Charity Law

HL Deb 05 March 1986 vol 472 cc203-26

4.40 p.m.

Debate resumed.

Lord Houghton of Sowerby

My Lords, after more than 50 minutes of injury time, it is a little difficult to get the ball back into play. Whether or not your Lordships can remember it, we were debating charities. I am following the noble Baroness, Lady Faithfull, after her most interesting speech. I agreed with most of it—particularly in regard to the ineffectiveness of the institution of the Charity Commissioners and the need for a charities board offering guidance and counsel to overlook the vast and growing industry of charity.

I may be the only Member of your Lordships' House who has any really hard bullets to fire. I have been in the voluntary movement for so long and have worked in it so much that I have very respectful criticism to make of it. I shall disagree immediately with my noble friend Lord Allen of Abbeydale in the introductory remarks he made regarding the extension of indirect aid to charities through the taxation system. That kite is being flown all over the place, and my noble friend who introduced this Motion has brought it into your Lordships' House. I want to shoot it down.

There is too much needed of reform and improvement in the charity world, and there is far too great a crisis of present and future work in the Inland Revenue, to open up fresh avenues of tax avoidance and more indiscriminate tax relief and finance for charities at public expense. Reference has been made to our present system of covenants. The present Government introduced two concessions in regard to covenants. They reduced the minimum period of commitment and raised the amount of tax relief to the top marginal rate of the donor. In reply to a Written Question in another place on 4th April 1985, it was stated that there was a 93 per cent. growth in covenant repayments after those two concessions were made. In all, covenants were rising year by year at a rate of something like 16 per cent.

The proposal that is now being mooted is that single gift donations should be a deductible expense from the tax liability of the donor. The covenant gives the tax benefit to the charity. The new proposal is that the tax benefit should go to the donor although the charity would still have the benefit of the gross amount. The third party in that transaction—no sleeping partner he—would foot the bill of the tax concession made to the donor, which could be anything from 30 per cent. to 60 per cent.

Nobody has yet said whether it is desired that the new system of single gift tax relief should run alongside the existing system of covenants. Mr. Chataway wrote a letter published in The Times yesterday suggesting that many charities would suffer grievously if covenants were to be discontinued and the single gift system introduced. So we shall now be asked to keep the two systems in double harness.

What about companies? They already have the benefit of covenants and of a very liberal tax policy in regard to sponsorship expenses. Apparently it is now proposed that companies shall have the benefit of corporation tax relief on single gift donations to charities. The charities hope to obtain more money in that way, yet the Government want to reduce public expenditure. The Government are accused of cutting grants to voluntary societies. Is the idea of a single gift tax concession meant to replace direct grants? Is the tax system to bear indirect aid to charities in order to replace direct aid to charities?

What of the principle of the matter? In my opinion, the proposal reaches one of the fundamental principles of taxation. I do not have time to argue that point now, but I ask whether our charitable work is to depend upon donors who want to gain something for themselves and who cannot be charitable unless they do. If we are to adopt the American pattern of expenses deductible against tax then we shall import a racket—there is no doubt at all about that. The Inland Revenue would have a new area of tax avoidance to keep clean. There would be many administrative restrictions and complexities in order to do that.

Charities already enjoy large tax concessions: no income tax, no corporation tax, no capital taxes, important though limited relief from value added tax, and the benefit of repayments on covenants. Not mentioned so far is their substantial relief from local rates; mandatory at 50 per cent. and optional for another 50 per cent. I have tried to obtain some estimate of the total state aid that is given through those various channels to charitable bodies. The nearest that I can get to it is £500 million a year. In the reply to a Question in another place last year, it was stated that direct tax relief to charities could not be much less than £400 million. I would say that by now that figure must be more than £500 million. I believe that the new scheme will send that figure much higher still.

I ask this question: where might some of that money go? Do we not read the newspapers? Have we not been reading only this week about certain matters relating to charitable bodies? The point about a covenant is that it is a deliberate commitment. It is a commitment to separate for other purposes a part of one's income. Do we wish to encourage the single gift donation on a moral impulse, under undue persuasion, or even to satisfy the concept of charity without tears—all at tax relief of 30 per cent. to 60 per cent? How long will it be before the backlash? How long will it be before the scandals begin to appear? I ask that everyone should approach this matter with extreme caution.

I am sorry that nobody appears to have referred to the report of the noble Lord, Lord Goodman, of more than 10 years ago. Nearly everything so far mentioned in this debate was referred to in the Goodman Report. However, my time is up. My noble friend Lord Allen of Abbeydale has enumerated the many respects in which reforms and changes are made. My message to the Chancellor is that he should not drag the tax man further into the funding of the noble work of charities. That work will be downgraded if he does.

Viscount Massereene and Ferrard

My Lords, before the noble Lord sits down, may I ask a question?

Lord Houghton of Sowerby

No, my Lords, I have had my time so I cannot rise again.

Lord Airedale

Before the noble Lord sits down may I ask whether he does not agree that the covenant system is not entirely appropriate for a sudden crisis such as a famine in Ethiopia?

Viscount Davidson

My Lords, may I remind your Lordships that this is a timed debate?

4.50 p.m.

Lord Mancroft

My Lords, would it be all right for me to get in a few words now? As time is obviously even more valuable than it was when we started this debate, what seems to be light years ago, I shall confine myself to one point only. What can we do to relieve the burden on the Charity Commissioners? We saw this very clearly and it was brought to our attention in the Brightman Committee, on which the noble Lord, Lord Allen, and I and many others served. They have far more work than they can possibly do. The committee's report, which I have here, is quite frank that the Charity Commissioners have far too much work and they do not know what they can do about it. The burden will increase. The noble Lord, Lord Houghton, has mentioned one new tax arrangement which he does not understand; and if he does not understand it I should not think the Charity Commissioners will either. I certainly do not.

We all thought that the welfare state would reduce the amount of charity, but not at all. People are much more charitable now than they were before the welfare state was invented. Since the noble Lord, Lord Allen, tabled his Motion on the Order Paper I have had no less than seven appeals through my letter box, all of them genuine and all of which I should have liked to support; and I expect that your Lordships have all had the same.

I have one suggestion that we might take to help them. Obviously we cannot have more Charity Commissioners with more space, more microchips and more computers. I suggest that we set up a body of assistant Charity Commissioners to deal with the lighter work and to deal with the easier stuff. They could be amateurs, volunteers and people with qualifications. Before your Lordships throw up your hands in horror, just think about the magistrates. About 90 per cent. of the cases coming before the courts in this country are tried by magistrates—amateurs, enthusiasts, appointed with great care, trained to a certain degree, and given refresher courses. They are unpaid but a thundering good job of work they do, too. Could we not find the same sort of people who are anxious to serve and who could act as assistant Charity Commissioners—retired bankers, retired merchant bankers, retired solicitors, retired charity workers of any sort? And they need not necessarily be retired. I say retired only because, unlike magistrates, the age factor does not come into it. They could be given the easier jobs to do, with a limit after which they must pass matters to the Charity Commissioners if need be. I believe that they would do the job extremely well; digging out dormant charities, digging out dormant trustees and looking at the simpler trustee accounts which have gone by default.

I believe they would do a great deal if they bore in mind one thing, and one thing only, which too often is forgotten; that is, the beneficiaries. Too often in the world of charity we get involved in all the legal niceties and we forget the one person who matters most of all—the beneficiary. I say that because I served for seven or eight years on the charity of my regiment, the Royal Artillery. I found it most interesting and rewarding work. I remember trying to impress upon my brother officers, all of whom were extremely senior to me, the story of the old Chancery barrister at the equity courts where I first started my legal career. He was appearing in a charitable case and suddenly to his horror heard that it had been settled. He threw up his hands and said, "What, do you mean to tell me that all this wonderful estate is going to be frittered away on the beneficiaries?" That is an attitude we do not want our assistant Charity Commissioners to adopt.

There are three sorts of people, to give your Lordships an example. There is the widow who does not know that she is entitled to any charity. There are plenty of those. There are the widows, the orphans, the lame, the sick, the halt and the blind who know they are entitled to some sort of charity but do not know how to set about getting it. Then there are those who know they are entitled to charity and know how to set about it but are too proud to ask for it. Those are very frequently found and those are the people I should like my assistant Charity Commissioners to be looking at.

That is the one point I want to make. I do not, of course, ask my noble friend the Minister to give an immediate reply to my suggestion, which I am quite certain will cause horror in the bosoms of all civil servants. However, perhaps he will be kind and offer to give my idea his mental hospitality for a short time. What the noble Lord, Lord Allen of Abbeydale, who so eloquently moved this Motion will say, I dare not think.

The noble Baroness, Lady Faithfull, said that the Home Office has some slight connection with the Charity Commissioners. Twenty-five years ago I was Under-Secretary of State at the Home Office. Twenty-five years ago Philip Allen, as he then was, was a very senior civil servant at the Home Office. We had several amiable discussions, but I confess that I cannot remember ever leaving his room and hearing the words "Yes, Minister" pass his lips. Indeed, on second thoughts I too often left his room seeing an expression pass across his customarily amiable features which, being interpreted, meant, "This young Minister should go and have his head examined." If I can come in between the two categories of initiatory genius and palpable nut case, I shall at least not have raised this matter in vain.

I can only say that, if there are any successful answers, I should be only too happy to be the first volunteer as an assistant Charity Commissioner; and I cannot say more than that, can I?

4.55 p.m.

Lord Denning

My Lords, I am glad that my noble friend Lord Allen of Abbeydale has put down this Motion. It seems to me that there is an urgent need today for reform in the law on charities and in its administration. The law as it stands at the moment is quite uncertain. It started in the days of the first Elizabeth when there was no income tax at all. It was re-enunciated in 1891 by Lord Macnaghten when income tax was small. Now in 1986 we have huge taxes and the elimination, evasion or avoidance of tax is a growth industry. That is the situation with which we are faced and the reform of the law is necessary.

We do not have much time available so I take only one illustration where the law of charity is at the moment most defective. My noble friend mentioned the Moonies. I take it wider. I take all those religious cults, as they are called, which at the moment have charitable status when they ought not to have it. They get tax relief. Your Lordships will remember the case of the Moonies. It was tried for six months before a judge and jury after the Daily Mail had exposed the Moonies and said what a pernicious cult it was and how young people were seduced from their parents, families were broken up, and the like. The Moonies, the Unification Church, brought an action for libel. The jury dismissed it and found for the Daily Mail and added a rider to the verdict saying that the tax-free status of the Unification Church should be investigated by the Inland Revenue department on the ground that it was a political organisation. The jury wanted an investigation but I am afraid that afterwards the Charity Commissioners went into the matter and considered that the law, as they saw it, was that the Unification Church still had charitable status and was entitled to the tax relief.

I need hardly mention that all these religious cults are imported from the United States of America. There are thousands of them in that country and there are hundreds of them here. The founders make great fortunes, like Mr. Ron Hubbard, who recently died, of the Church of Scientology; and like Mr. Moon of the Unification Church who made a fortune. He had tax troubles in the United States and was sent to prison but that did not affect his church. We have had the Exclusive Brethren in our courts. It was severely criticised by Queen's Counsel, Mr. Hugh Francis, a friend of mine. But the Exclusive Brethren apparently still has charitable status. As to the Church of Scientology, Mr. Justice Latey criticised it. It is corrupt, immoral, sinister and dangerous. Those are the cults which are coming before our courts and which are doing great damage, in many cases to family life. They get hold of well-educated youngsters of 18, 19 or 20 who are at university or the like. They get them into the organisation and brainwash them. They bend their minds and seduce them from their parents. I have had numbers of letters—I think they come to hundreds—from distressed parents whose children have been taken away into these cults.

The Earl of Longford

My Lords, if I may interrupt the noble Lord, may I ask a question?

Viscount Davidson

My Lords, I must remind the noble Lord that this is a timed debate.

The Earl of Longford

My Lords, is the Leader of the House going to say that that rules out any question, however brief?

Viscount Davidson

My Lords, I am not the Leader of the House. Questions at this time mean that other speakers may not have as much time as they would otherwise.

Lord Airedale

My Lords, perhaps we can have this matter looked into. I do not think it is a satisfactory situation.

Lord Denning

To come back to my point, my Lords, the question of charitable status was considered by the Charity Commissioners and their view of the law, as set out in their letter, is that: Any organisation professing belief in a deity or deities will be presumed by the Court to be for the advancement of religion and therefore charitable and that the presumption can be displaced only on grounds of public policy. Whether a particular religious group is contrary to public benefit and public policy involves fundamental questions of religious toleration which we believe can be determined only by the Courts, the Government or Parliament". Applying that principle, the Charity Commissioners think it right to grant charitable status in these cases. I suggest that that view is erroneous. At all events, it should be reconsidered by Parliament or by a committee so as to get the law in a position where these religious cults are not given charitable status with all the immense tax benefits that this implies.

Indeed, I could go further. The Charity Commissioner gave an interview, which was reported in the press, in which he said that he would like this question of the advancement of religion to be reconsidered. He said that they had to go by the application which the trust, organisation or whatever it was had put down on paper and consider whether those purposes were charitable or not; and of course they could be framed by lawyers in such a way as to appear charitable. He said that he would have liked to go into the intention of the promoters to see whether or not it was in good faith. I would go further. I should like the charitable purposes of such an organisation to be judged not by their paper applications for registration but by the way that they carry out their work. By their deeds shall ye know them! So that is another ground on which I suggest that charitable status should be reconsidered and reformed.

The other matter, on which I should like to end, concerns the investigation of all the accounts of the charities. I have had letters too. In those organisations which collect money on the basis of charity—and I know of one case where there was a dear old lady who altered her will and gave £20,000 to a charity—where does the money go? There is no accounting and no check by any independent body. I am afraid that in many cases the majority of it goes into expenses, salaries and all the other rewards of the organisation, and very little goes to the good purposes which it should serve. Ought there not to be an administration which would inquire into all the accounts of these so-called charities, so as to ensure that all the funds are not used up in administration, promoters' expenses and so forth? That is another reform which I should like to see. Indeed, is the time not ripe for this matter to be reconsidered not only as to tax, which is very important, but as to the law itself and indeed its administration?

5.5 p.m.

Baroness Lane-Fox

My Lords, when the noble Lord, Lord Allen of Abbeydale, told me of today's engagement I silently congratulated him on his well-known sagacity for giving us an opportunity to bring together the views formed during the lifetime of the Select Committee. As its most humble member I shall be very brief in my remarks.

I joined the committee with background knowledge gained only from a few days when I was privileged to work in the offices of the Charity Commissioners researching some information. That experience of some years earlier was unforgettable because of the cobwebby and dusty state of the files and the lack of indexation to help me extract the information. I found this not only very bad for my asthma but also very surprising because it in no way corresponded with the polished image implied by the information which had been circulated about the commission. Theirs seemed to be a remote, still world, away from the real rough and tumble of life. No doubt all these things have changed.

However, more lately, the commissioners, and correspondence through various charities with which I have had connections, have emphasised the apparent timelessness of the work; so it was a relief to hear evidence that shed light on the reasons for these delays. It appears from the facts given by my noble friend Lady Faithfull that, with the best will in the world, in their present situation the commissioners could not bring to light immediately facts about selected charities.

The instruction to charities that accounts be submitted annually could almost be disregarded because if the accounts do not reach the commissioners there is no machinery to chase them up. This implies a very different outlook from that held by most organisers of charities, who feel in honour bound to submit their accounts. It also gives a somewhat different complexion to the charities who proudly assert for fund-raising purposes that they are a registered charity, the inference being that therefore they are of exemplary behaviour. Now we know that registration means precious little.

The inadequacy of the establishment of the Charity Commissioners as it is at the present time is especially notable because of the increasing number of charities which more and more need to make use of them. Surely the commission should be given the most modern equipment in order to cope with this new situation. The fact that the kind of money which is at stake is other people's money which is often contributed at great sacrifice, as was made clear by the noble and learned Lord, Lord Denning, must make the necessity to improve the facilities very strong indeed. The onus is upon the Government.

Last year brought news of the wonderful generosity of the public in contributing to appeals such as Bob Geldof's. When causes touch their hearts, people wish to give. But we have also been assailed by stories of most urgent need—the need for funds for scanners and kidney machines and different aspects of the AIDS problem, let alone the plight of many London hospitals. I am surprised that the Government do not now take the opportunity to devise a method to marry up these two very different aspects: the one aspect which is the wish to give and the other which is the need for giving; and to do it in a way which will attract those who wish to have a gamble. The aim should somehow be to prime the pump and not to forget that today very many funds go both to the pools and to bingo.

Surely through a co-ordinated effort this could somehow be done. My noble friend Lady Vickers has suggested a means. The success of premium bonds has shown that good prizes can promote the wish to give. Therefore is it not time to devise some up-to-date method to encapsulate these circumstances? Is it not just the time? Nevertheless, in my recent Question, asking that a national lottery be considered, I was shot down by my noble friend Lady Trumpington.

I very much hope that my aim and object will be seriously looked at. While the public at large are loath to pay their taxes, they very much want to find cast iron channels through which to support important and immediate needs. It was the results of a national lottery which provided the funds to build the National Opera House in Sydney, Australia. Over 30 countries operate such a scheme. Can we really afford to turn our back on it? Obviously the collection and redistribution of funds voluntarily given deserve the utmost care. It is towards that end that I wholeheartedly support the noble Lord's case for close and scrupulous examination and scrutiny of the law relating to charities.

5.10 p.m.

Lord Rathcreedan

My Lords, I am loath to take up the time of your Lordships on this matter, but I was a member of the Select Committee that sat on the small charities legislation. My speech will be exceedingly short, as there is only one point that I wish to make and it has been made by other speakers, in particular by the noble Lord, Lord Allen of Abbeydale, who introduced the Motion. It is the total inadequacy of the Charity Commissioners to be able to fulfil their duties.

Let me read from the Charity Commissioners' annual report for 1982, which says: Like other public departments the Commission is affected by cash limits and reduction in staff numbers, and inevitably the standard of work must suffer and delays occur. While we recognise the need to keep expenditure down, to keep a tight control and to obtain value for money, we are conscious of the fact that we are prevented from doing as much as we should like to do and are required to do by our judicial and other statutory functions and to do it as speedily as we should like". It is clear that the Charity Commissioners are unable to carry out the statutory duties that they have to perform at the moment.

I was also rather amazed to find, certainly at the time when the committee was sitting, that they said that they did not have a computer. I do not know a great deal about computers or how effective they are, but I believe that if there is one institution that should have one it is the Charity Commissioners. They could not tell us how many charities which should have been registered were not registered, nor the amount of the various charities. They admitted that they did not know which charities had made an annual return of their accounts. Further, they said that they had been having reductions in staff over the past few years, whereas the number of charities that have been registered has increased. One would imagine that in order to keep up the standard, let alone improve it, there must be an increase in staff.

The deputy commissioner was asked whether there were any procedures for identifying the charities which had failed over a number of years to submit returns, as bound by statute. Her reply was that there was no longer any procedure for doing so. There had been one, but it had had to be dropped a few years ago owing to cuts in staff. I feel that the Government have made an error in cutting the staff of the Charity Commission. It should either be substantially increased or the Charity Commissioners should be given an effective computer. In getting a computer I fear that they would have to get properly qualified people to programme it. That would cost money, and the Government will therefore say that they cannot do that.

There have been two suggestions, one by the noble Baroness, Lady Faithfull, and one by the noble Lord, Lord Mancroft, as to how the burden on the Charity Commission might be relieved. I hope that the Government will consider the two proposals. Finally, to my mind it is no good bringing in legislation to tidy up and improve the law on charities unless we are prepared to spend money to make more effective the work of the Charity Commissioners. Every new piece of charity legislation puts a further burden on them. Unless they are given the ability to carry out their tasks, it is pointless to introduce further legislation.

5.17 p.m.

Lord Auckland

My Lords, the House will be much indebted to the noble Lord, Lord Allen of Abbeydale, for enabling us to discuss this important matter. As my noble friend Lord Mancroft said in his speech, which was as usual most erudite, we all receive a multiplicity of appeals for well-meaning charities. That brings one to the question of whether there may not be too many registered charities. I instance two aspects. One is mental health, in which I have a particular interest, and the other is cancer research. I want to make it quite clear that I believe those involved in the charities, even in the multiplicity of appeals, are dedicated people. But such multiplicity makes the work of the Charity Commissioners much harder. It also makes it much more difficult for the general public, be it individuals or corporate bodies, who receive the appeals, to make up their minds as to where to subscribe.

Having said that, always in a subject of this kind there is a great deal of special pleading. My noble friend Lord Mancroft, for example, mentioned his old regiment. I make, very briefly, an oblique special plea for the Royal British Legion. Late last year, I had down a Starred Question about value added tax and the Royal British Legion. Obviously, I do not expect my noble friend the Minister, or any other Minister, so near the Budget, to be in a position to answer questions on value added tax. There is, however, an interesting paragraph in Appendix E, subsection 3, of the 1984 report of the Charity Commissioners, on the question of buildings.

As your Lordships will know, the Royal British Legion—I happen to be president of the Surrey county branch—has a number of buildings in which disabled ex-servicemen and women are housed. There is the anomaly, I understand, of a new building and extensions to a new building being zero-rated but of value added tax having to be paid if one wishes to build a recreation hall or even possibly a chapel where an existing building is concerned. I realise that this is a technical matter. It is, however, one that I hope that my right honourable friend the Chancellor of the Exchequer will view with some sympathy in two or three weeks' time.

The question of charities brings to mind another issue. Are there, among the multiplicity of charities—for example, in connection with cancer research—some which should consult far more with the medical profession? The technicalities of some of these charities must make it difficult for the Charity Commissioners to decide. I should like to conclude by saying that this has been a worthwhile debate. Those who operate the charities are providing a valuable service. I hope that the Government will be able to give some sympathetic thought to the points that have been raised.

5.22 p.m.

The Earl of Longford

My Lords, I gather that there are eight minutes available to me. I do not intend to take that long, unless I am interrupted. In that case, I shall look to the noble Viscount, Lord Davidson, to protect me as effectively as he protected the noble and learned Lord, Lord Denning. I should like to say, in passing, that it would be a bad day for this House if, in the course of a two-and-a-half-hour debate, no questions could be asked at any time. I should like to take up that ruling later with the Leader of the House.

We are grateful to the noble Lord, Lord Allen, for raising this question. The noble Lord speaks with great authority. I do not believe that he spoke today in his capacity of chairman of MENCAP. It is one of the most important and most valuable charitable bodies in the country. This is rather a relevant point when we are trying to ask ourselves how much liberty should be permitted to charities to try to change government policy. Certainly, spokesmen of MENCAP, at times—and this also applies to myself when I was chairman of the National Society for the Mentally Handicapped, a predecessor of MENCAP—have never hesitated to try to bring pressure on governments for a more friendly interpretation of the rules or, if necessary, a change of legislation.

All of us are connected with charitable bodies of one kind or another. I have been concerned with the founding of two and I am involved today in the founding of a third. I say at once that I have no complaints. I had better be careful because we charitable people are in the power of the commissioners. If we antagonise them, we are sunk. I shall certainly therefore say nothing critical of the charity commissioners. I wonder nevertheless whether they themselves would like clearer guidelines. It is a difficult subject. The more that you look into it, the harder it becomes, as the noble Lord, Lord Allen, will, I am sure, agree. I wish, however, to concentrate on the one issue of whether the guidelines for the charity commissioners could be clearer.

I should like to mention one charitable body that I was not concerned in starting but on whose council I sit. I refer to the Matthew Trust founded by that remarkable man, Peter Thompson, concerned with mental health in all its aspects, particularly the special hospitals, and also with victims of crime. Can one expect a body of that sort to do nothing to try to improve the attitude of the authorities towards the various beneficiaries that it is trying to help? It is inevitable as everyone knows, that those who run such a body want to see improvements in practice and possibly in the law of the country.

Without going into the merits of a particular argument, the Matthew Trust launched a campaign about three years ago to have nursing staff in the four special hospitals represented by nursing unions instead of by the Prison Officers' Association. The reasons should be obvious. I hope that, in saying this, I do not reflect in any way on the Prison Officers' Association. However, one could not expect the Prison Officers' Association to like the argument brought forward by the Matthew Trust. The association duly protested to the Charity Commissioners. The commissioners, at first, warned the Matthew Trust that, in adopting this line, it was not acting within the terms of charitable behaviour. Later, following some argument and various submissions, they changed their attitude and gave the trust the all-clear. I mention the case only to show how difficult it is in many instances to ascertain that what one is trying to do to influence policy comes within the terms of the Charity Commissioners.

In any group of people dedicated, as are all people, whether paid staff or volunteers, who run charities, to helping sections of the community who need help, the question arises as to whether or not it is their duty to bring whatever influence they can to bear on local authorities, the Government or whoever else seems to be in a position to improve the lot of the beneficiaries. In all cases that I can think of, not least in relation to MENCAP, a certain campaigning element creeps into the activities of those who care most for the people they are trying to help. At the moment, it is unclear how far that is permissible. I do not want anything too definite said about this. I might receive the wrong answer. One has to be extremely careful. The situation is far from clear. I am asking the Government whether it is possible to consider the idea of trying to provide the Charity Commissioners with clearer and more liberal guidelines.

5.29 p.m.

Lord Campbell of Croy

My Lords, I am glad to follow the noble Earl, Lord Longford. I commend the points that he has raised on the need for guidelines and their application to mental health. I shall not, however, pursue those subjects because I wish to raise one particular matter. First, however, I should like to congratulate the noble Lord, Lord Allen of Abbeydale, upon his admirable introduction to the subject. He has drawn attention to the untidy state of the law and practice in regard to charities. In particular he pointed out the difficulty in drawing a clear and equitable boundary between what is a charity and what is not.

The matter I wish to raise and on which I wish to ask some questions is this. The Charity Commission does not operate in Scotland. The commissioners' writ does not run north of the Border. In Scotland one deals directly with the Inland Revenue on all matters concerning which the Charity Commission would be consulted in England and Wales. My noble friend the Minister, Lord Glenarthur, will no doubt speak at the end of this debate about the responsibilities of the Charity Commission. I ask him whether, if he has time, he could add an explanation of how the Inland Revenue operate in Scotland in decisions on granting of charitable status to bodies who apply, in dealing with charities which are registered in Scotland, and in keeping under review the activities of those charities; because it certainly should be part of the system that changes in the aims or practices of charitable bodies should be monitored.

I have understood that the Inland Revenue have aimed in Scotland to follow the same principles and criteria that the Charity Commission follow in England and Wales. I would therefore first ask my noble friend whether that is correct. If it is correct, how do they co-ordinate and compare practice and cases? What is the degree of supervision? We have been told that there are 150,000 charities registered in England and Wales who are the responsibility of the Charity Commission. I assume because the population of Scotland is about one-tenth of that in England and Wales that we are dealing with about 15,000 or possibly less in Scotland.

We heard from the noble Lord, Lord Rathcreedan, just now that there is considerable doubt whether the Charity Commission have access to computers. The Inland Revenue have many computers so there is no difficulty as far as they are concerned, I am sure, in dealing with the Scottish charities in the way in which they deal with taxpayers. They have, if I may say so, a great reputation for thoroughness. I am not complaining; I am merely inquiring.

However, it seems to me that the charities registered in Scotland may be being put through the mill rather more than those in England and Wales and it could be that reputable charities in Scotland are being supervised and their accounts examined very much more closely. I cannot imagine the Inland Revenue in the normal way not examining the accounts submitted to them, but we understand that the Charity Commission have time to look at only a small proportion of theirs. I am a little sad to think that bodies such as the Moonies and other strange cults which the noble and learned Lord, Lord Denning, mentioned, are in the Charity Commission's field, whereas reputable charities in Scotland are being examined, it seems, much more closely.

I have been involved with, and have advised, a number of charities based in Scotland over the years, especially at times when they are being founded and are starting up. I was chairman for Scotland of the International Year of Disabled People and from that, for example, a number of projects arose which sought charitable status.

It is important that the qualifications for charitable status should be made clearer because it makes a great deal of difference to the applicants whether or not they will receive various tax concessions. I am not complaining about the Inland Revenue in Scotland. They have processed without undue delay the applications with which I have been involved. But the requirements to qualify for charitable status appear to be very vague.

I do not ask my noble friend the Minister to describe them in detail. I was once privileged to hear, I believe, the best account available, which was given by the noble Lord, Lord Nathan, who had just been vice-chairman of a committee, about 10 years ago, looking into the law of charities. I was then chairman of a charity in Scotland. I invited him to address that charity at its annual general meeting and to give an account of the criteria which operated so far as the Charity Commission are concerned. He gave an absolutely excellent account, but it is clear that this is not an exact science. However, the decisions made mean a lot to the organisations which apply.

My noble friend will probably tell us when he comes to reply that the criteria are general and that the decisions are left to the good judgment of the Charity Commissioners. My inquiries are directed to whether the Inland Revenue try to apply the same process observing the same four categories to which the noble Lord, Lord Allen, referred in his opening speech, and whether they do this with a similar degree of vagueness and discretion when they are dealing with the cases from Scotland.

5.37 p.m.

Viscount Brentford

My Lords, I should like to thank the noble Lord, Lord Allen of Abbeydale, for introducing this debate at what seems to me to be an appropriate moment, when this Government have already taken steps to encourage charitable activities; and when there are leaks—true or not—that they are intending to take further steps along that path. It seems therefore a most appropriate moment.

I should like to make a couple of comments about the Charity Commission from my personal experience. Reference has been made by a number of your Lordships to delays through lack of resources. While that is undoubtedly true, I should like to record my appreciation of the way in which the staff of the Charity Commission can deal with matters of importance with both thoroughness and efficiency, and also with great speed when that is required. I personally appreciate this very much. It seems that they exercise good judgment on that matter when it is required.

I should like to make another point with regard to a remark of the noble and learned Lord, Lord Denning, on the question of further investigation when charities come up for registration. Again, I am impressed with the thoroughness with which the Charity Commission look not only at the paper work submitted to them, but require to know how the trust of the charity will be implemented by the trustees after it is formed and registered. I do not see what further steps they can take before registration than looking at the practical way in which the trusts will be implemented. I feel that that is highly commendable.

The main point which I should like to make is again touching on the very grey area which is the borderline between what a charity can do and what another organisation can do in the political field. The noble and learned Lord, Lord Denning, again touched on this, and if he were present I should like to ask him whether he has been able to work out a legal definition on how to separate a genuine religious charity from the cults about which he was talking. I have not been able to decide how to distinguish in this field which has been exercising the minds of people for some time. But I should be interested to know whether he has a legal definition to cover that.

The point I should like to make is on the problem that a charity—which exists to promote the Christian religion—finds when the political sphere is impinging on its charitable objects. Imagine, my Lords, a religious charity, which also has the power to teach and uphold Christian values in family life. The problem faces the charity when the law is going to be changed, or the law is being flouted, which impinges against its objectives. At the risk of being slightly technical I should like to make four points which it can do in this field. My basis for this is not my own understanding of the law but an admirable memorandum provided by the Charity Commission.

A charity such as this can comment to the Government after the Government have invited comments or suggestions from charities. A charity can comment on a Government Green Paper; a charity can supply information and arguments to Members of this House or another place after a Government Bill has been published; and, lastly, a charity can support or oppose a Private Member's Bill. This means that there are two things in particular which it cannot do which I should like to draw your Lordships' attention. A charity cannot support or oppose a Government Bill. It seems to me that there is nowadays a fairly fine line between a Private Member's Bill and a Government Bill. Again, there is a grey area between the two. A number of topics may be dealt with in either one way or the other.

Secondly, a charity cannot supply information and arguments to Members of this House or another place after a Government have expressed an intention to change the law but before they have published their Bill, unless they have actually requested comments. I suggest to your Lordships that it is beneficial for a charity to express its view on a Government's intention of changing law affecting charities prior to publishing their Bill.

This Government are committed to strengthening family life, but if a Bill were ever to come before your Lordships' House which negatively affected family life, the charity which I have suggested to your Lordships would not be able to oppose it before the Government published a Bill. I believe that that is an anomaly. It could do so if a change was being effected by a Private Member's Bill alone. I suggest that this is a grey area, an anomalous area, that could be tidied up by the law.

However, may I emphasise, first, that a charity should never be allowed to act beyond the scope of its charitable objects and, secondly, that it should never be allowed in any way to enter into a party political field. Therefore, I conclude by saying that I believe that there are anomalies in the law in this area which could usefully be tidied up by legislation. However, I am worried because last time I told my noble friend the Minister that there were anomalies in the law, he replied that the only way was to sweep away all regulations affecting it and have a free-for-all. That is not at all what I would advocate in this case. I believe that there is scope for tidying up the law in this context.

5.43 p.m.

Lord Prys-Davies

My Lords, we are immensely indebted to the noble Lord, Lord Allen of Abbeydale, for having initiated this important debate. I, too, should like to congratulate the noble Lord on his opening address. Our hope must be that some of his words and the words of other contributors to the debate will carry weight with the Government, because they are the words of men and women who are well qualified to speak about the initiatives which they consider to be necessary.

The statistics to which we have been referred this afternoon demonstrate that the charities sector is very large business indeed, and that it is growing. The statistics also show that the resources of charities are insufficient to enable them to cope with the demands made on them. I am sure that some of us who served on the Select Committee will recall the notable words of a witness who appeared before the committee. His charity could, without lifting a finger, disburse 10 times as much as it was disbursing to the poor, and it was disbursing £80,000. So the shortfall in that particular case was enormous. That is some of the backcloth against which Government policies of support for charities need to be considered.

However, there is another factor, and that is the generous response of the British public to fund-raising campaigns by charities. I believe that there is ample evidence that members of the public are willing to accept a heavy share of the financial burden of the ills of our society where they are satisfied that a charity reaches out effectively to its beneficiaries, and where the responsibility is not perceived to be that of the Government. I believe that those are the preconditions. However, there is a great response and this indeed is detailed in the Directory of Self Help and Community Support published by the Mental Health Foundation. We have heard that during the last few years there has been a growing demand for greater tax incentives to encourage companies and individuals to give to charities. Clearly, there are two views about the merit of this initiative, but I happen to believe that it is an initiative which ought to be considered with care and in the light of the American experience.

I should also like to refer to a paragraph in the last edition of The Sunday Times, where it was reported that: The Treasury is looking for incentives to encourage individuals and companies to make donations to charities to set them against tax. But the law on charities may have to be reformed first and Lawson may suggest the changes in a green paper. Yet the case for reform does not rely on Treasury involvement in tax loss resulting from possible tax changes. It seems to me that reform is not simply a quid pro quo for tax incentives, and I suggest that the proper inference to be drawn from The Sunday Times report is that there is a need for reform of the law on charities and the procedures related to its administration.

To call for the reform of the law on charities is a pretty sweeping statement; it is almost as sweeping as calling for the reform of the criminal law. I think it is accepted that there is no single grandiose plan to be imposed from on high. Indeed, your Lordships have tabled a large number of proposals to tackle actual problems, but in the interest of the whole field of charities.

I should like to refer to the five or six proposals which appear to me to have won considerable support in the course of the debate this afternoon. First, the point has repeatedly been made that charities must be made more accountable to the Charity Commission and that accountability starts with the filing of annual returns. Yet, as we have heard, nine out of 10 registered charities fail to lodge their returns. Therefore, while it is a duty which is set out in the Act, it is a duty which is unfulfilled and unenforced.

It is suggested that trustees should be subject to penalties if they fail, or fail over a number of years, to file accounts. After all, why should the trustees of a charity be exempt from a legal duty enforceable by a penalty, when the same duty is imposed on a registered friendly society? Again it should not be beyond the wit of the Charity Commission to devise a system of identifying those charities which fail persistently to file their annual accounts.

Secondly, the Charity Commission should give a higher priority to the systematic examination of a limited number of the annual accounts, and ensuring that the accounts of every charity will be audited not less than once in a period of 10 years. Unless the accounts are examined and are audited, how can the commissioners put their finger on abuse before too much damage is done?

Considering that there are 150,000 registered charities, it would not be surprising if in fact occasionally there was evidence of abuse. But I should not have thought that there is widespread evidence of scandal and abuse. I think I should say that in fairness to the trustees of charities who try to undertake a difficult task. This possibility that the accounts may be audited is just as important as the filing of an annual return. Individuals are ready to comply with Customs' regulations at a port or airport of entry to a country because they know that there is a risk that their luggage will be examined.

Thirdly—I do not think this point has been made in the course of the debate, but it has been made outside the House—should it still be necessary to obtain the consent of the Charity Commission before trustees can sell or mortgage land? Would it not be possible to dispense with such a consent if the trustees were unanimous, if they certified that they were acting in accordance with independent professional advice, that the terms were the best available, and that in the case of a sale they had given notice in a local newspaper of their intention to sell and inviting higher offers?

If this proposal were to commend itself it would enable about 35 members of the staff of the commission to be redeployed to undertake more important tasks, such as the inspection of the accounts, examination possibly in greater detail of applications for registration of new charities, and in general to cut down delays.

Fourthly, the Government should consider what changes are necessary in order to help trustees who wish to appeal against a decision of the Charity Commission. We have heard, and we know, that to pursue an appeal in the courts is a difficult and an expensive task. It has been suggested that a suitors' fund should be made available to trustees who wish to appeal a decision and who have reasonable grounds for so appealing. There is another alternative. An alternative appeals procedure could be set up which would probably be both cheaper and quicker; and there is a precedent in other legislation where certain disputes can be referred to an appointed hearing officer.

Fifthly, there is a view that the commission itself is by today's standards, based on an inappropriate model; it is a model inherited from the last century. But there is some reason to suppose that in the present system the quality of management skills available to it may be more at fault than the structure itself. I believe that the noble Lord, Lord Allen of Abbeydale, hinted at this; that in common with all other public sectors the commission requires its share of good managers. If this is so, the problem should not be shirked. There may also be a case for a Council of the Charity Commission, as has been proposed, or again for assistant Charity Commissioners. But there is unease about the machinery of the commission, and a high priority should be given to getting the machinery right.

Finally, there is a collection of other important proposals which would require changes in the law. Thus, charities should be enabled to make a more direct contribution to the cure of, rather than merely the alleviation of, unemployment. There is a need to have another look at the fine boundary line between charitable purposes and political purposes. There should be a relaxation of the complex cy-près doctrine, possibly along the lines pointed out by the noble and learned Lord, Lord Brightman, and which has been incorporated in the Charities Act 1985.

It may be said that many of these proposals are not new; that they have been about a long time, and that many of them can be traced to the noble Lord, Lord Goodman. We are sorry that he is unable to be in the House today. If that suggestion is true, I can only suggest that that is a sad commentary on the state of affairs.

The speeches have drawn together a collection of worthwhile proposals. The debate has been a worthwhile debate. But all the speeches and the contributors call for change, and we look forward to the Minister's reply. I hope that he can say that the Government accept in principle that the time is ripe to consider a fresh advance, and that careful consideration will be given by the Government to the proposals which have been placed on the table.

5.58 p.m.

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

My Lords, before I respond in detail to this interesting and enlightening debate, it may be useful to set our discussions briefly in context. As the noble Lord, Lord Allen of Abbeydale, said there are in England and Wales over 150,000 registered charities. Estimates of the total income of the charity sector vary. A recent study of a sample of charities suggested that it might be in the range of £4.8 to £7.3 billion—perhaps 2 or 3 per cent. of gross national product.

The range of organisations which fall within the definition of charity is far wider than is commonly believed. Many people, perhaps, if asked to name a charity would mention one whose work lies broadly in the field of social welfare—whether at home, or since the African famine has made such an impact on the public's awareness of need, overseas. But universities, churches, the arts, training, research, conservation, the national heritage, all have their place in the charitable sector. That is why I join with all those who have paid tribute to the noble Lord, Lord Allen of Abbeydale, for initiating this debate today.

The charity world is an important and dynamic part of our community life and it is right that your Lordships should bring direct knowledge and considerable experience to bear on issues which affect the operation of charity law and the charitable world. The noble Lord, Lord Allen, has with his customary clarity set out his concerns about the operation of the law on charity. I am sure he will understand if I respond to the matters he has raised with varying degrees of precision, since one or two of those matters I shall, as he would expect, need to pass on to my right honourable and honourable friends with a responsibility for these matters.

The noble Lord, Lord Allen, my noble friend Lady Faithfull and my noble friend Lord Auckland raised the question of VAT on charities. My noble friend Lady Faithfull has a keen interest and enthusiasm for this topic, and my noble friend Lord Auckland brings to it his personal long experience with the Royal British Legion. He has shown an active interest in charities and VAT and, in particular, as it applies to residential homes. I am aware of the proposals made recently by the Charities VAT Reform Group for VAT relief in certain areas, and I know that there has been strong interest in another place in these proposals. I have listened with great care to what has been said. Having said that, I must immediately dodge the issue a little by saying, as your Lordships would expect me to say at this time of year, that these are matters exclusively for my right honourable friend the Chancellor of the Exchequer, although I will of course make sure that he is aware of the remarks made in today's debate.

On the question of tax the noble Lord, Lord Allen, made suggestions, the noble Lord, Lord Grimond, made others and the noble Lord, Lord Houghton, disagreed with both. But as the noble Lord, Lord Allen, said much has already been done on tax benefits, but improvements have been made in the last five years which are not so widely known as I would wish. Many small charities could do more to help potential donors take advantage of these reliefs, so that what they do can add to the benefit received by the charity of their choice. The freeing of gifts to charity from capital gains tax and capital transfer tax; the four year covenant and associated tax relief for higher rate taxpayers; the possibility of covenanted giving through payroll deductions; the extensions in the range of special VAT reliefs; all these are helping to strengthen charities. Publicity may help—the Customs and Excise have helpful explanatory leaflets on VAT and a more general leaflet. And a leaflet published by the Home Office Voluntary Services Unit has been widely distributed and is still in demand. On the general point on tax, as your Lordships would expect, I can say nothing more today.

Much of what the noble Lord, Lord Allen, and the noble Lord, Lord Rathcreedan, had to say today has focussed on the Charity Commission and its operation, and I should like now to turn to that. The Government are aware of the constraints under which the Charity Commission has to work. We recognise, too, the enormous efforts being made at the commission to respond to the demands being made on it. The noble Lord, Lord Allen, suggested that management consultants might be helpful in assessing the use of resources within the Charity Commission. Certainly this is an option worthy of consideration, but consultants are not always the best method of finding answers to the management of resources within the public sector. We are not concerned solely with a management exercise in the normal sense. We have to consider whether society expects and requires certain functions of the commission and to what extent those functions might assist or inhibit a healthy charitable sector. It is a delicate balance, it requires careful checks which are not always easy to assess in strict financial terms. The suggestion made by my noble friend Lady Faithfull that a council be appointed is again a matter that is worthy of consideration, but I am not sure that it would be desirable to distance my right honourable friend the Home Secretary further.

My noble friend Lord Mancroft suggested an assistant charity commissioner. This is another characteristically creative view to take and one that is worth considering. I hope my noble friend will forgive me if I do not follow him further down that road now.

Towards the end of the debate the noble Lord, Lord Prys-Davies, raised the question of accounts. I am sure that your Lordships will recognise that it is simply not realistic to expect the Charity Commission to inspect annually the accounts of every one of 150,000 registered charities. Indeed the noble Lord made that plain. The cost of simply calling in the accounts was estimated some years ago at about £0.5 million a year.

The commissioners have decided, sensibly in our view, to establish a unit to scrutinise the accounts of particular charities or categories of charities that are or could be of concern. I have to say that this unit is only now beginning its work and it is therefore too soon to give your Lordships an account of its acitivities, or to say to what extent its surveillance should be extended, but I believe that this selective approach is the right one. The noble Lord, Lord Prys-Davies, suggested that all charity accounts should be professionally audited. That is an interesting idea. It is worthy of further consideration, especially for the larger charities.

My noble friend Lady Lane-Fox referred to the dusty files contained in the Charity Commission when she worked there. Both the noble Lord, Lord Allen, and the noble Lord, Lord Rathcreedan, pointed to computerisation. I understand that the commissioners will shortly undertake a study to identify the needs of all those who use the register of charities to establish a system which can best meet those needs. They are very conscious of the advantages of computerisation and of the need to update the information contained in the index. But it is a formidable task and it may well take some time to implement fully.

I have noted the suggestions made for the saving of resources, and I can assure your Lordships that these have been under consideration since the National Council for Voluntary Organisations made similar suggestions. I think it is fair to say that on the subject of consents to the sale of charitable property raised by the noble Lord, Lord Prys-Davies, under Section 29 of the Charities Act, 1960, the arguments are finely balanced. The Government appreciate the view that having to obtain the consent of the commissioners to sell land and buildings is seen by some charities as an unnecessary hindrance. On the other hand, there is concern that charitable property does not realise its full value on sale and that trustees are not acting in the best interests of their charity.

The noble Lord, Lord Allen of Abbeydale, suggests there could also be a saving on staff resources from raising the threshold of income for charities required to register. I understand, however, that the practical effect on the workload at the commission of such a proposal would be negligible since a great many charities seek registration voluntarily, presumably because of the public recognition and confidence they feel this will give their work. The absence of registration does not in itself remove the commissioners' jurisdiction over a charity.

I understand also the concern expressed by the noble Lord, Lord Allen, that the definition of what is "a charitable purpose" leaves something to be desired, and is out of line with today's views of public benefit. It is tempting to look towards a statutory definition, but is it a sensible or practicable way forward? Apart from the formidable difficulty of drafting a definition which would command widespread acceptance, would this not lead to a rigidity—which is part of the concern today—or (if open to any form of amendment by subordinate legislation) endless debate and confusion?

I can understand the concern of the noble and learned Lord, Lord Denning, that certain religious organisations have charitable status. That is why my right honourable and learned friend the Attorney General is challenging the commissioners' view in the courts. I noted the critical comments made by the noble Lord, Lord Allen of Abbeydale, on the charitable status of the Unification Church (the "Moonies"), and I will ensure that these are brought also to the attention of my right honourable and learned friend.

I can assure the noble Lord that we are considering seriously the suggestion that appeals in some circumstances against the Charity Commission's decision on charitable status should be publicly financed. The potential benefits are clear but what are not so clear, but are the subject of consideration, are the desirability of the concept of public funds being used to challenge decisions by the Charity Commission (whose actions are funded by public money and governed by statute), the potential consequences of such a precedent and the resource implications.

Reference has been made to the Charities Act 1985, which was the product of so much hard work in your Lordships' House over the last two years. I know that my noble friend Lady Trumpington was asked then to ensure that the Act she was piloting was given maximum publicity. The Act came into effect on 1st January of this year. The Home Office circulated detailed guidance on the Act to all local authorities concerned at county, borough and district level, and we believe that it was drawn to the attention of parish councils through their associations.

I am told that to the commissioner's knowledge the provisions of the Act have been publicised in at least 21 appropriate magazines and journals, so I do not think that we overlooked our obligation. It is of course very early days, but it would seem that there has been a great deal of interest in the Act. The commission have sent out over 14,000 leaflets on the Act's provisions. Several charity information bureaux and rural community councils, among others, have held seminars on the Act to which commissioners have contributed. About 100 resolutions or proposals for action have been received by the commission. Considering that the Act has only been in effect for two months, this is an encouraging level of reaction and I can assure my noble friend Lady Faithfull that there will be no difficulty in monitoring the effects of the Act. I understand that the chief Charity Commissioner has undertaken to report on this.

Perhaps I may deal more briefly with a few of the other points raised today. The noble Lord, Lord Allen, has raised the issue of political guidelines for charities, as did—and I shall come to him in a moment—the noble Earl, Lord Longford. I know that this is a matter which exercises some noble Lords. It seems to me that this is an area in which it is difficult to deal in abstract terms, and therefore I wonder whether there would be much to be gained from prolonged consideration and revision of the Charity Commissioner's guidelines. I know that the Charity Commissioners are quite ready to discuss and give advice on the activities of charities in real and not hypothetical terms. I think that this is the right way forward.

My noble friend Lord Brentford raised a specific problem. I believe that it is one that he perhaps could discuss directly with the commissioners as it is possible that his understanding of the commissioners' guidelines is a little narrow. I am sure that my noble friend will do that. I will convey to those concerned the view of the noble Earl, Lord Longford, that what is needed is clearer guidelines by the Government. So much depends on the tone and the context of a charity's political activities and its relation to the objects of that particular charity. The issue of charity advertising on television was not raised. It is in general one of interest and it is a matter which has been discussed with the IBA.

My noble friend Lord Campbell of Croy and the noble Lord, Lord Grimond, raised the matter of charities north of the Border. I am grateful to my noble friend Lord Campbell for giving me notice of his interest, which I welcome. There have been from time to time proposals that there should be a body in Scotland with responsibilities for the registration, investigation and supervision of charities similar to that which exists in England and Wales; although the noble Lord, Lord Grimond, seemed to suggest that England and Wales might have something to learn from Scotland. I am not sure that my noble friend Lord Campbell did not to some extent follow that as well. I understand that one such proposal from the Scottish Council for Community and Voluntary Organisations is currently under consideration.

In seeking information on whether the same principles apply north and south of the Border, I do not think that my noble friend drew sufficient distinction between a body registered with the Charity Commission and one seeking charitable status for tax purposes. So far as obtaining charitable status for tax purposes is concerned, I can say to my noble friend that the Inland Revenue apply the same principles—that is, the provisions of Section 360 of the Income and Corporation Taxes Act 1970—north and south of the Border. The level of supervision by the Inland Revenue, as I understand it, is the same for charities north and south of the Border. Their work, of course, is limited to ensuring what income has been applied to charitable purposes and not, for example, how well the charities are administered. Perhaps I may say to the noble Lord, Lord Grimond, that I hope he will be pleased to know that the court has held that Coeppler's bequest is charitable.

The noble Lord, Lord Allen, specifically mentioned the Trustee Investments Act. I can say to him that the Government are considering recommendations for reform of the Trustee Investments Act 1961 by the Law Reform Commission.

I am glad that my noble friend Lady Vickers raised the matter of what she referred to as charity chests. If I occasionally lapse into language which she does not like and call them "community trusts", perhaps she will forgive me; because of course the Government recognise the important role that these have to play. The Government have committed £100,000 a year for three years to help develop a number of local community trusts in England. These are to be independent charitable trusts which seek and distribute funds from a wide range of sources to help meet the needs of their local communities. We believe that they will increase the scope of partnership in tackling local problems between statutory agencies, private businesses, and other charitable donors and local voluntary organisations.

My noble friend went on in her speech to talk about experience in the United States and I noted with great interest what she said. My noble friend also raised the question of those who die intestate. Most of those who die intestate have families or relations with a claim on their estate; but the idea that the assets of those who die in that position and without relations might be transferred to a community trust is a new one about which I shall write, if I may, to my noble friend. I certainly hope, however, that community trusts will receive legacies from those who wish to benefit their local charities.

I acknowledge that there is concern that the Charity Commission's resources are not adequate for the task they are asked to perform. As with all government expenditure, it is necessary to strike a balance between what is desirable and what is practicable, bearing in mind other demands. I note that some of your Lordships consider that the balance needs adjustment and I will convey this concern to my right honourable friend the Home Secretary. Try as I might, I do not think I could find a way of drawing together such a diverse and far-reaching debate into a neat conclusion. I shall therefore not attempt to do so but all of us are grateful, as I certainly am, to the noble Lord, Lord Allen, for focusing our attention today on the need to be aware of developments in the charitable world and their effects on the operation of the law on charity and the functioning of the commission.

I must say that I think—and indeed it has been expressed by others today—that all of us owe a great debt of gratitude to those who work so tirelessly and so persuasively on behalf of charities and raise so much money for so many very worthwhile causes. What they do fills all of us with a great deal of admiration. Another group of people who fill us with admiration are those who contribute so exceedingly generously to so many worthwhile charities, a point made by my noble friend Lady Lane-Fox and by the noble Lord, Lord Prys-Davies. We shall of course study with care all that has been said and I hope that I have been able to give your Lordships some reassurance that the Government are very much alive to the concerns which have been expressed in this useful debate this afternoon.

6.18 p.m.

Lord Allen of Abbeydale

My Lords, I calculate that I still have 14 minutes left and I hastily reassure my neighbours that I do not propose to use all of it. There are just one or two points to make. I think we have had a very valuable debate in such parts of the afternoon as have been spared to us by British Leyland and the rate support grant. As I said at the outset, I could not hope to cover all the points, and the debate has amply demonstrated that there was a great deal that I did not touch on. I should like to say that I was taken to task for not mentioning the report by the noble Lord, Lord Goodman. As it was I who persuaded him to take on that particular inquiry, it was very much present in my mind; but it had a rather narrower remit than the discussions today.

I am tempted to follow the noble Lord, Lord Mancroft, in reminiscences of life in the Home Office, but I had better resist that temptation; just as I am tempted to follow a discussion with the noble Baroness, Lady Lane-Fox, about the possibility of a national lottery. I must make one comment on the points made by the noble Lord, Lord Houghton. I am a very simple-minded and unsophisticated sort of individual. When I read in The Times an account by a Lobby reporter that charities are set to receive a multi-million pound Budget-day boost as the result of a radical change to the tax laws and I read a similar account by a Lobby reporter in the Telegraph, I do wonder whether it is entirely imaginary. But there it is. In my opening speech I implied that I very much hoped that covenants would remain.

May I make just one or two other points. In response to something the noble Lord the Minister said in his very interesting speech, may I say that I myself shied away from attempting any statutory definition of a charity. I very much go along with the question which the noble Viscount, Lord Brentford, posed. If, for example, you are to distinguish between religions and religions, what sort of criteria do you apply? We had understood that the Attorney General was going to appeal over the decision of the Charity Commission to register the Moonies. All I can say is that I wish he would get on with it.

There has been some misunderstanding about accounts, I think. The statutory obligation to submit accounts is only upon the charities with a permanent endowment; the Charity Commission allow some of those to come in only every five years. But the Charity Commission can also ask any other charity to put in accounts at any time. The fact remains, as several others have said, that those accounts which do come in are not looked at.

Then, on the point about the care which the Charity Commission take in drawing up instruments, to which the noble Viscount referred, I am glad he said that. But the real trouble is that once the instrument is drawn up, with infinite care and complexity, no attempt is made to ensure that the charity keeps to its obligations.

Finally, as regards the computer, my only point was that if you raise the limit from £15 you would at any rate get rid of some thousands of entries on the register, which would simplify the preparation of computerisation—on which I am afraid my information is slightly less optimistic than that given by the Minister; but I am sure he knows better.

As the number of speakers today has shown, there is a great deal of interest in this subject. May I just say that the noble and learned Lord, Lord Brightman, did ask me to express his particular regret that he could not take part. He was chairman of the Select Committee which led to the Act last year and he was good enough to say that he was in general agreement with the points I have tried to put.

We have a great deal to think about when we come to read Hansard and I hope that some of the points that have been made will be found of value to the Government. In view of the widespread interest shown by members of this House on all sides, I could not help thinking of the familiar quotation from Pope: In faith and hope the world will disagree, But all mankind's concern is charity:". My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.