the other, but both have this particular aim in view, and both embody a principle that is exactly the same. That principle is, that the smallest of charities shall be capable of being wound up. In the Bill, the test of smallness is in Clause 1; that the capital value shall he under £1,000. In Clause 6 of the Bill we considered last week, the test is also there; that the annual income shall be under £10. There is a difference of magnitude between them, but there is no difference of principle. My two noble friends are friends also to each other in this, and I support them.

To preserve intact a principle that charities shall never fail is to fly in the face of the practical effects of not allowing them to cease. There are cases where the expenditure of capital is certainly the best and possibly the only way of meeting both the needs of the beneficiaries and the wishes of the benefactor. My noble friend Lord Renton referred to a clock tower. I have dreamed up the roof of a memorial hall in a hamlet which is suddenly dissolved with dry rot. If that were to happen, £1,000 or even £500 now will be of practical use while the promise of £40, £90 or even £100 a year for a decade will not start to keep the rain out. The doctrine of the stitch in time seems to us to be as ancient and valid as the doctrine of cy-prés and we ought not to neglect either of them.

The principle that lies at the foundation of the Bill—that is, to enable a charity better to serve its purposes when circumstances would otherwise render that impracticable—is no new thing. It has already been put forward in two important reports. In 1975 the Expenditure Committee was looking at the accountability of the Charity Commissioners, and the commissioners suggested to the committee that the trustees of charities with a total capital value of less than £50 should be empowered, with the consent of the trustees, to spend their capital. The Expenditure Committee accepted this recommendation. The committee thought that such changes should normally be made with the consent of the trustees but then contemplated some departure from that principle by recommending in addition that there should be reserve powers to act without their consent.

The following year, this proposal was echoed in the report of the Goodman Committee on Charity Law and Voluntary Organisations. This committee, under the chairmanship of Lord Goodman (who must be one of the more frequently quoted Members of your Lordships' House) had been set up by the National Council for Social Service. They, too, recommended that small charities should be allowed to spend their capital, and this principle is again incorporated in the Bill we discussed last week. But, while the principle is the same, there are important differences from some aspects of the earlier proposals. Unlike the proposals of the Expenditure Committee, the Bill of my noble friend Lord Renton does not, first of all, permit the capital to be expended without the consent of the trustees. Indeed, it will be the trustees who initiate the action, if any, which the Bill would permit if it were to be enacted—and we have no way of knowing how many trustees will take the opportunity so afforded to them.

Secondly, the trustees will not need the consent of the Charity Commissioners in order to expend their capital. Like my noble friend, we think that the trustees must be the best judges of the most fitting use of their small capital. If many of them were to want to take advantage of what his Bill proposes, the involvement of the commissioners in every case would enormously hamper their work and produce little, if anything, in the way of benefit. But any trust of which the value of the permanent endowment exceeded the figure set in the Bill would, of course, be protected with exactly the same vigour as is now the case. The expenditure of their trust capital against the terms of the trust will attract the same sanctions as at present.

I look forward to seeing this measure before your Lordships in the next Parliament—I hope from this side of the House. On reflection, your Lordships may see it as being not irreconcilable—in the words of my noble friend Lord Campbell of Alloway—with that brought in last week by my other noble friend. I hope, therefore, that your Lordships will do something then to soften the disappointment that my right honourable friend—indeed my thrice honourable friend—Sir Angus Maude must inevitably feel this day, that he cannot bring in this as the coping stone to a long and admirable career. But, for the reasons I have given, I think it ought not to complete its journey through this House in a single day as at one time seemed appropriate. I am grateful to my noble friend for his lucid explanation of what he has in mind. I ought to say in conclusion that I take in good part everything the noble Lord, Lord Mishcon, has said; I think there is no rancour.

8.40 p.m.

Lord Renton

My Lords, I express my thanks to all those noble Lords who have taken part in this debate. I am sure that whatever failings may have been laid at the feet of my noble friend Lord Elton last Friday can now be taken away; he has indeed atoned for any shortcomings on that occasion by his lucid explanation tonight of the Government's attitude towards this Bill.

I should like to join in the tributes which have been paid to my right honourable friend Sir Angus Maude. I served with him in another place, and indeed knew him right back in the 1920s at Oxford—that is a confession to make! I always had the highest regard for him and must share the disappointment that he feels. Indeed, when he invited me to take on this Bill in your Lordships' House, there was an air of enthusiasm that he exuded that he would at last have got his Bill on the Statute Book. It may be some consolation to him that he has been much luckier than I was, because I was 34 years in the other place and always balloted when I was not in the Government, and never once drew a place in the draw.

I was brought up to believe, in the words of the poet, that: In faith and hope the world may disagree But all mankind's concern is charity. There was an implication there that we would all be in agreement about charity and its purposes, and how they might he changed, and what might happen if they failed. But, alas, this short debate tonight has somehow disabused me of that ancient thought, and we have to accept that this is a difficult subject and strangely controversial, as I know from previous experience.

I will, if I may, reply very briefly to my noble friend Lady Faithfull and my noble friend Lord Campbell of Alloway, each of whom said, in relation to the clock tower example I gave, "Ah, but if only we had neighbourhood trusts the problem could not arise." I beg to disagree with them, because the neighbourhood trust does have its limitations; not all trusts are suitable for bringing into a neighbourhood trust scheme, as the Charity Commissioners have already found on a number of occasions. Indeed, one can have isolated parishes such as were in my old constituency, where it is just not feasible to bring them into a neighbourhood trust—small villages which have to stand on their own. I can well imagine that the provisions of this Bill would solve problems with which the trustees were frustratedly faced in such circumstances. So I am afraid I simply do not accept the view expressed on that quite relevant point.

My Lords, the only other point I would make is this. On the face of it, the noble Lord, Lord Mishcon, made a good point when he referred to the fact that the Goodman Committee attached a condition to the acceptance of its recommendation, the condition being that there should be local committees to supervise any changes that might be made. However, that does not invalidate the recommendation that they made that there should be something done about these very small trusts, and that is what the Bill seeks to achieve. I am deeply grateful, and I am sure that my right honourable friend Sir Angus Maude will also he grateful, to your Lordships, and in view of what has passed, I now beg leave to withdraw my Motion for Second Reading.

Motion for Second Reading, by leave, withdrawn.