Charity Law

HL Deb 28 January 1987 vol 483 cc1345-77

3.51 p.m.

Lord Allen of Abbeydale rose to call attention to the case for reviewing the charity law and the role of the Charity Commission; and to move for Papers.

The noble Lord said: My Lords, I at last beg to move the Motion standing in my name on the Order Paper. I begin by stating that I am a trustee of several charities, I should like to thank all those who have put down their names to speak today, with perhaps a particular word of thanks to the right reverend Prelate.

I am conscious that we debated some of these issues rather less than a year ago but I make no apology at all for returning to the subject today. It is one affecting a great many people and involving a great deal of money. I can only say that so far we have not received very much enlightenment from the Government. Things are always under consideration, but nothing very much actually happens.

The income of charities runs into billions of pounds; tax relief is substantial, to put it mildly; and the continued growth of charitable effort is indicated by the fact that getting on for 4,000 charities apply for registration each year. Since our last debate one or two things have happened. The Finance Act gave further tax concessions and, in a very important provision, authorised the Inland Revenue to tell the Charity Commission if it had suspicions about a particular charity. We have also had an Answer to a Question by the noble Lord, Lord Houghton of Sowerby, on 6th November 1986 at col. 1248 of the Official Report saying that the Government had no present plans for changes in charity law. I understand that it has been decided, following a Treasury staff investigation, that the Charity Commission may keep its existing number of staff but is not to have any more to cope with new work or to enable it to carry out its existing work more effectively.

Alas, there are still serious delays in registering new charities. There are still doubts and obscurities about whether particular activities will be accepted as charitable. Most charities fail to send in their accounts and not all that much is done about those accounts which do come in. The register of charities remains uncomputerised and I am sure is cluttered up with a lot of dead wood. The Charity Commission does not have the staff to carry out field visits on any scale, and overall its attitude necessarily remains one of reacting to events rather than initiating action itself.

Against this background, it seems to me that there is, to begin with, a strong case for looking again at the statutory provisions involved. I am not suggesting an attempt to define in an Act of Parliament what constitutes charity. That indeed would be to venture into a morass, and I have another approach to suggest in that context. But there are quite a few questions to be thought about as possibly improving the present state of affairs.

For instance, the commissioners, acting judicially, cannot at present refuse to register an institution which is impeccably charitable in law according to its declared objects, whatever suspicion they may have about its real intentions. There is much to be said for giving them power to register a charity on a probationary basis to see if over a period it lives up to its declared objects. Perhaps indeed all charities should be registered provisionally to begin with. Then, as the development of charity law to meet new and changing circumstances rests on judicial decisions and charities cannot afford to go to law, would it not be right to set up a suitors' fund to enable cases involving important issues to be taken to the courts at public expense, a course for which there are good statutory precedents?

Should there be some relaxation of the tight controls in the Charities Act 1960 over the disposal of property and land? Should the cy-pres provisions in that Act he looked at again? Under that Act a charity with an income of less than £15 does not have to register. Should that figure be put up to, say, £100? Should the 1985 Act—it was passed in 1985 although it seems only the other day that we were debating it—dealing with small charities be further simplified and perhaps greater powers of initiative given to the Charity Commission?

Can we not bring up to date the legislation on trustee investment? Should charities be allowed to advertise on television? Should the Official Custodian for Charities be allowed to charge fees for looking after property and investments? Should all charities, and not just those with perpetual endowments, be obliged to submit accounts? Should charities be obliged to make their accounts available for inspection by members of the public who can show good cause? Should charities with an income above a certain limit be obliged to have their accounts audited?

Should the Charity Commissioners be given greater power to remove trustees where there has been maladministration, or to wind up a charity which devotes precious little of its income to the ostensible purposes of the charity? Should there not be a serious examination of the proposals in the report of the National Council for Voluntary Organisations on malpractices in fund-raising, some of them involving legislation? That is an important report on which so far the Government have remained notably silent, as I fear appears to be there wont when faced with reports on charities from Goodman on.

There to start with are a dozen possible changes in the law to be thought about. Come to think of it, I believe it adds up to a baker's dozen, which might perhaps appeal to at any rate one member of the Cabinet. If some of these changes were made it could result in a better use of staff and at least a reduction in the possibility of some scandalous misuse of charitable funds. I have been wondering whether one possible course might be for issues of this kind to be looked at by a Select Committee of this House rather like that which led to the 1985 Act, but I am not sufficiently expert to know whether that is really a starter. Perhaps other ideas will emerge during the debate.

I now turn briefly to the role and the resources of the Charity Commissioners themselves. I sometimes wonder whether the Treasury—I try to forget that it is a department in which I once served—understands what is the role of the commission under the 1960 Act. I notice that no extra staff were provided to cope with the consequences of information handed over by the Inland Revenue under the new powers; though I understand that the small unit which has been created is finding that this involves quite a lot of work. Incidentally, I hope that there will be some ongoing publicity about the progress of this co-operative effort.

I thought I had a significant reply when, some time ago, I asked about certain provisions included in the Finance Bill as introduced last year. It suggested that those concerned had very little knowledge of how charities actually work and the provisions were withdrawn when enlightenment was forthcoming. In that reply the noble Lord, Lord Brabazon of Tara, confirmed that the commissioners had not been consulted about the proposals and he spoke in terms which implied that, if they had been, the risk of leakage would have been just as great as if any outside body had been consulted. Those exchanges are recorded in col. 6 of Hansard on 21st July 1986.

The charity world, not surprisingly, was astonished that the Government completely failed to take advice from their own professional experts within government. Indeed, this ought not to happen again. I gather that the Inland Revenue subsequently got over its fears of leakage and is currently consulting some knowledgeable people in the charity world before this year's Finance Bill is unveiled to our horrified gaze.

There is widespread appreciation of what Mr. Denis Peach, the present chairman of the Charity Commission, has done during his period in office; but Mr Peach is due to retire within 12 months. Will the Government take this opportunity not only to make a suitable appointment to the top post after open competition but also to strengthen the supporting posts near the top in order to equip the commissioners better both to organise their own responsibilities and to function as advisers to government, as they should?

Will the Government also think about the possibility of appointing, say, two extra non-executive commissioners from outside or perhaps giving the commissioners the backing of a pretty high-powered advisory committee—call it what you will—with whom they could discuss tricky policy issues? That could include, for example, the attitude they should take in deciding what constitutes charitable activity in such controversial areas as the relief of unemployment, the advancement of human rights and the furtherance of religion. Perhaps that is a point at which I could look rather expectantly in the direction of my noble and learned friend who is to speak later in the debate.

I know very well that there is currently an expert looking at the scope for using computers in the Charity Commission, that the Home Office is planning a six-week Rayner-type inquiry into the commission and that the National Audit Office is even now scrutinising the work of the commission—it must be the most scrutinised department of all time—but I hope that the Minister will not just rest on telling us that various inquiries are in hand and that nothing can yet be decided.

Social needs have much changed since 1960, including increased reliance on voluntary effort, but the law and the resources have not kept up. We are talking about activities involving the wellbeing of many of the less fortunate members of the community and we do not want them marred by muddle, delays, malpractices or failure to apply the large sums of money involved—much of which is provided at the cost of the taxpayer—to their proper purposes. The arguments for fresh legislative and administrative action are, to my mind, very powerful. I beg to move for Papers.

4.5 p.m.

Baroness Faithfull

My Lords, I pay tribute to the noble Lord, Lord Allen of Abbeydale, for his tenacity in again bringing up in your Lordships' House the question of charities. Much of what I have to say underlines what the noble Lord said, and I, too, should like to pay tribute to the Charity Commission, the staff, and the Charity Commissioner, Mr. Peach, who rightly was honoured last year.

The Charity Commission comes in for a great deal of opprobrium not because its staff is poor, inadequate or inefficient but because the commission does not have adequate facilities. I take up a point which the noble Lord, Lord Allen, made. Charities register at the rate of one every half hour of a working day. This betokens two points. The first is the enormous amount of work which the Charity Commissioners have to do and the second is the growing wish among the people of this country to set up charities. Six hundred letters are received each day. There is a backlog of three weeks before any matter can be dealt with. There are 60,000 to 70,000 files stored in the commission's office and to refer to one of those takes three days; and there is a considerable staff shortage.

In this country there is a great deal of complaint about the work of the Charity Commission through no fault of its own. It was in my mind to write to The Times and, indeed, to other newspapers, to ask those people who had been dissatisfied with the service received to write to me. However, in the first place I knew I should not be able to deal with the correspondence and in the second place it would have been unfair on the Charity Commission because it would look as if the commission itself was inefficient.

It is not known, and nor has it been quantified, what is not done. Time and again people write to say that they have written to the Charity Commission and received no reply, and I think that that will be borne out—the noble Lord, Lord Boyd-Carpenter, brought such a case to my notice only a short while ago. Therefore, I believe it should in some way be possible to find out, perhaps through community councils or local authorities, what is not being done in the country and what is not known about.

I also take up another point which the noble Lord, Lord Allen, spoke about. I refer to the very excellent report by the Natonal Council of Voluntary Organisations, the chairman of which was Mr. Harry Kidd, on malpractices in fund raising for charity. There are many recommendations for legislation in this report. The malpractices in this country are quite frightening, and they do not come to light.

My arm is in plaster. If I asked every one of your Lordships to sign the plaster, auctioned it and made a lot of money which I said I would give to charity but kept 80 per cent. of the proceeds and gave only 20 per cent. to charity, nobody would question me. One must read the report, because I suggest that that is what is going on in this country. Very many people who are contributing to charity do not realise the malpractices that go on.

It is strange to me that if there is a little trouble in the City there is a great deal of debate in your Lordships' House and in the other place; if there is a fault with local government, it is taken up; if there is a difficulty in a government department, the matter is looked into. Why is it not loked into when there is malpractice in the case of voluntary organisations, particularly when the money is given voluntarily, for specific purposes? It seems wrong that we should throw away and abuse the generosity of the many people who give so much money.

On the subject of the Charities Act 1985 to which the noble Lord, Lord Allen, referred, the Charity Commission has published and distributed 7,000 copies of a booklet. Either because there is not the staff in the Charity Commission or perhaps—I am bound to say this—because the Act was not right, although there was movement when it was first passed, this has ceased to be. Therefore, with small, parochial charities a good deal of money is being wasted and lost.

As to past history, as the noble Lord, Lord Allen, said, committees have been set up again and again to look into charities and to make recommendations—the Nathan Committee of 1952, the House of Commons Select Committee of 1975, the Goodman Committee of 1970 and a report from the Conservative Political Centre in October 1984. The noble and learned Lord, Lord Hailsham, in 1980 said: The legal concept of charity is not static but moving and changing". I suggest, as has the noble Lord, Lord Allen of Abbeydale, that the Charity Commission has no political mileage in it and, therefore, nothing gets done.

I believe that there should be a charity council. This council should be advisory and consultative. It should consist of two or three Members of the other place and two or three Members of your Lordships' House, perhaps with outside experts. Such a council would therefore be able to monitor, look at and receive requests or complaints about the administration of charity. I believe that until we get some such council to which people can refer, the noble Lord, Lord Allen of Abbeydale, will be introducing yet another debate, and that nothing will have been done.

4.13 p.m.

Lord Houghton of Sowerby

My Lords, I am sure that we are very grateful to the noble Lord, Lord Allen of Abbeydale, for once again introducing this subject for a short debate. Last time the noble Baroness, Lady Faithfull, preceded me in the debate and we were seaparated by a 50-minute interval for Statements to be made in the Chamber. This time we have been delayed by 50 minutes in starting the debate, such are the procedures of your Lordships' House.

It is difficult to avoid agreeing with everybody else in the debate. There is so much common thought and purpose about charities that what we want is for something to happen. There is no sign of serious attention being given by the Government to the numerous problems that arise in regard to charities.

The Government are in a desperate hurry to provide more tax relief to help finance charities. I was criticising last year what I thought then might be the Government's scheme for single gifts to charities to be tax deductible. The scheme that was introduced was less objectionable than that; it did not follow the American model. We all know that deductions under pay-as-you-earn are now for arrangement by employers, which makes it more modest and more widespread than otherwise it might have been.

Even so, more money is being made available to charities this year than before, imposing a fresh drain on the taxation revenue of the public, while not at the same time tackling some of the underlying problems of financial and commercial management of charitable bodies. There is so much money now going into charities and so much public interest involved in support, donations, contributions and tax relief, that it is indefensible that we should continue in this way year after year. After 14 years or so the Goodman Report—the last substantial informal inquiry into charitable law—still stands neglected, and most of it relates to the problems that we discuss from time to time.

It has been said that as a nation we cannot move faster than our institutions will allow. The Government have undoubtedly tackled some of the institutions that have been in need of attention. In general I think that the state is like Gulliver in Lilliput, tied down by unnumerable strands of rope attached to innumerable stakes, all labelled "vested interests", with the charities among them. We cannot get moving because of the antiquity of much of the charity law, the deplorable inadequacy of the resources of the Charity Commission and its lack of sufficient authority and power to investigate and do its job.

It is not a scrutinising body. The Charity Commissioners are like policemen on the beat. They are not plain clothes detectives; they act on information received, some of it from the Inland Revenue and a lot of it from rival charities, which will complain about the activities of their contemporaries. That is from where the Charity Commissioners receive so much of their information. Other charities watch their rivals and complain bitterly to the Charity Commission that the rules are being broken. What a way to run charities, yet so we go on.

I hope that this time we are to have from the Minister something more positive than we have had before. We do not want waffle this time. Can we be told whether the Government are to set about an inquiry into charitable law and practices so that we may have some reassurance and give our minds to the changes that are needed? For example, the accounts of all collecting societies of any size should be subject to the comprehensive audit procedure that now applies to local authorities and other public bodies. There is no audit in the charitable world of value for money, nor are all managers in the charitable world good managers. There are many dedicated people in charitable work who are not all that competent in administration and prudent management. I think that that is most important in the public interest.

I hope that the Charities Aid Foundation can develop its role of assisting charities to get higher standards of administration. I am also concerned about the integrity of appeals made by charities. There is a lot of emotional stimulus at present to arouse the public's conscience and to make people feel guilty so that they part with their money in order to assuage their consciences. We are all subject to that. We are distressed by so much on television about the handicapped, the disabled, the deprived and the poverty stricken, and about abused children, and all the social distress that viewers see day after day and night after night. It is most disturbing to those of us who feel deeply about these matters. Many of us can do little more than give our money to charity; otherwise we cannot sleep at night. The charities benefit from this state of mind. More than many people and many institutions, they have a responsibility for the emotional state of those who give their money.

I am beginning to question the role of the BBC in this connection. The BBC is now becoming a very large fund raiser. Is the BBC now a charity? Is it an arm of the charitable world? Day after day, the Children In Need programme went on until they raised a target figure of millions of pounds for distribution to children's charities. Do we know where all the money goes? Do we know the real need of many children's charities that lies behind the appeal? That kind of thing needs to be the subject of scrutiny and judgment.

My noble friend Lord Allen mentioned the possibility of television advertising for charities. Are we going to have that now? If so, is it not time that we had some advertising standards? From my own experience I know that a distressing advertisement of children in acutely deprived conditions is not a picture of real life but a commercial product. We must be careful about using commercial advertising agencies for charitable purposes. We must be sure that what is being presented to the public is real and not simulated.

I know the difficulty of photographing people who are in dreadful straits and who wonder whether their pictures will appear publicly so that their neighbours or friends will see their plight. I admit that difficulty, but to conjure up and concoct pictures for advertising purposes for charities is not permissible. I believe that there should be rules. Standards of advertising for charity should certainly be considered.

There are so many appeals. We must realise that the public and its money are easily parted. I need not dwell on the fact that we are a generous and responsive people. However, we must be realists and at least understand that at times charities, like other institutions, may succumb to the temptations of a materialistic society and the corruption of money. Charities must keep their hands clean; otherwise they do not deserve the support of the public.

I am not imputing any criticism to any particular charity. I say only that during the short time that I was Chancellor of the Duchy of Lancaster (it is true that this was 20 years ago) and the Minister in the Cabinet responsible for voluntary services, I did not like a great deal that I encountered in the voluntary services movement. I can only hope that a great deal of improvement has been made since then.

In the public interest, we now want the charities, together with the trades unions, the Stock Exchange, insurance services and financial services to go through the mincer and have their affairs more closely examined. I sincerely hope that the Minister will have something more concrete to say. Let us not have an annual debate on charities for no purpose whatever other than to repeat our continuing anxieties, agree with each other and obtain nothing from the Minister which gives us any comfort.

4.24 p.m.

Lord Grimond

My Lords, the House should be particularly grateful to the noble Lord, Lord Allen of Abbeydale, for raising this matter a second time having allowed what is about the right period to elapse between the two Motions. The Government have had nearly a year to consider the many questions and suggestions put to them. No doubt, as the noble Lord, Lord Houghton, hopes they will tell us that something concrete will be done.

The first reason for welcoming the debate is the set of very pertinent questions which, once again, the noble Lord, Lord Allen of Abbeydale, put before us. However, there is now an additional reason for some action; namely, the approach of the general election. A general election leads to an absolute spate of lobbying, a great deal of which comes from charities. The Home Secretary himself expressed some doubt about whether that lobbying always serves a useful purpose.

There is only one point on which I must disagree with the noble Lord, Lord Allen, and that is his suggestion of a probation period for charities. I disagree, not because I think that it would do any harm, but because I am not quite certain that it would cure the trouble. It seems to me that difficulties would arise at the end of the probationary period. The trouble usually is not that the charities deviate from what they say they will do but that there is justifiable doubt about whether what they do should be termed charitable.

I should like to cite the case of the Moonies which was widely canvassed. At the end of any probationary period, the difficulties about the Moonies would still exist. We can take an entirely different form of organisation. For example, I think that most people in this country wholly agree that it would he entirely beneficial to the community—which is one of the purposes of charity—if enormous sums of money were given to the Alliance. Of course there are benighted minorities in the country who would take a different view, and I am afraid that no amount of probation would reconcile the two.

I quite understand and sympathise with the way in which the noble Lord, Lord Allen, shies away from any definition of "charity" but, presumably, somebody has to decide whether or not something is a charity. Although it may not be a matter of legislation, I think we must face the difficulty about defining what is "a charity" and possibly give some guidance upon it. As the noble Lord has rightly said, charities are now very big business—is it £4 billion a year?—and are being formed at the rate of 4,000 a year. I am afraid that sooner or later we shall have to grasp the nettle.

It has often been said that when a charity is exempted from taxation it means that it receives a compulsory gift, so to speak, from other taxpayers. It may not be a very large gift but by the amount that the charity is exempted, other taxes, presumably, have to be increased. In passing, I should say that I wholly admire the voluntary organisations. But I sometimes wonder whether the word "voluntary" in the case of all of them is really justified. Many receive very large subventions from the Government. And, again, those are compulsory payments by the taxpayer.

The next point I want to make—I made it before but this will be, I hope, my only repetition—is that it is not essential to be a charity to carry out beneficial purposes. The organisation of which, for many years, I was a director—the Joseph Rowntree Social Services Trust—is not a charity. It paid its taxes but expended its money on purposes which the founder thought beneficial and social. Sometimes, it is assumed that because a particular, excellent objective is not charitable, it is difficult to support.

The crucial question that I want to put to the Government concerns Scotland. During the previous debate, it was pointed out that the Charity Commission does not operate in Scotland. As I understand it, the decision is left to the Inland Revenue. Presumably, by now, the Government have looked into whether charitable affairs are better dealt with in England or in Scotland. If, in fact, Scotland manages perfectly well without the Charity Commission, it may be that, with some additional legislation, the whole matter can be left to the Inland Revenue.

If on the other hand the Inland Revenue relies upon the Charity Commission, which I suspect is what it does—the noble Lord, Lord Allen, is nodding his head—I would strongly support (and this is my principal reason for speaking again) the suggestions may by the noble Lord, Lord Allen, and the noble Baroness, Lady Faithful!, in the previous debate for, as I understand it, an advisory committee to assist the commissioners. That seems to be simple and inexpensive, and, as I understand, can be done quickly. We may have to have a more general inquiry and new legislation. The proposals of the noble Baroness, Lady Faithfull, which she has outlined so cogently and which I need not repeat, would be simple and I should have thought helpful to the commissioners.

I have one piece of evidence to support that. The Joseph Rowntree Social Service Trust started paying money some years ago to the political parties to enable it to hire research assistants. This may now have gone too far. It was a departure which at the time seemed useful. We received a great deal of helpful advice from the noble Lord, Lord Glenamara, who at that time was the Labour Chief Whip. It is useful for charities, which may be operating on the verges of charitable work, to have advice from people experienced in politics and, as the noble Baroness said, from people possibly outside politics altogether. I hope that the Government have given serious consideration to the matter during the past 11 months.

The noble Baroness was not the only speaker to make useful suggestions. The noble Baroness, Lady Vickers, and the noble Lord, Lord Mancroft, also did so and received favourable notices from the Government. Has anything been done about them? That is the crux of the matter.

It seems impossible that the Charity Commission could supervise the accounts of all charities. It should possibly confine its attention to the accounts of the larger charities. When an amount of money of this size is at stake, it is highly desirable that the accounts should be available to the public if they are wanted and that if necessary those of the larger charities should be subject to periodical examination by the commissioners.

I hope that the debate does not cover the same ground as it did 11 months ago but that we shall hear from the Government what progress they have made and what concrete steps they intend to take.

4.32 p.m.

The Lord Bishop of Leicester

My Lords, the theory of charity and the action of the law of charity is of course important in my life in many ways. I should like to thank the noble Lord, Lord Allen, for providing me with this opportunity to speak on certain aspects which are particularly in the mind of a bishop. I should like also to thank the noble Lord, Lord Houghton of Sowerby, for what he said about spurious spirituality in charity.

What I wish to say first about the increase in charitable activity, which has been remarked on by several noble Lords, is that it is a matter for profound gratitude that our country is so engaged in charitable activity. But there is a spurious spirituality which is beginning to worry many of those whose spirituality can be labelled easily and clearly as religious. Those people such as the university teacher who recently said to me, "I am not religious at all but I do have a spirituality", are as concerned as we are about this spuriousness.

I wish to draw attention to some of the doubts about charitable activities which the noble Lord, Lord Allen, mentioned and which verge on the question which he, as I, pose and which the noble and learned Lord may later investigate and refer to. My particular concern stems from my responsibilities as chairman of the Advisory Council on Relations between Bishops and Religious Communities within the Church of England. A number of our communities are contemplative and do not carry out any activity that in a purely secular sense can be seen to be charitable. They are supported, often modestly, by donors whose intention in supporting them is precisely the same as when they support the more obviously publicly well-doing charity. We find that they cannot be regarded as charities under the charity law.

To put it simply, the existing law does not recognise that prayer is charitable. On that matter, the lawyer and the theologian will find themselves unable to agree. The basis of that inability to agree may be because two different definitions of the word "charitable" are being used.

The established Church sees prayer as a charitable activity and so, I believe, do the other religions which I emphasise are of increasing importance in the spirituality of our land. With regard to contemplative communities being regarded as charities, the Charity Commissioners normally refer to a decision given by the Law Lords of this House in the case of Gilmour and Coats. It is an interesting case in which a Carmelite convent was left a sum of money on condition that the convent was engaged in charitable work. If it was found that the convent was not so engaged, the money was to go to the Roman Catholic Converts Aid Society.

The judgment finally declared that the money had to go to the society because the Carmelite sisters were not doing anything that would give public benefit as a charitable work. To put it simply, as one commentator did, the benefits to the public of intercessory prayer were not susceptible of legal proof. One is perfectly willing to agree to that. One would have to go on to say that nor are the benefits of many counselling charities and a good many other activities which now go under the name of charitable.

Curiously, the advance of the Christian religion has been allowed as grounds for charitable work. Apparently prayer is not regarded as part of the work for the advancement of the Christian religion, which to Christians is an entirely unacceptable point of view.

Beside that must be set the question of how we are to cope with non-Christian charitable organisations which are essentially contemplative and do their work through prayer. It appears that at present the law cannot cope with that problem. I suggest that it is important that it does. It is especially important for some of the great deeply spiritual religions which are now becoming so much a part of the life of our cities if not yet of the whole of our country.

I hope the question of how the charitable law refers to purely religious activities will be reconsidered. I know that that immediately opens up in the minds of many the problem of the sects. I submit that that is a different question. It is connected with what has already been referred to in relation to how charities are administered and the checking of what is done with the money. I ask that the spiritual basis of charity should be given due weight in further consideration of the improvements that are so necessary in every part of our law on charity.

Baroness Lane-Fox

My Lords, perhaps I may add, albeit in a rather hoarse voice, my thanks and congratulations to the noble Lord, Lord Allen of Abbeydale, on his persistence in following through most contructively a deep interest in the future of charities and the law. As one Member of your Lordships' House who served on the Select Committee on Small Charities, I retain a wish to see conditions improve both for the commission and for its clients.

The fact that the commission is expected to deal with the innermost workings of approximately 150,000 charities, growing I am told at the rate of 4,000 per annum, with a staff of 330 makes its task surely almost superhuman. It is small wonder that those of us who appeal to the commission for advice for our charity grow impatient when its answers take a long time to arrive. We all know that delay can cost money and opportunity but we should be finding a way not to impose this extra handicap on the spontaneous endeavours of voluntary groups of people.

The voluntary groups are important if only to counter the recurrent national and personal tragedies and cases of need that crop up. The wish to help is invaluable but it is a fickle spirit and if snubbed or delayed it is liable to vanish. This is a very lively time in the field of charity. However, the commission appears to be caught. At a time of striving by the charitable world to meet the requirements of today's society, the commission's establishment has virtually stood still.

What can be done to improve the scene? Obviously everything necessary should be done, including the installation of the most modern techniques. I hardly like to mention computers since I would not know how to work one. However, to do less than that is to undervalue the best of the voluntary effort that is so generously offered.

The main thrust of my remarks is to ask that the money which is subscribed by the public with such heart-warming generosity—and so evident in recent appeals—should be used to the best possible advantage. This means that advice has to be quickly obtainable from the commission together with an assurance that care is taken to prevent misuse. There are many and diverse means of raising money as was illustrated by my noble friend Lady Faithfull. The new and important provisions of the Finance Act will further complicate the work of the Charity Commissioners, although the Inland Revenue will also be closely involved. New opportunities could be of great help to worthwhile charities and should help them to achieve their objectives more quickly. That prospect cheers the hearts of those of us who are deeply involved in charities, but we want to see proper safeguards.

It is vital at this stage that the staff of the Charity Commissioners should be empowered to deal promptly with present-day requirements. It is for that reason that I strongly support the Motion in the name of the noble Lord, Lord Allen of Abbeydale.

4.45 p.m.

The Earl of Longford

My Lords, as always, it is a pleasure to follow the noble Baroness, Lady Lane-Fox, who embodies in the eyes of many of us the selfless longing to help one's fellow men and women, which is the essence of what we are talking about today. Before coming to my remarks, I should like to say how much I support the intentions of the right reverend Prelate. I only hope that somehow or other his purpose of putting prayer on a footing with good works will be achieved.

We are told in the Gospels—at any rate in the translation available to me—that Mary was supposed to have chosen the better part when she listened to the word of the Lord. Although nothing was said against Martha, Mary would seem to rank on at least the same footing—perhaps a higher footing—as charitable. I can see that it will be difficult, but as has been pointed out, the ordinary charities which counsel in so many forms, cannot really produce results. Therefore I do not see why a new approach should not be made to the matter.

However, it cannot be left to the Government unaided. I think that the right reverend Prelate, with all his spiritual resources—apart from his prayers—and with all his influence in the religious world should be backed up by us all. No one has asked me to speak for the Roman Catholics, but I cannot doubt that they are on his side here even if they might lose something which might otherwise go to the converts' aid.

I hesitated to take part in this debate, although I would always have a prejudice in favour of supporting a Motion put forward by the noble Lord, Lord Allen of Abbeydale. I am not one of those who are perhaps a little nervous about the sums of money going to charity. I should like to see much more go to charity. Therefore, I do not want anything to be said which would discourage charity. I yield to no one in my admiration for the noble Lord, Lord Houghton. He gave a vivid account of the way in which his conscience worked and of the sleepless nights when the programmes about helpless children were shown on television. If I may say so, with great respect, I think that that is good for him. I think that the more sleepless nights leading to a wonderful cheque in the morning, the better. I do not say that that is true of him alone. I am sure he is more generous than most of us.

I do not deplore the capacity to inspire guilt which seems to be the modern technique of the charity-mongers. Let them develop that technique and let us all feel more guilty, have more sleepless nights and give much more to charity!

Turning to the general topic, I should like to concentrate on two points. I hope that I shall have the sympathy of the noble Lord, Lord Allen, and, if I am lucky, the sympathy of the House and the Government. The first topic is the position of foreign organisations setting up charities in the United Kingdom. If time permits, I should like to say a word about the graduated registration fee on charities. First, I should like to draw the attention of the House to the question of foreign charities. I do not pretend to be a specialist on the matter. It has recently come to my attention through the energy and imagination of the dynamic leader of the Matthew Trust, Mr. Peter Thompson, who has raised these matters with Government and the noble Lord, Lord Allen. I believe that the noble Lord, Lord Allen, was, to say the least, sympathetic, but there was not room for this argument in his speech. He is happy, I believe, that I should raise it.

Among well-informed people there seems to be widespread concern about foreign organisations setting up charities in the United Kingdom. There is special anxiety about foreign organisations which set up charities to raise money here and then take the money out of the country. It seems impossible to trace most of that money. I do not say that there are many abuses, but there is no doubt that there are some. To cut a long story short, I think that this whole matter needs to be looked into and to be brought under control. If required, I could give the Minister after the debate various examples of alleged abuses, but he may already have them. However, in the time available I believe that it would be wrong for me to begin mentioning names of organisations which are suspect. I think that it would be unfair to them if I were to handle the matter so rapidly.

The Chancellor of the Exchequer seems to be aware of this kind of abuse. In June 1986 he brought forward various proposals which subsequently became law, including the following: A charity's tax relief will be subject to restriction where it makes payments to overseas bodies without taking reasonable steps to ensure that they are used for charitable purposes". That seems to me to be a step in the right direction, but surely it does not go far enough. It may well be that the Chancellor will go further later on. I hope that there will be wide support for a recommendation of the kind that I am about to put forward, although I am not saying that the wording is perfect: namely, that trustees of charities in the United Kingdom, when charities have a foreign authority, should be comprised of a majority of British subjects to keep the control of the affairs of the charity within the United Kingdom. As I have said, no doubt the wording could be improved or supplemental and other steps taken that may be necessary.

I have given the Minister some notice of the matter, although not a great deal. However, I hope that he will at least agree that—to quote the famous words once used by the then Prince of Wales—"Something must be done".

Before concluding I should like to indicate another and in a sense more far-reaching proposal. I am sure noble Lords here do not question the ability of the Charity Commissioners. We all take their integrity for granted. As was stated by the noble Baroness, Lady Lane-Fox, and others, every time a new duty is imposed upon them it becomes more obvious that their resources are totally unequal to the task of coping with 150,000 charities.

I venture to suggest that one solution would be to impose a small annual registration fee. I would certainly exempt small charities. I admit I have a slight prejudice in favour of small charities, having started three such charities myself. I have always been very well treated by the Charity Commissioners. A graduated fee would enable the Charity Commissioners to acquire the kind of resources which are required if they are to continue to do the job that they are already striving so well to do.

4.51 p.m.

Lord Airedale

My Lords, I have the honour to be another member of that Select Committee on two Private Members' Bills which sat under the very able chairmanship of the noble and learned Lord, Lord Brightman. Our deliberations led to the introduction of the 1985 Bill which became the Charities Act of that year. We took evidence from the Charity Commissioners, and it is quite clear that one thing that made a deep impression upon our minds was the difficulties of the commissioners as expressed to us in evidence.

In their latest report of 1985, the Charity Commissioners have repeated for all the world to read the difficulties under which they labour. Paragraph 2 of their introduction states: The Commission is affected by cash limits and restraints—indeed reductions—in staff numbers, and by our inability to do as much as we should like or as speedily as we should wish. Our work increases, but staff decreases. A recent Debate in the House of Lords (5th March 1986) highlighted the concern about our resources and the undue delay in dealing with work; the incomplete and out-of-date information held in the Central Register of Charities; the lack of a computerised register; and our insufficient supervision of charities. We recognise and much regret these deficiencies. We hope that at least we may be allowed to keep the staff we have; indeed we should wish for a modest increase. Paragraph 10 states: We are constrained by our limited resources from scrutinising accounts of all charities; the degree to which trustees as a whole efficiently, and effectively manage their trust property is not known to us. This raises the question: what is the use of Parliament setting up an official body and entrusting it with tasks to undertake if the organisation is then to be denied the financial resources to enable it to undertake the tasks imposed upon it?

Our Committee were haunted from time to time by the fear that at some time some scandal would arise concerning funds of some large charity being misapplied for wrongful purposes and articles appearing in newspapers asking what the Charity Commissioners were doing about this and why they were not alert to prevent this scandal arising.

How unfair that criticism might have been. When one considers the amount of work undertaken by charities which would otherwise have to be undertaken by the taxpayer, and even allowing for the fact that some charities receive grants from public funds, one sees that the taxpayer gets an enormous benefit from this arrangement. He gets a tremendous bargain out of it. One thinks of charities such as the Salvation Army, the lifeboat service, charities providing amenities for patients in hospital.

There are 154,000 charities, as has been mentioned already. Let the Treasury go through those 154,000 cases and select those charities that are doing work which would otherwise fall upon the taxpayer to do. Let them add up the total figure and set beside it the figure that would be required to enable the Charity Commissioners properly to fulfil their functions with adequate financial resources. I believe that if those two figures were placed side by side we should all be ashamed at the financial stringency being imposed upon the Charity Commissioners. I very much hope that we shall not go on reading in their annual reports that the Charity Commissioners are not receiving the financial support they deserve.

4.57 p.m.

Lord Denning

My Lords, I thank my noble friend Lord Allen of Abbeydale, and let me first say that he has made a strong case for reviewing the charity law and the role of the Charity Commission. My noble friend Lord Airedale has made a strong case for saying that at the moment the Charity Commissioners cannot do their work properly, or at all, because they do not have sufficient staff or other resources to fulfil all the duties which Parliament has imposed upon them.

I propose this evening to speak about one particular group of charities. One of the main headings that charities come under is that for the advancement of religion. That has been carried so far as to enable religious cults to be set up in England, many coming from the United States. Such charities collect money which is amassed by the founders, who have great wealth. They also cause much distress to families by their doctrines.

I should like to give two illustrations. Some years ago the Daily Mail published articles exposing the activities of the Unification Church, called the Moonies. The Daily Mail put forward many young people to show the evil practices that were going on. The church sued the paper for libel. After many days a jury found the allegations were justified and added the comment that there should be an investigation into the tax-free exemption of this Unification Church.

The rest of the story is simple. The Charity Commissioners felt that according to the law the Unification Church was still an advancement of religion. Pressure was such that the Attorney-General brought an action in the courts to test the position to see whether it is a charity. The pleadings are not closed yet. There will be a long trial in the Chancery Division, then the Court of Appeal, then the House of Lords. The best estimate I can get is that it will be five years before it is decided whether or not the Moonies, the Unification Church, are a charity.

Meanwhile there has been a most important case in the High Court of Australia only two years ago about the Church of Scientology. I am afraid that in the courts judges, including me, have criticised those scientologists. But now in the High Court of Australia all five judges of the highest court in their land have held that it is a religious institution and exempt from taxes in Australia.

It was described this way by the Chief Justice: Scientology is said to have been discovered, developed and organised by Mr. Hubbard alone. The Library is large and the meaning of much of it is obscure". No one has been able properly to define religion, but the Chief Justice said: The criteria of religion are two-fold: first, belief in a supernatural being, thing or principle, and second the acceptance of canons of conduct in order to give effect to that belief". These words in that test are so wide that they not only cover the scientologists but, as I read them, all the religious cults now operating in this country and in the United States.

Your Lordships should know what happens. They choose a leader. It may be Mr. Hubbard for the scientologists; the Reverend Moon for the Unification Church; it may be Mr. Armstrong for the Worldwide Church of God; or it may be Mr. Taylor for the Exclusive Brethren. They have a leader. That leader preaches its doctrine. He gets adherents to go out and collect money for his work. The money goes into his coffers and those of his trustees. There is no tax on it at all. It is not accountable at all. There are no shareholders to complain as there would be in a company. There are no named beneficiaries to complain, as there would be in a charity trust or ordinary trust. There is no one to complain. Therefore these religious cults are not accountable before the law at all.

That is how they are enabled to amass these great fortunes; and I am afraid also—and I have had masses of letters addressed to me—cause great distress in families by separating children from parents and telling children as part of the doctrine that they must have nothing more to do with their parents. I have had masses of letters about that.

I do not know what the House of Lords will say if the Moonies case ever gets here. They may feel that the arguments are so strong that they have to go by them; that these will all be charitable trusts under the head of the advancement of religion.

There needs to be at once and imperatively a committee to go into this question of religious cults; to go into their activities; to go into their moneys and how they collect them. Could not the Inland Revenue be authorised no longer to exempt them from tax under whatever cloak they are put, whether individually or not? At all events could it not make them liable to tax on what they get and also make them accountable in the same way as proper charities?

If the Charity Commission had the staff it could make inquiries. If it had the staff it could have the accounts laid before it and audited. But at the moment there is not the staff to make inquries into them and their integrity. There is not the staff to do all the accounting. That is why I suggest that the Charity Commissioners' staff should be strengthened in many ways; enough for them to do their most important duties. Such a staff would, I hope, be able to deal with all the problems of religious cults. Much is wrong at the moment, and much needs doing.

5.5 p.m.

Baroness Macleod of Borve

My Lords, as usual it is a great privilege for me to follow the noble and learned Lord, Lord Denning. I happen to know what he is talking about because I have had the privilege of sitting on a committee about the cults for some years. He has gone into this problem in great depth, and I hope your Lordships have learnt a lot about the problems of these cults from him this afternoon.

The noble Lord, Lord Allen of Abbeydale, has brought this problem to us for the second time. It is not the second time from him, but he came to this House on 5th March 1986 when there was a similar debate which I read this morning with interest. Much of what was said then is pertinent now. So far as the figures for the Charity Commission are concerned I am afraid that they have not altered at all.

I hope that the Minister, after all that has been said by noble Lords in the Chamber this afternoon, will take note of the fact that, because of the enormous amount of work that is done through the various charities by people of good will in this country, they need adequate people on hand to help. That of course would be the Charity Commissioners.

We have heard, and it is true, that there are 330 people helping the Charity Commissioners. But under the Act five Charity Commissioners are allowed, and there are only three in post. Despite the fact that it will take more money, I hope that the numbers will be made up. From my experience it is vital that the charities should be encouraged, and by no means are they always encouraged when they are told that consideration of a new charity by the Charity Commissioners may well take up to two years.

That was a figure I heard a year ago. I was delighted to hear this morning that it is likely that a new charity will be considered well within that time now, and probably in about six weeks.

Even six weeks seems a long time to people who realise that a new charity is necessary. Six weeks is a long time also for people to go off the boil. They can get interested in starting a new charity, but they then have to go to the Charity Commissioners, and they may be told that it will take some time for their application to be put on the table of the commissioners, let alone for a decision to be made. Unfortunately sometimes those charities may not get under way. As everybody will know, it is vital for a charity to have a charity number; in my experience you cannot ask for money for a charity unless you have charitable status and therefore a number. That is why it is so important that the number of people helping us with our inquiries—perhaps to coin a phrase—should be sufficient to assist in good time.

I am privileged occasionally to lead and certainly to help several charities—the best, in my view. I know I am treading on other people's corns and I am sorry. I must tell your Lordships this because I am so proud of the way people in this country look after other people who are not so fortunate.

I shall quickly tell the House about a charity that some of your Lordships will know about, that my late husband and I started in 1967 and which, round our dining room table, we called Crisis at Christmas. We look after between 500 and 1,000 people for six days and six nights, sometimes in a disused warehouse, sometimes in an unused church. All sorts of properties are made available to us. For six days and six nights we look after people who have no roof, no food, no entertainment, no friends and nowhere to go at Christmas time.

That means, as your Lordships will all realise, three meals a day. It does not take much in the way of multiplication to realise that at least 1,800 meals are served, all by voluntary help, people of good will. This last Christmas we had between 500 and 700 people all day and all night on mattresses and blankets and they had adequate food.

What I am proud of most is that 2,066 people offered, indeed queued up, to give us their help to look after those people who had no shelter at Christmas time. Those 2,066 people offered to give up part of their own Christmases. I am very proud to be head of that charity. I had to tell the House about it because if people can do that for other people in distress there is not much wrong with our country at this time.

I also subscribe to the idea of my noble friend Lady Faithfull that there should be a charity council made up of people outside the Charity Commission who can perhaps oversee what is happening. Apart from reading the audited accounts from each of the charities, I suggest that there should be laid down a percentage above which no charity should be able to go for paid administration. Crisis at Christmas works with two paid staff only.

Another charity of which I was the head for 12 years, the Leagues of Hospital Friends, also has only two paid staff, but half a million people work for that charity to their own benefit because it enabled them to work. It should be laid down that only a very reasonable percentage should be allowed for paid administrators. There are many people who will help voluntarily. There are plenty of people who unfortunately are being made redundant but who want jobs to do. They will not do them unless one specifically asks them, but there is plenty of good will among people in this country.

As I understand from the Secretary of State, Department of Health and Social Security, when he was in America, very soon we shall run up against being asked to provide hospices for those who have AIDS. This again will fall on those who are of charitable mind, who are generous of spirit and who want to help those who have real problems. The Leagues of Hospital Friends, I am certain, will help, but there will be a call, I hope quite a demand, for people to come forward to help these new hospices which I understand we shall be asked to set up. We in the Leagues of Hospital Friends already help two cancer hospices. Not only money will be required but people of good will who will work. I want to emphasise that charity is not just the giving of money; it is also people willing to work, to visit and to do all sorts of things other than dipping in their pockets and saying, "Ah well, I have done my bit".

I should like to emphasise that the millions of pounds donated to charities should be, and should also be seen to be, put in the right direction for each charity. I am certain that after today's debate people will be awakened to where the money goes. I hope that as a result of this debate my noble friend the Minister will be able to tell us that more people will be drafted into the Charity Commission. They are people whom I know have a great workload on their desks, but we depend on them. I hope they know it.

5.16 p.m.

Lord Nathan

My Lords, it is a humbling experience to follow the moving speech of the noble Baroness, Lady Macleod. I am grateful to the noble Lord, Lord Allen, for the opportunity of participating in this debate; I did not participate in the debate in March last year. I noted that many of those who spoke today did, and I read with great interest that debate. I intend only briefly to touch on one or two of the matters mentioned then and in this debate and to concentrate on rather different fields.

Reference has been made to the Goodman Report. I was vice-chairman of that committee. I am president of INTERPHIL (the International Standing Conference on Philanthropy) which was heavily involved in the development of the convention to which I shall refer later. I should declare that I am a trustee and an officer of various charities, but I have no financial interest whatever to declare.

The crucial element for charities is the assurance that the money will be used for the purpose intended. This is vital for those who give money to charities; it is vital for the public generally because of the tax reclaims that charities enjoy; and it is vital for the general reputation of charities. Without a good reputation attaching to charities as a whole, and the good reputation of individual charities, support from the public will not be available.

In their report for 1985—this has been mentioned before—the Charity Commissioners refer to the reduction in their resources in money and manpower. They refer to the limited supervision they can exercise. If government really cannot provide the funds, I suggest that charities must do so—this suggestion has been made before by the noble Earl, Lord Longford, tonight—perhaps by some form of registration fee or annual charge. In the Goodman Report we came out against this, but something must be done to fund charity supervision adequately.

When one considers that charity administration is in the hands of just three commissioners, I for one am filled with admiration at the job they do. Nevertheless I think there is a strong case for forming a charity board or charity council, such as we recommended in our report, whose members would be drawn from a wide circle of interests and expertise to whom the Charity Commissioners could refer if desired and which could provide advice on its own initiative to the commissioners. It could also act as a standing commission on charities to advise the Secretary of State either at his request or on its own initiative.

One of the new elements which I believe should fall for consideration by the Charity Commissioners (or, as I suggest, by the charity council or board) is the impact of our closer association with Europe—the European Community, as well as the larger group constituting the Council of Europe. Charitable activity, or, if you like to be less technical, non-profit-making organisations working for the good of the community, should not be confined within this country, when practically every other activity is becoming increasingly integrated in Europe.

A first step has been the constitution of the European Foundation by agreement among the 10 members of the Community, which has been ratified by nine of them, including the United Kingdom, and there seems reason to believe that the tenth will shortly ratify. Its objects are broadly cultural within the context of the Community and it would qualify as a charity if it were constituted in England. It has its seat in Paris and is presided over by Ambassador Jorgensens of France, who has been devoted to that cause. I very much hope that his successor will come from this country. I believe this would be a popular move because of the high regard in which the United Kingdom tradition of voluntary giving is held. The foundation is qualified to receive private donations which may be given under convenant, and it has been agreed that where convenants are made the foundation will be able to recover tax from the United Kingdom Inland Revenue department, just as if it were an English charity.

This is a new departure and it is one which it seems to me should be monitored by a body such as a charity board. In particular, since private donations from this country may be made to that foundation, the monitoring of the process of fund raising, if that is carried out, is one of the functions I would envisage in this context.

Then there is the new convention to which I referred and which has long been under consideration on the mutual recognition of non-governmental organisations, many of which are analogous to charities in this country. It comes under the aegis of the Council of Europe and has been signed by Portugal, Switzerland, Austria, Belgium, Greece and the United Kingdom. I understand that there are good prospects of signature by France, Germany, Luxembourg and Spain. Ratification by three signatories will bring it into effect. The United Kingdom, Switzerland and Belgium are particularly important bases for non-governmental organisations, and therefore signature by these three countries is particularly significant.

The convention represents a substantial step forward in international co-operation in a field outside commerce. The promotion of a convention of this kind seems to me to be the sort of activity in which a charity council should be involved. Of course matters would be relatively simple if the law governing voluntary bodies in different countries was more or less similar, but it is not.

A more far-reaching solution to the problem to which I have referred would be to unify or harmonise the laws of different countries in this field. Such was the ambitious purpose of the initiative launched last autumn in the Committee of Legal Affairs of the European Parliament; but it did not receive sufficient support to make progress. I believe that we should progress in the international field slowly and by steps, and that these very ambitious projects do more harm than good. A lot is going on in one form or another in Europe.

The United Kingdom tradition of voluntary giving and of voluntary work for causes beneficial to the community has always been an inspiring example to other nations across the Channel and far beyond. It is important that the responsible department—the Charity Commission and, as I believe, the charity board or council to be formed—should be so organised as to play a full part in fostering the voluntary sector in England and overseas, and particularly in Europe. I very much hope that consideration of these matters will fall within the scope of any study made in accordance with the Motion put forward by the noble Lord, Lord Allen.

5.24 p.m.

Lord Mishcon

My Lords, in thanking, as we all have done, the noble Lord, Lord Allen of Abbeydale, for yet another charitable act, if I may say so, in raising the whole question of charities, perhaps it is pertinent in a winding-up speech from these Benches on a subject in which there is no party dispute at all just to remind ourselves what we are dealing with when we talk about charities. Our law has deep roots. None is deeper than the definitions of charity, which date back to the reign of Elizabeth I. In a very learned judgment of a very learned Law Lord, Lord Macnaghten, we have set out four heads: relief of poverty; advancement of religion; advancement of education; and matters which are for the general benefit of the community.

Our first anxiety is always in law to be as precise as possible, but there are some matters where precision is not only impossible but undesirable. We have built up by precedents in our law—and for the benefit of the Charity Commissioners who follow that law—a whole host of cases over a long period of time. Your Lordships may feel that the law stood still and did not take account when these decisions were made by our judges of changing social conditions. If I may say so as a humble lawyer who has tried to study that aspect of the law, this is not so. We have moved in various directions. Some may think that we have not moved fast enough. Others, like the noble and learned, Lord, Lord Denning, may think that in certain directions, and until the law is altered in some way, we have not moved at all: that is, in the admission of the sects to which he referred.

Therefore this is the aspect we are considerng when we look at how it is all working. Your Lordships may feel that definitions of charity beyond the heads that we have and beyond the decisions that have been made may create more difficulties than they will solve. But there are difficulties in this sphere and nobody could better the words of the noble Lord, Lord Glenarthur, who was the worthy predecessor of a very worthy Minister who will be winding up this debate. He said, in the oft-quoted debate of 5th March 1986 (at col. 220 of the Official Report): 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 charity world". He was right, and your Lordships have been right. In this debate again today a wealth of experience and wisdom has been expressed.

All is not well, as is apparent from that debate and as was apparent from the debate which was also initiated by the noble Lord, Lord Allen of Abbeydale, in March 1986. Delays have been spoken of as one of the factors which operate to the disadvantage of charities applying for registration and for guidance. I must say that when we talk about delays in registration it is not just the Charity Commissioners who take time. One must in justice tell your Lordships that on every application they refer the matter to the Inland Revenue, and it has been my experience that the Inland Revenue is as guilty of delays in this matter as are the Charity Commissioners. It is a fact without any doubt that delays are causing hardship.

Charities, as the noble Baroness, Lady Macleod, reminded us, cannot tell contributors that they have the benefit of contributing to a recognised charity unless the charity is registered; and of course there are then delays in getting in funds. There are hardships caused by failures to advise with promptitude, and trustees throughout the land—little people and big people who have no great experience very often of how to act as a trustee or how the law operates and who want guidance from the Charity Commissioners—very often take a long time to get advice and guidance.

One of the few occasions on which I ever had a ripple of laughter in your Lordships' House was in the early days of the service of the Minister who is to reply to this debate. A Question was put down on delays by the Charity Commissioners. He rose—I think it was almost his first day in his office—to answer the Question. I ventured in a supplementary question to say to him that I hoped that his tenure of office would be as long as it takes to get a reply from the Charity Commissioners.

It is all very well to complain about delays; and, as has been said in this debate, and said very wisely, very properly and very accurately, and as was quoted by the noble Lord from the Alliance Benches, the commissioners themselves have spoken in moderate but pitiful words about the hope that their numbers will not be further decreased and about how difficult, if not impossible, it is for them to cope with their work on their present staffing.

It is extremely easy, especially from Opposition Benches—as the noble Earl, Lord Caithness, will realise when he sits on an Opposition Bench—to say to any government "Spend more money. It is advantageous to the nation". If I may be crude, there are not many votes in increasing the staff of the Charity Commission, and political parties, whether they should or whether they should not, have the habit of acting politically.

I was so pleased when I heard not only the noble Earl, Lord Longford, but also the noble Lord, Lord Nathan, come out with a practical suggestion on which I prided myself when I was thinking about this speech, and now I have to give it not even second-hand but third-hand to your Lordships. It is the practical suggestion which I take from some figures which were given in that very debate on 5th March 1986 (at col. 220 of the Official Report) by the noble Lord, Lord Glenarthur. He was dealing with estimates of the total income of the charities sector and he said: 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". If the Government continue to give the amount that they are giving now—and your Lordships will find that amount in the report of the Charity Commissioners for the year 1985—which is £5¼ million a year for the running of the whole of the Charity Commission, of which nearly £5 million is taken up by wages, subject only to an inflationary increase, and if there were added to that some sort of annual charge or annual licence fee only chargeable, if you like, at the rate of ½ per cent. on the income of charities where that income exceeds £100,000, the question of delay would, in my humble judgment, go out of the window. I ask that this suggestion be very definitely considered.

Then what would the Charity Commissioners' department look like? It is all very well—and nobody listens with greater attention to the noble Baroness, Lady Faithfull, than I do—to suggest, as others have done, an outside council consisting of those who have some expertise. It is a suggestion that is worth considering and I admit that at once. But when you start setting up these bodies, which operate outside the main body that is supposed to be administering the charities, you walk into confusion and duplication. Very often the various people concerned do not know whether they are supposed to be doing something or somebody else is supposed to be doing something; possibly they are duplicating their work or possibly the decision ought to be made by the other body and not by them. Why should the Charity Commissioners themselves not be built up to do all these various things?

I now move to the next item of complaint—not enough supervision and abuses. Both those things are true. That emerged from this debate and it emerged from the last debate. Why should there not be departments in a new Charity Commission of such importance as the noble Lord, Lord Glenarthur, described on the last occasion in our national life? Why should there not be a complaints department, why should there not be an accounts department, why should there not be a registration department and why should there not be an advisory department? Why should there not be a commissioner in charge of each one of those departments, with a chief commissioner in charge of the lot? That would mean of course increasing the commissioners to five, as against three as at present, which again I think was a suggestion made by one of the noble Lords who participated in this debate. And, of course, why should there not be speedy computerisation?

I turn quickly to abuse. There is abuse. I know that the noble Lord, Lord Houghton of Sowerby, will forgive me if I say that, far from criticising the BBC, I admire the work it does in collecting moneys for very deserving charities, and I think it does it splendidly. As somebody else said, I do not think that it has to operate very much on somebody like the noble Lord, Lord Houghton of Sowerby, to make him sympathetic. It has a very much more difficult job with other people, but it manages and I am glad that it does.

But the point I make is that there are goodness knows how many charities paying out high salaries, paying out commissions and paying agencies. It is not an agreeable part of our national life that that should be so and it is not fair to the public that it should be so. They give their hard earned money in many cases—sometimes literally the widow's mite—to these causes, and it hurts your Lordships and it hurts me that a great portion very often of that widow's mite goes in so-called administration expenses.

Why should it not be law that in any appeal that is made in writing by any charity in our land—and, indeed, it may have to be any foreign charity appealing for help in our land if it wishes to do it in our land—it should have to state the percentage of its annual income spent last year in administration expenses? And the term "administration expenses" should be very tightly defined in any Act of Parliament or regulation made under it.

One thinks in terms not of repeating the debate that we had last March, not of coming out with truisms, arguments and statements that have been uttered in your Lordships' House on this vital national subject, where we deserve, as the noble Baroness said, a lot of praise for the way in which we react by services as well as by money in regard to charity. Practical suggestions have been made. They are thrown at the Minister. We all know that he does not have the right at this moment, short of consultation, to say "This idea is accepted. Thank you so much for giving it to me". What we do ask of the Minister is that he will, in truly sincere terms, tell us that these ideas, abuses, wrongs, delays and some of the points put forward to get over them will he duly considered, not in the customary ministerial use of that term but rather actively considered with a report back to this House at an early date.

5.40 p.m.

The Earl of Caithness

My Lords, I should like to add my gratitude to the noble Lord, Lord Allen of Abbeydale, for once again giving us an opportunity to debate charities. I know these are matters which are close to your Lordships' hearts and it is good of him to give the House the benefit of the wide experience which he brings to these matters. I am also grateful for the very wide range of experience and benefit which other Members of your Lordships' House have been able to bring to this debate this afternoon.

This debate has been interesting and wide-ranging. But behind many of the points which have been made lie two main strands: first, issues concerning charity law, and, secondly, issues concerning the Charity Commission. I should like to take these in turn.

At the risk of making a point which will be thoroughly familiar to many—though some do on occasions forget it—I should like to distinguish between charity law (properly so-called) and law which consists of fiscal provisions aimed at benefiting charities. Charity law has to do with the protection of charitable trusts and the duties of trustees to keep to their trusts' and to the donors' intentions and to ensure that money given to the charity is used for no other purposes than those intended by the donor. Tax and rating concessions—the main ways in which the Government support charities by directing money from the Exchequer into the funds of charitable organisations—are a separate instrument of social policy. It is a fact that if all tax concessions were done away with tomorrow, the work of the Charity Commission in protecting charitable trusts and the interests of donors and in ensuring the perpetuity of trusts could continue unchanged.

The 1986 Budget introduced a number of measures for the benefit of charities which were foreshadowed in last year's debate—in particular payroll giving and tougher measures to check the abuse of charitable status. Although I am conscious of some remaining issues concerning the application of value added tax, it is generally and widely accepted in the charity world that the tax concessions for charity introduced by this Government are the most generous ever seen and serve to create a most favourable climate for fundraising.

Every budget that we have introduced has benefited charities. If that causes the noble Lord, Lord Allen of Abbeydale, to stare with horrified gaze, I dread to think what he would do to some measures introduced by a government of a less charitable nature.

The effect of the most recent changes is that one can give money to charities tax free either through the traditional and very popular covenant or, after April 1987, by a regular deduction before tax from payroll. The Government have both shortened the minimum qualifying time for a covenant from seven years to four and increased the originally announced maximum limit for tax-free payroll deductions from £100 to £120 a year. Through these measures, as well as through the concessions we have given for one-off company donations and the like, we have endeavoured to create a steadily improving financial climate to encourage both private and corporate giving.

I should add that this is against a backcloth of steadily increasing support of the charity and voluntary sector by the Government. Through a variety of programmes and the involvement of many government departments, public sector support for charities has increased substantially over recent years—more than 75 per cent. in real terms since 1979–80—and the trend continues. Government grants to charities are now running at over £0.25 billion per annum. This increased public support is, I am glad to say, now being matched by steadily increasing private sector giving. I am sure it is the hope of all of us in this House that the new incentives for giving which we have now made available will continue to sustain this parallel growth of giving by companies and individuals.

One way in which that growth should take place is through payroll giving, which as I have said will become available with effect from April. As my right honourable friend the Chancellor of the Exchequer announced recently when the regulations were laid, employees will be able to donate up to £120 a year—£10 per month—directly to charity and before tax has been deducted. If American experience is anything to go by—and in debates like these we are frequently exhorted to take notice of American experience—payroll giving should open the way to quite considerable sums of new money and new charitable giving.

Turning now to charity law as opposed to the law relating to tax and rates, I am grateful to the noble Lord, Lord Allen, and to my noble friend Lady Faithfull for raising again the working of the 1985 Charities Act. The information we have is that use of its provisions is steady, but perhaps slower than we might have hoped. This means that it may take longer than was originally anticipated before the full effects of the Act are felt.

I was interested to hear the points raised by the noble Lord, Lord Allen, about the 1985 Act and whether its provisions could be extended. I think your Lordships will agree that the 1985 Act is sound in principle and may indeed pave the way for further relaxation of cy-près if that is thought desirable. But we will have to leave it a little longer before we can be certain that there are merits in trying to simplify some of the procedures.

As to any more general reform of charity law, we are of course studying the National Council for Voluntary Organisations (NCVO) report on malpractice in fundraising. This was a point raised by many of your Lordships, including the noble Lords, Lord Allen of Abbeydale and Lord Mishcon, and by my noble friend Lady Faithfull. Far from being silent on this report, we have welcomed it warmly. But the House will be aware that the majority of the recommendations are for the voluntary sector itself and do not require government assistance or changes in legislation. At this stage, we are discussing with interested parties how best to give effect to those recommendations which do need legislation. As noble Lords have recognised in this debate, charity legislation is not an easy matter and one should be careful to move, whenever possible, with a clear consensus of opinion. At the moment, this consensus has not yet emerged.

Malpractice in fundraising is only one aspect of abuse of charitable status. There are complex abuses, both connected with tax recovery and the spending of charitable funds, which also require attention. Your Lordships will be pleased to know that, following the arrangements introduced by the Budget for the exchange of information between the Inland Revenue and the Charity Commission, the commission has now established a new investigation unit, with staff with both Charity Commission and Inland Revenue experience, to tackle directly some of those abuses. I am pleased to be able to tell the House about this today and to commend it to your Lordships. I am sure that the noble Lord, Lord Allen, will particularly welcome these new arrangements.

The right reverend Prelate asked whether we might consider the possibility of some religious communities being regarded as charitable. I note the points that he made. However, I know that he will appreciate that there are considerable hazards in the definition of a religious community. Indeed, he alluded to some of those hazards himself. Those difficulties were also mentioned by the noble Lord, Lord Grimond, and the noble and learned Lord, Lord Denning. They relate to the definition of charitable status, in particular of such charities as the Unification Church and similar organisations in general.

My right honourable and learned friend the Attorney-General has challenged whether certain registered charities associated with the Unification Church are entitled to charitable status and has taken these matters to the High Court. The current position is that the Vice-Chancellor has given directions as to evidence that it should be set down for hearing immediately, but the case is not to be heard before November this year. In those circumstances I am sure your Lordships will understand why I can add nothing further to that.

I should say to the noble and learned Lord, Lord Denning, that very few cults are registered as charities in this country. The Scientologists are not a charitable organisation in this country; nor are many others. The charitable status of cults is scrutinised very closely and we are not convinced that it is the right time for the review of cults which the noble and learned Lord has suggested. We acknowledge the distress that can be caused by such organisations.

On the approach to charity law reform, which is a difficult subject, perhaps a more attractive course may be to concentrate on the proper regulation of fund raising and possibly on the better definition of the roles and responsibilities of charity trustees. I know that we are not alone in being conscious that we should not press too much change too quickly on to the charity world. It always takes a little time for charities to prepare properly for major change, such as the introduction of payroll giving, and there are distinct benefits in not going too fast.

The noble Lord, Lord Allen of Abbeydale, and the noble Lord, Lord Houghton of Sowerby, asked about the progress we are making in clearing the way for television advertising by charities. Reservations about what would happen to charities, in particular the smaller ones, if television advertising were allowed has been one of the reasons we have wanted in the past to proceed very cautiously. The House may know that the Independent Broadcasting Authority has been conducting a survey of the attitudes of charitable organisations to television advertising.

The question of advertising by charities on television is therefore under close and detailed discussion within the IBA and its statutory committees and among representatives of the charitable organisations. I think it will be some time before the IBA is in a position to decide whether it wishes to make an approach to my right honourable friend the Home Secretary about any relaxation of the current restrictions on charitable advertising. Until that approach is made I really cannot add anything further to what I have said.

My noble friend Lady Faithfull raised the question of the development of community trusts. I confirm that the support will continue for the designated time. As my noble friend will know, there are a number of community trusts which have established themselves without any funds from the Home Office, and it would not be right to interfere with the arrangements for the experimental schemes during this initial phase.

The noble Earl, Lord Longford, asked how we know that money which goes for charitable purposes abroad actually reaches the intended beneficiary and does not get lost on the way. I agree with the noble Earl that this can be difficult, and sometimes there is even the possibility of direct abuse. However, there is a requirement on United Kingdom charities to show that they have taken all reasonable steps to ensure that funds sent abroad are applied for charitable purposes in a way which satisfies both the Inland Revenue and the Charity Commission.

As the House may know, these requirements were strengthened in the last Finance Act. It is too early to say whether we need to do anything more, but we are aware of the problems; and to help us I should be grateful if the noble Earl and any other noble Lord would forward to us any examples of where such abuse is alleged.

The noble Lord, Lord Allen of Abbeydale, raised the suggestion of the possibility of some form of probationary registration of charities, and in particular the quesion of a suitors' fund. The noble Lord will appreciate that such a fund involves not only difficult matters of principle but also the provision of funds, and is not something to be embarked upon lightly without giving the matter due thought so that it does not go wrong at a later stage.

I turn now to the important issues raised by all your Lordships about the role, structure and function of the Charity Commission and the resources available to it. I know that this is a matter which is of deep concern to your Lordships' House.

The Charity Commission exists to promote the effective use of charitable resources and it is important that it should be properly resourced and staffed to carry out its statutory and other duties effectively. That is why, in the autumn of last year, when it seemed that real difficulties might arise if the Charity Commission's resources were not increased, we invited Parliament to approve a winter supplementary which raised the money available to the commission. Further increases in planned spending have been included in the Government's expenditure White Paper published earlier this month.

Since 1980 there has been an increase in the resources available to the commission to provide a computer for the official custodian. As the noble Lord, Lord Allen, has reminded the House, the Government properly take a stringent view of all proposals for public expenditure; and for that reason it is vital that the commission should continue to look for ways of improving value for money, taking account not only of the level of spending but the relative priority of the work which is being done, and whether this can be achieved more efficiently.

However, as your Lordships will be well aware, there have been a variety of issues raised about the way in which the commission operates for some time. For instance, we have debated in this House whether there is work of which the commission could be relieved. We have debated whether or not it is desirable for the commission to examine the accounts of all charities. We can hardly believe that it is, but it is a matter which has been raised.

We have debated whether the commission should be differently composed or structured—including the suggestion made again this afternoon by my noble friends Lady Faithfull and Lady Macleod of Borve about an advisory committee; and indeed we have heard the opposite point of view from the noble Lord, Lord Mishcon. We have also discussed the more complex questions of how much of the commission's work in registration should be computerised and the costs which this might involve, particularly in the early stages of conversion and programming

As I am sure your Lordships will appreciate, these are difficult and sometimes technical questions. As the noble Lord, Lord Mishcon, said, there is often an overlap, and indeed some of the suggestions which we have had put to us are contradictory. I am glad to be able to say that progress is being made with some of them. For instance, since we last discussed these matters in your Lordships' House—my noble friend Lady Lane-Fox will be pleased to hear this—computer consultants have been working on information technology needs of the commission and the advantages and disadvantages of computerisation.

Other matters, however—and many of these have been raised in the course of today's debate—require very careful thought and analysis. I am therefore pleased to be able to announce to the House today that, not least because of the major resource questions which such issues raise, my right honourable friend the Home Secretary has decided that it is right and timely for there to be a thorough review of the way in which charities are supervised and the roles of the Charity Commission and other bodies in this work. This review, which will take the form of an efficiency scrutiny, will begin shortly.

The noble Lord, Lord Allen of Abbeydale, gently chastised the Government about my noble friend Lord Brabazon of Tara's remark: The bird is apt to fly from the nest if too much discussion is taken beforehand". That remark seems to be vindicated in that I thought I should be the first to announce to the House today such a scrutiny.

I listened with great interest to the suggestion put forward by the noble Lord for a Select Committee of this House on charity matters. That of course is a matter for your Lordships' House and I certainly agree with your Lordships that there is plenty of scope for further review. Whether there is a need for the establishment of another Select Committee will, I am sure, require very careful consideration and I do not think the House would expect me to express a firm view about this today.

I can say, however, that the scrutiny that it has been decided shall be conducted will cover a great many of the matters not only raised by your Lordships today but debated in this House from time to time. It will make recommendations about all aspects of the work of the Charity Commission in relation to the supervision of charities; the adequacy of the resources, including the staff, available to the commission and whether these could be better deployed; the scope and justification for the making of charges for services by the commission or the official custodian—a point raised particularly by the noble Earl, Lord Longford, and the noble Lords, Lord Nathan and Lord Mishcon—and any clarification which may be necessary in the respective roles of the Home Office and the Treasury with regard to the Charity Commissioners. The subject for the scrutineers is deliberately wide-ranging. In short, it will be responsible for looking at virtually anything except for the definitive definition of what is or what is not a charity.

The noble Lord, Lord Grimond, will be pleased to hear that the scrutineer will also be asked to examine and make recommendations upon the way in which charities are supervised in Scotland and Northern Ireland, bearing in mind the interests of the public as beneficiary and donor. When they are available, I will place a copy of the agreed terms of reference in the Library of the House, together with an announcement of the name of the scrutineer.

We are sure that a review of this kind will be helpful to the Charity Commission in planning for the years ahead. We are sure that is right, and I am sure that this is very welcome to all sides of your Lordships' House. I am pleased to be able to make this announcement today. It goes without saying that I will be delighted to hear from any noble Lord who wishes to write to me with matters to put to the scrutineer. Therefore, having said that, far from agreeing with the noble Lord, Lord Allen of Abbeydale, and my noble friend Lady Faithfull that nothing ever happens under this Government, I have to say that much has happened; much more will continue to happen, but I do not disagree that there may be more to do on top of that.

The noble Lord, Lord Nathan, broadened the scope of the debate and made some extremely interesting points. I am sure that he will be the first to realise that I am not the person to answer or debate with him some of the points. I will of course make sure that they are passed on to my right honourable friend so that they are taken into account. It may please the noble Lord, Lord Mishcon, to hear that the Inland Revenue has recently reviewed its procedures to minimise delay in considering cases referred to it. This should reduce delay significantly. I hope he will appreciate my sentiment when I say that I hope it has no effect on my term of tenure of office.

Perhaps I may deal quickly with the point raised by the noble Lord, Lord Allen of Abbeydale, about the appointment of a new chief commissioner when Mr. Denis Peach retires. I should like to join him in paying very great tribute to the work of Mr. Peach and I am sure that there will be other opportunities for the House to pay its tributes between now and the end of the year. This is perhaps not the time to talk about the precise arrangements for the new appointment, but I have no doubt that my right honourable friend the Home Secretary will wish to maintain the arrangement adopted before Mr. Peach was appointed, under which a wide field of candidates, by no means all from the Civil Service, were considered. The chief Charity Commissioner is not in any way an appointment confined to the Civil Service.

I cannot end without paying tribute to those who work so long and hard for charities and voluntary bodies. There is a danger when we discuss these matters of looking only at abuse and malpractice and forgetting about the truly magnificent work of honest and hardworking trustees and others who work for charities, so often as volunteers. There was no better speech about this point than that of my noble friend Lady Macleod of Borve.

The debate has been an excellent opportunity for me to tell your Lordships of the progress which has been made since we last debated charities, particularly but not exclusively through the Budget, and of our plans for the future including this important review of the supervision of charities. In common, I am sure, with the whole House, I have every confidence that we shall continue to maintain progress with these issues over the coming year and beyond in this way and we shall underline the Government's commitment to the vital work of sustaining and supporting charitable and voluntary work in this country.

Lord Mishcon

My Lords, before the noble Earl sits down, I wonder whether he would care to comment—if he does not I shall understand it—on the suggestion that on their publications and appeals charities should have to state what percentage on their last annual accounts was chargeable to administration expenses. Does he feel that this matter could be reviewed with a view to legislation?

The Earl of Caithness

My Lords, I think that is a very important matter to be looked at and I believe that it would come within the scope of the scrutineer. But if not, I am sure that my right honourable friend will take due note of what the noble Lord says.

Lord Mishcon

I am much obliged.

6.2 p.m.

Lord Allen of Abbeydale

My Lords, in rising to thank the noble Earl and all the others who have taken part in the debate, I think I can justifiably repeat what I said at the beginning. There is no need to apologise for having this debate today less than a year after the previous debate. It has been an extremely interesting and important one. I should like to read very carefully what the Minister said. I do not claim to have taken it all in and I hope that for his part he will read carefully what we and other contributors to the debate have said.

I should like to say—and perhaps I should have said it at the beginning of the debate—that we very much appreciate the tax concessions to charities which have been made in recent times. But that was not the purpose of the debate today. I should like to assure the noble Earl that the adjective I used about the forthcoming Finance Bill was directed at its drafting, not at its content.

Perhaps I may make three brief points on issues that have been raised in the debate. The noble Lord, Lord Mishcon, rightly said that we do not want a definitive definition of charity. This was the point I tried to take. It is a flexible concept which we need to adjust to changing cirumstances. He said that it rested on an Elizabethan statute which has long since been repealed and a judgment of the High Court (if it was the High Court) issued at a time when perhaps there was not the assortment of religions that we have in this country at the moment and when the education system was not quite as it is now. As he pointed out, the law has been built up by judicial decisions thereafter.

The point I was trying to make is that there are not enough of these judicial decisions and that the cost of going to the courts has meant that a number of these very important issues have not been judicially settled. When I was talking about the suitors' fund, it was to that point that I was addressing my mind, and I remind the House that there are precedents both in sex and race legislation.

Secondly, the list of possible changes in the law which I enumerated, with one of which at any rate the noble Lord, Lord Grimond, rather disagreed, was not a list of changes that I think ought to be carried out but of changes that I think ought to be looked at. One or two other suggested changes have been added to that list during the debate. Thirdly, reminding myself as I did earlier that I used to be in the Treasury, I am afraid that the suggestion that fees should be charged is not an answer of itself, because there is no guarantee that the Charity Commission would be around to keep the fees that it collected.

I was chairman of the Gaming Board for some years. It was supposed to be self-supporting and it charged pretty healthy fees for licences and so on that it issued. But it was subject to just the same controls over staff as any other government department. I am afraid that that solution is not quite as straightforward as it might appear at first sight, although I certainly agree that it is well worth considering.

On the whole I found the reply of the noble Earl a little disappointing—the 1985 Act operation was still being looked at; the Government were still studying the NCVO report; they were still thinking about religious cults; they were still considering advertising on television; they still saw difficulties about the suitors' fund; and all the rest of it. In regard to the forthcoming review, a great deal seems to rest on the scrutineer.

I do not know quite what to say at the end of the debate. I think it is fair to say that the attitude of the Government and what they have done so far has not received absolutely overwhelming support from those who have taken part in the debate today. It is not a very satisfactory state of affairs. I hate to think that we might have another similar debate in a year's time when we have had the same kind of putting-off replies about matters still being under consideration. I suppose I must leave it on the basis that I hope some thought will be given to the points we have raised and that if there is not much sign of progress we may be able to prod a little here and there by question and perhaps by discussion outside the House.

Although I cannot go away completely satisfied with the Government's reply, I can go away with much appreciation for the support and suggestions which have been forthcoming from all parts of the House. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.